Quarter of UK top 40 firms eye up mergers with non-legal practices

Quarter of UK top 40 firms eye up mergers with non-legal practices

Around 25% of firms in the UK top 40 are considering a tie-up with a non-legal practice within the next two years, according to research by accounting and consultancy firm Smith & Williamson. Of the 21 top 40 firms that responded, nine said they were considering a combination, of which three described such a move as 'likely', with accountancy firms the most attractive potential partners. Six top 40 firms also confirmed they are considering taking external investment, with five of these looking for private equity funding.

AROUND 25% of law firms in the UK top 40 are considering a tie-up with a non-legal practice within the next two years, according to Smith & Williamson.

Of the 21 top 40 firms that responded, nine said they were considering a combination, of which three described such a move as ‘likely’, with accountancy firms the most attractive potential partners.

Six top 40 firms also confirmed they are considering taking external investment, with five of these looking for private equity funding.

In order to take on external funding, the firms would first need to convert to an alternative business structure (ABS), with 89 so far converting since January 2011.

Irwin Mitchell, the largest law firm to have made the ABS switch to date, has yet to take up the option of external investment, with a previously mooted initial public offering still an option for the future.

Firms outside the top 40 to have secured private equity backing include Keoghs, Parabis Group and Knights Solicitors, which last summer sealed an investment from private equity house Hamilton Bradshaw.

Knights managing partner David Beech said: “These figures don’t surprise me, particularly in the current economic climate, and they point to a shift in how law firms are starting to think about realising their future growth. Any firm considering taking on external investment has to be prepared to do things differently which, for us, meant moving away from the traditional partnership model.”

Shoosmiths chairman Andrew Tubbs (pictured) added: “Within an ABS environment, clients will still look to the law firm to take responsibility for top levels of client service. Law firms will need to ensure quality control of any non-lawyer entities.”

Smith & Williamson’s head of professional practices Giles Murphy said: “Given that the LSA provides an additional source of funding, we should expect to see firms taking advantage of this in the near future as a way of funding an acceleration of growth through acquisitions and team moves.”

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata
Professional Services

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine
Accounting Firms

Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021
Making Tax Digital

Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource