SENIOR legal figures from some of the largest firms in Scotland have suggested merger activity in the sector may have passed its peak.
However they do believe further deals will be struck which will lead to the disappearance of more long established name.
The likes of McGrigors, Dundas & Wilson, Biggart Baillie, Semple Fraser and Tods Murray have all gone in recent years.
Addleshaws is the latest English firm reported to be looking to do a merger with a Scottish partner as it talks over a deal with Maclay, Murray & Spens continue.
Kirk Murdoch, Pinsent Masons chairman for Scotland and Northern Ireland, suggested there are now fewer alternatives for firms looking to do mergers.
He said: “While there could be other law firms pledging their future together, the number of viable partners is much diminished.”
That view was echoed by Harper Macleod’s Martin Darroch who said: “Compared with what has gone before, I think the Scottish market in likely to be pretty dull in the year ahead.
“Beyond the takeovers which have already been agreed this year, I don’t expect to see anything of significant scale.
“We’ve seen so many of our traditional names disappear over the past couple of years that we’re getting to a stage where there aren’t many candidates left, though no doubt we’ll continue to see smaller firms either merging with equals or going into bigger firms.”
Philip Rodney, chairman of Burness Paull, does expect activity and said: "We haven’t seen the end of that dynamic. At every level we will see some firms huddling together for warmth.
“We will see more takeovers by English firms with the Scottish end becoming north-shoring operations. And I’m sure we will see a few clever tie ups driven by strategy rather than short term expediency.”
Caryn Penley, joint executive partner in Scotland for CMS, and Stephen Gibb at Shepherd and Wedderburn were others who expect further deals.
Bill Drummond from Brodies said: “Nothing will surprise me after what we have seen happen in the legal market in recent years.”
Encouragingly all the firms which responded said they intended to be net recruiters in 2016 with the majority reporting strong growth across various practice areas.
While the overall Scottish market is said to be growing again several people pointed out opportunities that firms based here could take advantage of in other jurisdictions.
Mr Gibb said: “What we have not done enough yet is look internationally. I think we have a lot to offer the likes of the US. If you look over there the cost of lawyers is really high.
“Somebody coming straight out of college will be paid about $160,000 a year which is a huge amount of money and way beyond what a graduate would be paid even coming in to a firm like us.
“So what that means is I think there is a cost effective job to be done on work that is being lost in America to the professional outsourcers.”
Mr Murdoch also iterated that the growing internationalisation of the market will lead to many new opportunities for Scottish legal talent “and that can only be a good thing”.
Mr Rodney suggested more could be done to market Scotland and that firms here could also work more closely. He said: “I think it would be good to see firms working together collaboratively supporting each other in areas where they don’t compete. I would also like to see an increased profile for Scottish law as a brand. There are some material benefits that come from litigating in Scotland. It would be great to see wider recognition of that.”
Stephen Millar, joint executive partner in Scotland for CMS, said: “It would be great to see more done across the sector in terms of enhanced training and the development of skill sets which are suited to a wider international client base to continue the growth of the Scottish legal sector’s reputation as a global centre of excellence.”
Meanwhile Mr Darroch warned the failure to implement some form of alternative business structures in Scotland has left firms here at a disadvantage compared to those south of the border.
He said: “This delay has had real consequences for firms who saw an opportunity in ABS, but the powers that be still need to deliver it.”
Mr Gibb also warned of the growing challenge from legal centres in northern English cities such as Manchester, Leeds and Newcastle as firms increasingly look to move some work to lower cost centres nearby.
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