The firm says net profit increased by 42 per cent to £5.5million on turnover of £16.9m.
Chief executive Chris Harte stated like-for-like growth for the year was around eight per cent.
He said: "General activity levels are up a bit and that is helping. We are happy that we believe we are getting a bit more than our fair share of that."
Mr Harte added: "We have made good headway into new business streams across all of our key sectors.
"It's an interesting market we're now operating in and we're confident that a competitive and dynamic Scottish firm can continue to benefit from the changes in our market."
Morton Fraser is ranked 13th in Scottish league tables by The Lawyer trade magazine but is in the top 10 according to Scottish Business Insider's rankings, which exclude some bigger international firms.
Mr Harte commented: "I do think it's something that a Scottish legal business has to make its mind up about.
"Does it see its future as part of a much larger UK or indeed world-wide player or as a Scottish firm?
"We would not be so arrogant as to say there's a right and wrong answer to that but I certainly think you need to come up with an answer rather than muddle through not making your mind up."
The firm benefited from the sector's biggest recent tie-up when a five-strong property team left Dundas & Wilson on its merger with CMS Cameron McKenna to join Morton Fraser.
Mr Harte said: "As well as a number of new client wins, we recently attracted significant hires to our private client team, and our real estate and planning practices.
"Alongside driving growth, we're pleased to have ended the year debt-free, making us well placed to implement our investment plans over the medium to long term."
On the continuing trend of consolidation, Mr Harte said: "Like any sector there are conversations all the time."
Scottish mergers in recent years have seen McGrigors disappear into Pinsent Masons, Andersons into DAC Beachcrift and Biggart Baillie into DWF.
The Macdonalds merger added around 50 to Morton Fraser's headcount.
Mr Harte, 42, who is halfway through his three-year elected term, said the firm's strategy was built around transparency, particularly on fees. "We try to listen to what people say about their experience of using law firms in general and ourselves ... there is a lot of frustration with lawyers for the opaqueness about costs."
Mr Harte said the firm had developed a policy of ensuring that clients only paid what they had been estimated and would not be hit with surprise upward revisions of costs.
Morton Fraser has around 175 people in Edinburgh and 95 in Glasgow.
Clients include Heathrow Airport Holdings, Diageo, Royal Mail Group Ministry of Defence, Transport Scotland and Scottish Canals.
- This article has been amended to reflect the fact that Kennedy's and Simpson & Marwick had proposed a merger but the deal did not complete.