(Reuters) - Following a precipitous drop in law firm mergers thanks to the COVID-19 crisis, legal industry consultants say firms are gearing up for a much busier year of combinations in 2021 - the pandemic permitting.

The predictions reflect pent-up merger ambitions that may find an easier outlet in 2021, especially if the virus can be brought under control. But law firms are also finding it difficult to achieve the scale they desire through hiring alone, making mergers the best option for growth, consultants said.

With limited opportunities for lateral hiring in a tight market, combining can be a shortcut to add talent and leapfrog other firms on league tables that track transactional deals, said Zeughauser Group consultant Kent Zimmermann, who advises on law firm mergers.

"If there's a common thread to the firms that call us and want to talk combinations, the common thread in the answer is almost always it's a really competitive lateral market," Zimmermann said.

The biggest factor determining 2021 activity will likely be the enduring pandemic and the success of efforts to tame it, such as vaccinations. Even as the legal industry returns to some degree of normalcy, with several law firms ending austerity measures and giving out bonuses, the virus is still tamping down law firm courtships, said Lisa Smith, a principal at law firm consultancy Fairfax Associates.

Although some merger deals have been announced and executed virtually in 2020, Smith expressed doubt that a major merger between two large firms could be pulled off without more in-person contact than is currently feasible.

"Mergers are facilitated by chemistry," Smith said. "You can replicate some of it by Zoom, but not all of it."

Smith added that in-person contact might not be as important if the two firms know each other well and are comfortable with one another.

Following an active 2019, the year started off strong from a merger perspective, Smith said. By the end of the first quarter of 2020, previously-negotiated mergers between Faegre Baker Daniels and Drinker Biddle & Reath, Taft Stettinius & Hollister and Briggs & Morgan, Lathrop Gage and Gray Plant Mooty were finalized, as was Dentons first U.S.-based combinations with firms in Indianapolis and Pittsburgh under its strategy to expand across smaller U.S. cities.

But the international breakout of the coronavirus, and the subsequent stay-at-home and lockdown orders that various states and countries issued, demanded that law firm leaders pay attention to their own internal affairs.

"It's difficult to do mergers when you're doing everything virtually," said Brad Hildebrandt of Hildebrandt Consulting. Like Smith and Zimmermann, Hildebrandt said he is also seeing an increase in merger discussion activity.

Fairfax counted 41 completed mergers in 2020 - the fewest in a single year since 2010. According to Altman Weil, which tracks announced and reported deals, law firm merger activity hit a 10-year low in the second quarter of 2020, with just seven announced deals. Altman Weil counted 115 mergers in 2019, the second record-breaking year in a row.

Nearly a quarter of 2020's completed deals, meanwhile, involved one firm: Dentons. The global behemoth has continued its aggressive expansion even amid the pandemic, with a string of combinations that included a deal with Salt Lake City-based Durham Jones & Pinegar in November.

Within the past month, Dentons has announced two more combinations with midsize U.S. law firms as part of its quest to become the first national law firm in the United States -- Davis Brown in Iowa and Sirote & Permutt in Alabama.