QualitySolicitors has agreed a funding deal which marks the first major investment by private equity in the high street legal market, the Gazette can reveal.

Pan-European private equity house Palamon Capital Partners has invested a ‘significant’ sum in QS. The agreement will see it gain a majority shareholding in the company, though it will not have a stake in the law firms which are franchise members.

QS chief executive Craig Holt would not disclose the amount invested. However, Palamon, which has €1.1bn of funds under management, typically makes investments of €10-€80m (£8.7m-£70m).

Holt said the money will be used to support the growth of the QS brand, enabling a ‘multi-million-pound’ marketing campaign, including a redesign of its website and marketing material, and a high-profile TV advertising campaign. Part of the investment will be used to increase the services provided to QS firms, centralising back office and other functions.

‘This will enable [our firms] to be more profitable than their local, more inefficient, rivals who don’t have the same economies of scale, and squeeze them out of the market as a result,’ said Holt.

QS will also invest in a new internal training department for firms, with a strong emphasis on soft skills.

Holt intends to ‘headhunt’ industry leaders to support the development of the brand and member firms. It has appointed Steve Richards, former chief executive of Interflora, as chairman of its board.

Richards said: ‘The Legal Services Act has created a once-in-a-generation opportunity to create a strong national network of local solicitors operating under a trusted brand.

‘Despite fierce competition from the supermarkets, we built Interflora into the sector-dominant brand by focusing on quality and service, and I’m extremely excited about repeating that achievement at QS in a similarly fragmented market.’

Palamon invests throughout Europe in service-orientated businesses with ‘high potential growth’. In the UK, it is currently backing dental chain Integrated Dental Holdings and Towry, an independently-owned group of financial advisers.

Palamon partner Jonathan Heathcote and associate principal Owen Wilson will join the QS Board, sitting alongside Holt and QS chief operating officer Saleem Arif.

QS has 220 branches around the country and is present in 160 WHSmith outlets. Member firms pay an average annual fee of 5% of turnover. The network aims to secure a 30%-40% market share.