In a rare interview, Dickson said that unless European banks make more liquidity available, there will be a slowdown in deal-making.
Dickson told Scotland on Sunday: “I’m not very optimistic at all. The City is going to contract in 2012 and I’m not sure how many people realise that.
“It’s going to be a very tough year and there won’t be anything like the number of deals that there have been. There is not the bank liquidity around that we need to make the transactions happen.”
His comments come after a report by data compiler Merger Market showed that Dickson Minto – which is based in Edinburgh but has a major operation in London – jumped from 74th place to fourth position in the “premier league” of legal advice.
Merger Market calculated that the firm advised on deals worth a total of $7.6 billion (£4.9bn) in 2011, leaving it behind just three of the so-called London-based “magic circle” law firms in the rankings.
Deals in which Dickson Minto was involved last year included private equity firm EQT’s £1.2bn purchase of Swedish caravan fittings maker Dometic and the £1.6bn sale of Swedish cable TV company Com Hem to BC Partners.
“Last year’s deals had a certain Scandinavian flavour to them because the Scandinavian banks still had money to lend,” Dickson said.
He added that the company’s rapid rise up last year’s rankings reflected busier times for the firm, but also work for some clients that didn’t go on to win auctions.
“Last year, our clients won more than they lost, so we had a much higher strike rate,” Dickson explained.
He said that law firms based in the UK continued to benefit from the fact that many European companies chose to have their deals covered by English commercial law.
“People are probably unaware of how many global deals are done by UK law firms,” Dickson added.
The Merger Market report highlighted a rise in the number of US legal practices trying to muscle in on European deals – a trend that Dickson said he had noted.
“The Americans can be quite tenacious,” Dickson said. “They seem happy to open an office in Europe and then, even if they have a couple of bad years, they will stick with it.”
Yet Dickson Minto has also reaped the rewards from “exporting” legal work, carrying out transactions in more than 50 jurisdictions in recent years, including work across Asia and Europe.
“We have very hard-working staff and they are prepared to travel overseas to complete deals for our clients,” Dickson added.
He said its private equity clients were now beginning to look at deals in eastern Europe and South America.