A MAJOR merger of law firms in Scotland is likely in the next two to three years, according to the latest annual survey of the sector from accountancy firm PricewaterhouseCoopers.

The survey found Scottish law firms had endured "a challenging year", with turnover on the whole remaining flat.

PwC concluded from its survey firms had "at best" achieved a "small marginal increase in profit per full equity partner". And it highlighted a "sustained reduction in the number of full equity partners, coupled with a reduction in the numbers of support staff and business overheads".

PwC said that, as in 2009 and 2010, the top Scottish firms had been under pressure, facing a reduction in market demand and pricing pressures on fees.

As a result, it added, the firms had found it difficult to grow, or even maintain, pre-2008 levels of profit per equity partner.

Predicting law firms in Scotland would before long follow the major-merger trend seen south of the Border, based on its survey results, PwC said: "There have been a number of well documented, significant mergers in London and (elsewhere in) England in the last two years, but to date there has yet to be a major merger of legal firms in Scotland.

"This is likely to change in the next two to three years, as the survey confirms that 60% of the firms questioned believe a merger is 'fairly likely' within this timescale."

Mike McCusker, partner at PwC in Scotland, said that leading Scottish law firms were using business process outsourcing in areas such as payroll services, facilities management, and travel, to reduce costs.