Private dancers

Neil Rose examines the influx of private equity capital into law firms of all shapes and sizes 

When Duke Street Capital became the first private equity (PE) house to invest in a law firm, Parabis Group, back in 2012, it seemed to herald the start of a new era.

Only the investment went sour, millions were lost as the firm was broken up in a pre-pack sale in 2015, and people wondered if the story of PE in the law was over before it had really begun.

Indeed, one of the law firms that made up Parabis – Plexus Law – had another go at PE, securing a £15m investment in 2019 from Origin Equity. Plexus was bought out of administration in 2023 by a firm called Axiom Ince, and we all know what happened there soon after.

There were other high-profile failures, such as Cheshire personal injury firm Roberts Jackson, whose PE investors did not recover a penny of the £22.5m invested after the firm went under, and McMillan Williams, sold in a pre-pack in 2020.

Perhaps tellingly, most of the early failures were in the personal injury market, which was subject to outside forces (namely government reform) that were out of lawyers and investors’ control.

But, quietly, there were some successes too – both listed law firms Knights and Keystone Law used PE as a stepping stone to the public markets – and now PE is very much back with a bang.

Firepower to scale and innovate

Research published in February 2025 by Acquira Professional Services found that PE had invested nearly £1.2bn into law firms over the previous five years, with a record £534m coming in 2024.

With international firm DWF, conveyancing giant Movera, employment law business WorkNest and compliance data subscription platform aosphere on its books, Inflexion was the biggest player, having spent nearly £450m in that time.

The research said that, in a rapidly evolving market where standing still was simply not an option, PE investment offered law firms “the firepower to scale, innovate, and future-proof their businesses”.

At the same time, it was not straightforward, with investors needing to understand “the deeply rooted culture of law firms, which are often hierarchical and reliant on the reputation of individual partners”.

“From cultural integration to governance challenges, private equity is not a one-size-fits-all solution. Yet, for forward-thinking law firms, it could be the catalyst that redefines their future” 

It went on: “From cultural integration to governance challenges, private equity is not a one-size-fits-all solution. Yet, for forward-thinking law firms, it could be the catalyst that redefines their future.”

The report recognised too the reputation PE sometimes has as an asset stripper and just focused on the bottom line, with the potential to discourage and drive out staff. “It is worth noting, however, that private equity itself is deeply reliant on human capital. As the legal profession is fundamentally a people-driven business, the loss of key talent would be counterproductive for any acquirer.

“Successful private equity firms often recognise the importance of alignment between their objectives and those of the professionals they rely on.”

Since that report, a steady stream of PE investments has continued, including: Manchester personal injury firm Express Solicitors, Higgs in the Midlands, national firm Canford Law, Cheltenham-headquartered conveyancing practice Montpellier Legal, East of England firm Greenwoods, South-East conveyancing firm Muve, London private prosecutions specialist Edmonds Marshall McMahon, and Harper James, whose lawyers work remotely.

Those already with PE backing have been splashing the cash too to build their businesses, perhaps most notably in recent months the decision of Fletchers Group – previously focused solely on serious injury work – to move into family law with the acquisition of Raydens Solicitors, the second largest family law firm in the country after Stowe Family Law. (Stowe itself was bought from PE house Livingbridge in late 2024 by alternative investment manager Investcorp.)

Heading for a tipping point

According to IRN Legal Reports’ UK Legal Services Market 2026 report, an estimated 31% of mergers and acquisitions identified in the past year involved either new investments by private equity businesses or private-equity-backed law firms.

Robin Elley, senior investment manager at Waterland Private Equity, a Dutch buy-to-build investor that made its first investment in the UK legal market through North-West based Beyond Law Group in 2024, told the Acquira report: “Private equity investment into law firms is still nascent, and yet to reach a tipping point. The UK legal market offers opportunities as it is highly fragmented, which offers scope for consolidation and revenue growth.”

But the report highlighted the risks too. “Common pitfalls include excessive debt, cultural misalignment, over-leveraging during expansions, and potential regulatory obstacles. Thorough due diligence, cultural alignment, and carefully managed financial structures are crucial to a successful investment.”

Jeff Zindani, managing director of Acquira, says that for law firm leaders wary of external ownership or tighter oversight, alternative financing options – ranging from traditional bank loans and specialist lenders to hedge funds – may be more appealing.

“Private equity investment into law firms is still nascent, and yet to reach a tipping point. The UK legal market offers opportunities as it is highly fragmented, which offers scope for consolidation and revenue growth” 

“It is important to note that PE deals vary widely; a full buyout is only one option among minority stakes, co-investments, and structured partnerships that can preserve elements of a firm’s autonomy.

“Ultimately, for private equity to be a springboard rather than a stumbling block, leaders need a firm grasp of both the potential benefits – capital for expansion, upgraded technology, enhanced managerial skills – and the possible drawbacks, such as diluted control, intensified performance targets, and cultural disruption.”

He predicts that one new direction for PE is likely to be into corporate/commercial firms, where Inflexion’s so far successful deal for DWF may attract others.

He says: “PE investment is not for everyone but PE firms vary enormously, so it is vital to find an investor that is the right fit with the values of your firm.

