A BDO survey of independent Scottish legal firms found 69% of respondents believe there are still too many law firms and lawyers in Scotland — and that 53% of firms held merger discussions last year.
Nonetheless, the survey showed that financial firms’ performance is strong and firms are confident that their pipeline of client instructions will continue to flow in 2016.
For the first half of the financial year 2015/16, 88% of respondents reported higher fee income and 65% reported higher profit per equity partner (PEP) than the same period in the previous year.
In 2015, 82% of firms recruited new staff and 35% of those have increased their headcount by more than 5%.
About 88% predict that they will be recruiting additional headcount in the next 12 months.
“It is clear that further consolidation of mid-tier Scottish firms or mergers with UK national firms is expected,” said BDO.
“53% of firms stated that they had held merger discussions last year. For those who did not, the lack of cultural fit was cited as the main reason.
“Having said all of that, 69% of respondents believe that there are still too many law firms and lawyers in Scotland.”
BDO said there were clear signs that Scotland’s legal sector has developed stronger management systems to adapt to the current economic environment.
“Almost three quarters (70%) said they had managed partners out of the business with 60% stating they had significantly reduced an equity partner’s interest in the firm and 40% said they had demoted partners from equity to non-equity.”
Read the full BDO report here: http://www.bdo.co.uk/__data/assets/pdf_file/0008/1367612/BDO-2016-Survey-of-Scottish-Independent-Legal-Firms-3.pdf