SHEPHERD and Wedderburn has posted its best ever financial results, with pre-tax profits rising by more than a quarter to £18 million in its latest financial year.

The law firm cited strong performances by its core divisions - energy and natural resources, real estate and infrastructure, and financial services - as turnover grew by 26 per cent to £48m. However it said it experienced growth in all practice areas in the year ended April 30.

And the firm highlighted a significant contribution by Tods Murray, the Edinburgh firm it acquired out of administration in October.

The record figures come shortly after Glasgow-based law firm Harper Macleod reported a 7.5 per cent increase in profits to nearly £8m, signalling that confidence is returning to parts of the Scottish legal sector following the challenges of the financial downturn.

Stephen Gibb, chief executive of Shepherd & Wedderburn, said the firm benefited from a "flight to quality" during the year.

He said: "People are choosing to go where the expertise actually is - and we have been lucky enough to benefit from that.

"We've also been looking to drive our position in each of those sectors by making people more aware of what we can do, and I think both of those things have helped."

The firm saw revenue increases in excess of 20 per cent in two of its three principal areas, with turnover up 26 per cent in real estate and infrastructure, and 21 per cent in financial services.

Its corporate team advised on deals worth a cumulative £5.2 billion, which according to the firm said translated into a 24 per cent increase in revenue on the prior year. It acted for William Grant & Sons' in its acquisition of Drambuie, and for Wolfson Microelectronics' in the deal which saw it taken over by Cirrus Logic.

Shepherd and Wedderburn swooped to acquire Tods Murray in October, after the Edinburgh firm went under in the face of high property costs.

The acquisition led to Tods Murray's 3,500 clients moving across to Shepherd & Wedderburn. However the deal was not without some "pain", with 60 of Tods Murray's 138 staff ultimately being made redundant.

Mr Gibb praised Shepherd & Wedderburn's IT, human resources, marketing and finance staff for effecting the integration within a 10-week period. The enlarged firm now employs 501 staff.

He said: "When the deal happened it wasn't like a merger, when you normally have six months to prepare for it. We had a matter of weeks and suddenly had to bring everyone in and integrate the IT, [and] the financial systems.

He added: "We managed to save 100-odd jobs in the market, which is good, but there was still some pain."

Mr Gibb said the deal had allowed the firm to strengthen its team in areas such as finance, agriculture, private client, real estate, corporate and litigation. He added: "We found that clients were willing to give us a try and come over.

"Almost all of them did, which was a really fantastic testament to the Tods Murray team."

Asked if Shepherd & Wedderburn was in the market to do further deals, he said while they "would never say never - it is not something we are actively looking to do, certainly in the central belt."

He signalled that a major part of the growth strategy was focused on recruiting skilled lawyers, and highlighted the arrival of three partners during the year.