Competition in the Bermuda legal sector could be heating up ? but is unlikely to bring rates down, said Appleby Spurling & Kempe managing partner Peter Bubenzer.

Speaking with The Royal Gazette last month following news of the company's plan to "combine" with Cayman Islands firm Hunter & Hunter on April 1, Mr. Bubenzer predicted other local firms would likely follow their lead.

AS&K ? which will become Appleby Spurling & Hunter after the deal ? is the first Bermuda firm to essentially merge with a company outside of Bermuda.

Mr. Bubenzer said the two firms were joining forces in a bid to become the leading offshore law firm although it is not technically a merger but a "combination" that leaves the Bermuda office in the hands of Bermuda partners and the Cayman office in the hands of Caymanian partners.

When the two firms announced their intention to band together in January, rival law firm Conyers Dill & Pearman ruled out its following the same route saying it had always done and intended to continue on a path of organic growth.

But Mr. Bubenzer said that some of Bermuda's smaller law firms ? in total the Island has hundreds of lawyers practising out of some 40 offices ? were likely to expand their reach through mergers with outside companies in the near future.

"I would absolutely expect that it is going to take place," he said, adding that this was already a trend seen in other offshore jurisdictions.

"There have been a number of substantial firms in other offshore jurisdictions who have doubled up," he said, including the merger late last year of Channel Islands firm Ogier and Caymans firm Boxalls, while two Channel Island firms ? Carey Langlois and Olsens ? joined to create Carey Olsen.

"These firms clearly have the same vision and I think it is highly likely that they are going to look to pick a Bermuda partner. I firmly expect we would see a transaction with a Bermuda firm in the future." Mr. Bubenzer said the expansion of the legal sector could be good news for clients in terms of service, but prices were unlikely to drop.

"At the end of the day a more competitive legal environment in Bermuda seems to me to benefit the consumer of legal services, whether a Bermuda resident or a business that is based here. But I would not suggest that we are going to earn any less. The firm expectation is that we would do better as a result of new business. I think competition tends to have the effect of reducing the rate at which fees increase but I would not say that it would cause them not to increase as there are clearly inflationary issues for each firm, determining a need to adjust the rates."

Although Mr. Bubenzer said some costs for companies were going down, for example the cost of communications, other costs such as salary and benefits were going up.

He said this was particularly true for AS&K given the firm's goal to hire as many Bermudians as possible, with the market for local hires being an increasingly competitive one.

"It is a competitive market for Bermudians. It is definitely not getting cheaper to hire people. All of this will drive fees higher but competition between law firms means that firms may more carefully watch where their fees are in comparison to competitors."

Mr. Bubenzer, a Bermudian, said the firm took pride in offering training opportunities to Bermudians from secretarial and corporate administrator posts to legal training. The company laid off its staff of six paralegals last year, but Mr. Bubenzer said there were no redundancies planned in the deal with Hunter & Hunter.