Dibb Lupton Alsop is cementing a deal with Scottish law firm Bird Semple, to become the first English firm to enter an Anglo-Scottish merger.
Plans to merge are set to be concluded before the end of the year.
A Scottish source says: "Bird Semple staff have been told that the merger plans should be finalised by Christmas."
Dibbs' move into Scotland is believed to have been motivated by its clients Royal Bank of Scotland and Bank of Scotland.
Bird Semple has strong property and litigation departments but is not known for banking. But Scottish firms are normally retained by UK companies for property advice and litigation when there is a Scottish element.
A source says: "Bird Semple will not be able to offer the spread of expertise. I'm sure that Dibbs will also be looking for lateral hires."
An inside source at Dibbs says that the move was also motivated by the variable quality of Scottish lawyers that the firm kept having to delegate work to.
"At least this way, we can get rid of lawyers who are not up to scratch," he says.
Earlier this year, Dibbs was linked to leading Scottish firm McGrigor Donald which was looking for expansion opportunities in the UK.
Kirk Murdoch, McGrigor Donald's managing partner, says: "We have known for some time that Dibbs was keen to expand into Scotland. More competition is an inevitable consequence of an ever-changing legal environment."
Scottish sources say Bird Semple has struggled since the failure of its merger with Edinburgh-based Fyfe Ireland in 1994.
This year the firm has also been raided by UK firm Masons which has been poaching lawyers from Scottish firms since it became the first English firm to set up in Scotland, opening a Glasgow office in May last year.
One source says: "Bird Semple got their fingers burnt with Fyfe Ireland. I suspect they would jump at the chance of a merger with any decent UK firm."
Another source says: "Bird Semple were at a stage when they had to do something. They were losing market share.
"We saw them disappear from deals and then they tried to re-invent themselves to regain credibility with clients. When they merge they will lose their identity and will become Dibbs in Scotland."
Dibbs will be the first English firm to swallow a whole Scottish practice when the merger goes through.
Gordon Hollerin, Bird Semple's managing partner, denies a merger plan.
He says: "I have heard this rumour a couple of times in the last few days. It is not correct."