AVERAGE profits at Scots law firms have dropped almost 10%, according to a major industry survey.

The results of The Law Society's Cost of Time report for 2012 show profit per partner levels have dropped back while bank balances have also declined.

The research is published today as MacRoberts reveals a 4% dip in its turnover to £17.3 million and pre-tax profits also down 4% to £5.5 million.

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The long-running Cost of Time survey found median profits per partner across the more than 240 Scottish firms participating in the research were down from £71,000 to £64,000 and a long way from the high of £104,000 seen in 2008.

Firms with 10 or more partners saw their 2012 figures rise from £144,000 to £163,000, while sole practitioners increased from £46,000 to £53,000.

However, two to four partner firms declined from £75,000 to £67,000, while five to nine partner firms fell from £80,000 to £76,000.

The research also found firms with more than 10 partners have seen their bank balances drop from in excess of £200,000 to around £50,000, with similar levels of decreases seen at other multi-partner firms.

Lorna Jack, chief executive of the Law Society of Scotland, said: "The Cost of Time survey is a good indicator of the general health of the profession on an annual basis and it's clear that the effects of the recession are not over.

"We're all well aware of tightening budgets right across the private and public sectors, and we are encouraging our members to think very seriously about how they shape their business and look hard at their strengths and weaknesses to make the most of available opportunities.

"The legal services sector is, and will remain, highly competitive. We anticipate the arrival of the first licensed legal services providers in Scotland in the first half of this year and we will undoubtedly see further consolidation.

"As the legal market continues to change, it's vital our members make sure they are running a tight ship and take steps to ensure they are effective business managers as well as excellent solicitors."

Management consultant Andrew Otterburn, co-author of the Cost of Time report with actuary Dr John Pollock, said: "There has to be a real focus on cash flow and maintaining a healthy bank balance.

"Understandably the priority for most solicitors is attending to the needs of their clients, but they also need to ensure that their own business is operating effectively."

Meanwhile, MacRoberts hopes to reverse its decline in turnover by expanding into Dundee to add to its presence in Edinburgh and Glasgow.

Employment law partner John MacMillan, who is also a former managing partner of the firm, is moving to the city to head up the operation.

Craig Turnbull, current managing partner at the firm, said: There is a lot of economic activity in Dundee, including the new £45 million V&A museum, the £1 billion Waterfront development, which is the second largest regeneration project in Scotland, and the new £14m railway station.

"MacRoberts already has many clients in the north east. The new office will bring us closer to them and also allow us to grow our business in the city and the surrounding area.

"While we are disappointed with any reduction in turnover and profit, we are encouraged that traditionally strong sectors for MacRoberts, such as employment and construction, continue to outperform the market.

"We are also seeing increased activity in energy, corporate finance and intellectual property."