The merger talks with Mallesons may be on hold, but Clifford Chance has stepped up its commitment to the region with the announcement that it has signed a "best friends" agreement with prominent Indian firm AZB which will see the magic circle firm refer India work to AZB, who will in turn refer international work to Clifford Chance.

This is far from the first such alliance of the kind.  Linklaters signed a "best friends" agreement with Mumbai-based Talwar Thakore & Associates in 2006, Allen and Overy signed on with Trilegal last year, Jones Day is associated with P&A Law Offices and Brown Rudnick bedded down with Poovayya in 2007.

There are also a number of rumoured alliances.  "Some firms are concerned that such arrangements are sailing close to the wind [and the prohibition on international firms advising on local law]," said one partner on condition of anonymity, "so they do not publicise the existence of these alliances. However, the Clifford Chance agreement may tip the balance in favour of firms making these alliances officially known in order to gain a competitive edge."

From the Indian perspective, the list of potential suitors is not yet exhausted - Baker & McKenzie is another international firm which is said to be "open-minded" about the possibility of an alliance.