There are too many law practices in Scotland, survey finds
5th April 2016 12:01 - Professional Services
Despite the law firms in Scotland being optimistic about the current year, and what it will bring for trading, more than 50 per cent of law practices in Scotland have held merger talks within the last 12 months. A further 37 per cent said that they think it is likely that more practices will begin to fold.
Entitiled ‘Gearing up for the Future’, the BDO survey also discovered that of the respondents who had held merger talks within the year, 67 per cent had cited a suitable culture as the core reason for not merging. As well as this, 33 per cent cited troublesome property lease commitments.
Of the practices, approximately 75 per cent said that they believe more mergers with UK national companies will occur within the next 12 to 18 months. A further 63 per cent believed that there will be heightened consolidation of mid-tied firms in Scotland.
37 per cent of the practices said that it is either likely or highly likely that more law firms will experience insolvency in the next year.
The survey also uncovered that in 2015, 82 per cent of law firms employed more staff. It was revealed that 35 per cent had increased their headcount by more than 5 per cent.
88 per cent intend to recruit more staff in the next 12 months.
The Head of BDO in Scotland, Martin Gill, said of the market research findings:
“These figures reveal a legal sector which is remarkably optimistic and seems to have bounced back from the recession with some force. However, countering this optimism remains the view that the market is saturated with 69% of firms believing that there are simply too many lawyers and too many law firms in Scotland.”
He added: “It is clear that the legal market believes that there are too many law firms and lawyers chasing too little work and that mergers and even failures are the likely outcomes in the coming year. The Scottish market has changed over the last few years and adopted more business-oriented and realistic approaches to operating law firms but there may still be some way to go.”
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