Withers and Speechly Bircham have opted against a merger of the two firms, following votes at both firms earlier this week.

A spokesperson for both firms said: "Following detailed discussions between the management and partnerships of Withers and Speechly Bircham, both sides have now concluded that a merger would not be in the best interests of both firms and have agreed not to pursue this further. The talks have enhanced the respect that both firms have for each other."

The news comes after the two private client focused firms first issued a joint statement in March this year, confirming that preliminary discussions over a tie-up were taking place. A merger would have created a UK top law 25 firm with revenues of around £170m, under the name of Withers Speechly Bircham in Europe and Withers Bergman in the US.

In a further statement, Speechly senior partner Michael Lingens added: "Our discussions with Withers were interesting and positive but both sides separately concluded that we should pursue independent paths.

"For Speechly Bircham, that means continuing our strategy of developing our well-established commercial and private wealth practices in an increasingly international context. We have recently opened an office in Zurich as part of our focus on international private wealth, and growth in the funds and tax work of our Luxembourg office has just led us to move to larger offices there.

"We intend to open a third office in a major European location this Autumn, with a significant team hire. The office will be focused on providing corporate and tax services to a commercial client base in line with the profile of our other offices.  The firm's management team is already well advanced in developing our independent strategy for the next three years."

Withers reported turnover of £113.3m for 2011-12, with the equivalent figure at Speechly coming at £57.6m. Withers has profits per equity partner of £386,000, compared with £299,000 for Speechly. A combined firm would have had around 520 lawyers, including roughly 200 partners.

One partner told Legal Week: "I am somewhat surprised at the result – any firm in the top 30-50 space needs to be looking at a merger. I think it was more an issue of market forces – people are very nervous to make changes at the moment and move two buildings into one, meaning possible redundancies – it's bad timing. Anything is possible in the future though."

One former partner recently told Legal Week that some members of Withers' litigation team had reservations about a merger, describing the challenge faced by management of pushing through a deal as "an uphill task".

The news comes amid much consolidation among the upper echelons of the UK legal market, with recent deals including the tie-up of Bond Pearce and Dickinson Dees to create Bond Dickinson and Mills & Reeve's merger with George Davies.

However, a number of other potential deals have also fallen by the wayside, including mooted tie-ups between Addleshaw Goddard and Nabarro and Field Fisher Waterhouse and Osborne Clarke.