Since the 2008 economic downturn we’ve seen the Scottish and UK legal sectors undergo unprecedented change. Names of eminent law firms have been lost to mergers and acquisitions as consolidation continues to sweep across the sectors.

In Scotland, household LLPs including McGrigor’s, Dundas and Wilson, and last month, Simpson and Marwick, have been swallowed up as firms joined forces to keep business afloat and remain competitive.

Now, seven years on, new challenges mean consolidation is a strategic choice for some of Scotland’s law practices. In fact, consolidation is an ongoing trend right throughout the UK and further acquisitions and mergers could be in the pipeline – one recent report suggested two thirds of Scottish firms had been in merger talks of one kind or another.

The benefits of consolidation are undoubtedly attractive if the partnership is right. When Pinsent Masons and McGrigors closed their high-profile merger in 2012, both firms benefitted from the combined knowledge of over 2,500 staff in 15 international locations.

In more recent years, Scottish firm Dundas and Wilson (D&W) merged with London headquartered CMS which gave D&W access to CMS’s 830 partners operating in 32 countries. However, both firms surrendered their names and Scottish autonomy to London, shifting power across the border.

Despite this, there is still opportunity for Scottish firms to grow organically, keep autonomy in Scotland and avoid a cross-border takeover. There is also growing confidence from the Law Society of Scotland. In a recent survey, 61 per cent of members said they were optimistic about the future of the profession, compared to just 53 per cent in 2013.

In the wake of the financial downturn HSBC supported countless Scottish SMEs who had a strong product, strong expertise and a strong staff but saw their market close in around them.

In 2008, when Scottish exports declined, most businesses went into survival mode, retrenching into their core markets and focusing on revenue generation and cost savings. However, even in those difficult times, some companies had the bravery, cash reserves or foresight to expand exports – and in many cases those were the ones to achieve growth throughout the downturn.

Indeed, even today one of the main legacies of the recession is a hesitancy to move into new markets – our research suggests only 6 per cent of Scottish SMEs intend to start exporting over the coming six months.

What has become increasingly obvious in the legal sector is that to grow and avoid takeover, Scottish firms need to evolve – or face the consequences.

An example of a successful alternative to consolidation is MacRoberts LLP. Diversification of services and skills ultimately led to the growth of the firm and retention of autonomy in Scotland. Following the recession, instead of scaling down to weather a diminishing market, they chose to diversify their range of services, particularly in litigation and construction.

By strategically identifying areas for development MacRoberts realigned staff and made lateral hires to bolster their expertise and establish a presence across a broadening range of sectors. Key hires established a stronger foothold in the London market and facilitated the export of MacRoberts’ services.

Scottish law firms who want to retain their autonomy and protect their independence must think beyond borders and export their services, or diversify the services they can offer to clients.

Scotland has an attractive business landscape. Domestically, while the economy may be stuttering, confidence in the legal sector seems high – fee incomes have been on the rise this year as have profits per equity partner. In Europe, Edinburgh is an established financial powerhouse and Aberdeen is its oil capital. There are many opportunities for legal firms as Scotland continues to attract business interest domestically and internationally.

Exporting and making strategic alliances with London firms therefore offers customers an international service. These partnerships can also provide a competitive alternative to larger consolidated firms that compete head on with London’s PLCs.

Scottish firms are also well-placed to capitalise on their location, which offers significantly cheaper premises and labour costs. Charge out rates are not aligned to a London market but clients will still benefit from a Scotland-London partnership. We have seen many firms setting up legal service centres in Belfast, Glasgow and Manchester to take advantage of these factors.

The landscape of the legal sector in Scotland has much improved but it is yet to completely heal. For Scotland’s independent law firms to grow and protect their autonomy in Scotland, they must think beyond borders and diversify expertise and export services. Consolidation might be prevalent but it is not inevitable.

partnership. We have seen many firms setting up legal service centres in Belfast, Glasgow and Manchester to take advantage of these factors.

The landscape of the legal sector in Scotland has much improved but it is yet to completely heal. For Scotland’s independent law firms to grow and protect their autonomy in Scotland, they must think beyond borders and diversify expertise and export services. Consolidation might be prevalent but it is not inevitable.

Grant Bett is Relationship Director of Professional Services with HSBC.