Experts say private equity is reaching the point where it can no longer be dismissed as an option by law firm leaders – after a year in which investment grew faster than ever before. According to the latest UK Legal Services Market Report published by IRN, 25% of all legal mergers and acquisitions last year involved either new investments by private equity businesses or private equity-backed law firms. This was up from 20% in 2023.
Meanwhile, a white paper published by merger specialist Acquira Professional Services has found that nearly £1.2bn has been pumped into the legal sector in the UK by private equity in the past five years. A record £534m was invested in 2024 alone, as bigger private equity houses capitalise on opportunities in the law.
Inflexion spent nearly £450m bringing on board international firm DWF and conveyancing outfit Movera, while the likes of Fletchers, FBC Manby Bowdler, HF and Lawfront have all grown since attracting external investment.
The Acquira white paper concludes that firms looking to grow their business through technology upgrades, regional expansion and talent acquisition may be best advised to seek private equity investment, even if there are misgivings about ceding control.
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‘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,’ said the paper.
‘Law firm leaders who dismiss the opportunity outright may miss out on a strategic avenue to fund growth, drive digital transformation, and strengthen market positioning.’
Robin Elley, from Dutch investor Waterford Private Equity which acquired Beyond Law Group in 2024, added: ‘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.’
The paper stresses that owners tempted by private equity should not only understand the benefits but appreciate the possible drawbacks, such as diluted control, intensified performance targets and cultural disruption.
‘Common pitfalls include excessive debt, cultural misalignment, over-leveraging during expansions, and potential regulatory obstacles,’ it adds. ‘Thorough due diligence, cultural alignment, and carefully managed financial structures are crucial to a successful investment.’
The average holding period for a portfolio company is between three and five years, although that has crept up in the past decade.
But there remains scepticism and even hostility from sections of the profession. An HSBC survey of UK law firm leaders found nearly half (49%) anticipate mergers or acquisitions in the near future, but just 8% expect private equity to play a role. But a greater proportion of law firm leaders now see private equity as a more attractive option than when they were surveyed two years ago.
Acquira said this shift may be because private equity firms are seen as offering more than just capital, and are increasingly viewed as providing strategic guidance, operational improvements and access to broader networks. Early success stories may be having an influence, as might competitive pressures in the legal market forcing leaders to seek alternative funding arrangements.
Jeff Zindani, founder and managing director of Acquira, said: ‘Private equity investment offers law firms the firepower to scale, innovate and future-proof their businesses. In a rapidly evolving market, standing still is simply not an option.’
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