“Being fully aware of all options for growth is essential. Even if a law firm decides that the PE route is not for them, the industry’s success in the buy-to-build approach is a useful masterclass in how to grow through adding viable businesses in complementary practice areas—something that can be achieved through M&A with or without private equity involvement.”

No patient capital

Crispin Passmore, chair of legal consultancy Passmore & Oliver Partners, is at the heart of the PE explosion. Having helped usher in alternative business structures as a regulator – first at the Legal Services Board and then at the Solicitors Regulation Authority – he is now a consultant advising many of those looking to enter the UK legal market.

He explains that what investors see is a £40bn market that is “fragmented, under-managed, under invested, and historically insulated from competition”. They see law firms that “have distributed their balance sheet to zero every year-end for decades, which means very limited long-term investment in technology. No patient capital for M&A. Limited capacity to build something that outlasts the current financial year”.

It is also a market where there are no national brands, and where the largest law firm in the world is just one eighth the size of Deloitte or Accenture.

“They see a profession where client demand is enormous – and largely unmet. Small businesses navigate extraordinary complexity without legal support. Ordinary people face tribunals, disputes, and life-changing decisions entirely alone. Even sophisticated corporates are trying to exert more control over legal spend not because they need less law, but because they can’t afford more. The legal market serves a fraction of the legal needs that exist.”

Mr Passmore says investors’ answer to these structural challenges is to bring “capital, management discipline, and a longer-term perspective to firms that have been operating with one hand tied behind their backs”.

Law firm partners may be there for many years – and far longer than a private equity investor would be – but are they building for capital growth like PE does? No, he says. Their focus is on year-end cash distribution. “This is not a minor point. It’s a fundamental shift in how firms can compete — for clients, for talent, and for the future.”

Growth opportunities

Law firms taking PE generally give out similar messages about the need to invest in new technology, tackle succession and deal with the rising cost of compliance.

Last November, Express Solicitors sold a majority stake to Ufenau Capital Partners, which specialises in buy-and-build strategies for European service companies – this was its first UK deal.

Set up in 2000, Express has grown significantly in recent years, both organically and through a series of acquisitions. Its most recent turnover figure was nearly £89m – up 25% on the previous year – and it has 830 staff.

Chief executive James Maxey says the firm went out looking for investment 18 months earlier and had been speaking to Ufenau for a year, including an exhaustive due diligence process.

The need to invest in new technology is one of the key reasons often cited by law firms taking PE investment

There were three drivers. First was succession planning, given that he had been the majority owner. Though he expected to remain in place for several years, “a firm of this size needs a plan where it continues after I’m not here”, he says.

Second was the “greater firepower” that Ufenau’s backing would provide. He has never bought a firm that was more than 20% of Express’s size and, while he is “agnostic” about the size of deals it will do in future, it is now “better placed” to buy a large practice.

Mr Maxey says the plan is “more of the same”. He adds: “Not in a boring way – a lot of more of the same.” There was “no shortage of opportunities”.

Ufenau provided skilled support as well as money, he continues. “I expect a lot of my job over the next few years to be M&A.”

Finally, “like any PE sale, there’s an element of me taking money off the table” after successfully building the business from scratch.

For Canford Law, best known for its credit hire work, the money to grow is only part of the story. In January, Queen’s Park Equity bought a majority stake in the firm, which has 119 staff working across offices in Hatfield, Manchester, Bournemouth and Glasgow.

Canford founder David Nash says his intention has always been for it to be bigger, with more offices and potentially going international, and he wanted to draw on a private equity firm’s know-how, as well as its cash, to help him do it.

“I don’t want them to just say, ‘Hey, Dave, here’s a load of money. Go and buy some firms and take some money for yourself’. We’ve got really healthy reserves and had done really well in terms of putting our money into new ventures and growing over nine years…

“I wanted them to be involved around the boardroom table and talk about opportunities, and then help me align those opportunities so that the growth is successful.”

This will come through a combination of organic growth and acquisitions in the face of growing demand from credit hire providers, insurers and fleet providers for Canford’s services. There will also be some expansion into other areas of practice.

Optical allusion

For Mr Passmore, the pace of change will only accelerate. “We are past the point of debating if private investment will happen or become widespread,” he explains.

“The question for law firm leaders is no longer whether to engage with external capital — it is what your strategic response would be if your major competitor suddenly has a strong balance sheet, backed by a long-term investor. How, and when, and on what terms to engage with investors will become a key strategic driver for all firms. Waiting is itself a strategic choice.”

But he stresses that it does not mean the end for traditional law firms. He draws an analogy with the opticians’ market after deregulation in 1984.

“Before it, most people bought glasses from a small independent practice – expensive, limited in choice, slow. The profession warned that commercial ownership would compromise clinical standards.

“Then Specsavers launched and made eye tests affordable and accessible for millions. Prices fell. Access improved. The number of people getting their eyes tested went up, not down. But it wasn’t only about consolidation and mass market disruption.

“The independent optician didn’t disappear – but the market transformed around them. Those that survived did so by being genuinely excellent at what they do, not by assuming the old model would protect them.

“That is coming to law. Not every firm will be Specsavers. Some of the best will be Cubitts. But you need to know which one you are – and build accordingly.”