Legal firms shed 500 workers in two years as recession hits hard

At a conservative estimate, up to 500 posts have gone, including almost 200 solicitors.

Senior lawyers said the market in Scotland had become "casual" towards costs before the recession and was still bloated, concluding that further cuts are inevitable.

The Scotsman contacted about 40 of Scotland's largest legal firms to assess the effect of the recession on the sector.

The survey showed almost 400 job losses at the biggest 30 firms, including nearly 150 solicitors. However, a number of mid-ranking firms refused to provide figures and it is known there have been job losses at many small firms too.

Sources suggested that the total number of jobs lost could be as high as 500 if all these firms are taken into account.

As well as a drop in the number of lawyers and partners, traineeships fell by more than a quarter, further straining the future of the profession.

Douglas Connell, joint senior partner with Turcan Connell in Edinburgh, said: "There's quite a lot of trouble within the Scottish legal profession and over-capacity.

"Change is necessary. Some firms may downsize or some consolidate - I think it would be better if for structural or long-term reasons rather than pressure from banks.

"There will be firms slow to change or averse to change that will not survive."

Of the firms who provided numbers, turnover across legal firms in Scotland fell more than 20 million between 2009 and 2010. Profit per equity partner - a well-established measure of the health of the sector - fell from more than 100,000 in 2008 to 72,000 in 2009 and 64,000 in 2010.

Profits tell a different story with a total rise across those firms giving details of 7.2m between 2009 and 2010.

Malcolm McPherson, a senior partner at HBJ Gateley Wareing, said that in its 200 years of existence, the firm had never made redundancies, until the recession.

He said: "We have tightened up. We had got casual with our approach to costs. I don't think that was unusual but I don't think it will ever happen again."

Legal areas such as employment law, litigation and energy have seen growth during the recession, even as the property market collapsed, hurting law firms badly.

Of the three firms providing early numbers for 2011, two have turned the corner and increased turnover.

Lorna Jack, chief executive of the Law Society of Scotland, said overall numbers showed profits collapsed by 40 per cent into 2009, before showing a bounce back last year.