An amendment made to the Legal Services Act in March 2012 made it possible for law firms to seek external investment, or share ownership, by converting to an Alternative Business Structure (ABS).
It was then expected that a number of supermarkets would begin to provide off-the-shelf type legal services – with the change dubbed “Tesco Law”. However, the growth has not materialised and been more concentrated in the professional services sector where companies such as KPMG have applied for multi-disciplinary licence.
McMillan Williams, a consumer-focused firm founded in 1983 with a turnover of £18m, has become the latest law firm to take on external investors.
The firm will use capital from the BGF, which has portfolio companies including GYMBOX and Peyton and Byrne, to open eight additional offices in London and the South East in the next two years. It is expected that this will result in the hiring of 75 additional solicitors and legal staff.
Explaining why he has taken on private equity-style investment, McMillan Williams CEO Colum Smith said: “We were attracted to BGF’s alignment of interests with ours, their offering of patient capital that could be deployed over a longer time period and also to their ability to provide follow-on funding should markets like conveyancing continue to perform strongly and our growth outstrip expectations.
“That type of support, guidance and backing is unusual in the legal field. This is excellent news for everyone associated with our business.”
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Back in August 2012, insurance law firm Parabis became the first private equity-backed firm to take advantage of “Tesco Law”, and was the 20th company to be granted an ABS licence since the liberalisation of the law market. Parabis has since expanded to deal with claims management services and secured revenue growth of 25 per cent, alongside profit growth of 50 per cent.
Former Dragons’ Den investor James Caan has also made investments in the space through is investment firm Hamilton Bradshaw.
Erin Hallock, senior investment manager at BGF, commented: “From our first discussions it was clear that McMillan Williams is a business led by an ambitious management team that has consistently delivered high levels of profitability in a fragmented market and where there is a large opportunity to grow organically and through consolidation.”
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