UK legal magazine Legal Week reported that Lovells had "entered into a formal tie-up" with Phoenix.

Phoenix co-founding partner Abhishek Saxena denied that there was a significantly closer relationship between Phoenix and Lovells than there was between Phoenix and several other law firms.

He told Legally India: "I can tell you this is speculation. I think the speculation has been going on even before the time we set up: there were rumours that before we were leaving Trilegal we were joining Lovells."

Saxena added: "We work with them as we do with many other firms. It's always exciting for people to speculate."

Saxena added, however, that Phoenix was in favour of liberalisation and was not opposed to forging closer links with an international firm in future.

Lovells said in an emailed statement: "We are not going to comment on the nature of the relationship between the firms other than to say that we've been working with Phoenix on a range of matters."

It is understood that Phoenix works closely with Lovells but does not receive the majority of its referral work from any one firm.

Legal Week reported: "The non-exclusive relationship means the two firms will refer work to each other, although both declined to comment further on the exact details of the collaboration."

Several market sources confirmed to Legally India that they had heard that Phoenix has a best friends relationship with Lovells, although none could provide authoritative confirmation of such a link.

Lovells is a top ten UK firm with a revenue of £479m in the 2007-08 financial year.

Legally India recently reported Phoenix's plans to rapidly expand in Mumbai.