Private Equity and UK Law Firms appear uncertain as to whether each are friend or foe.
From the high-street to sports clubs, private equity’s (PE) deal appetite appears far-reaching, and the legal profession is no exception.
With more than $1.6 trillion in ‘dry powder’ to call upon, according to EY, Private Equity has the means to match.
Law firms, with their relatively steady revenue streams and traditionally favouring a partnership model, have increasingly been attracting private equity investment as the industry searches for places to deploy capital.
However, from a PR perspective, private equity has some work to do to convince sceptics that the additional capital benefits firms in the long run.
Private Equity: Friend or Foe?
Regulatory changes, led by the Legal Services Act 2007, have made it easier for law firms to accept outside investment. This is at least one area where the UK (England & Wales) is ahead of the traditionally freer market of the United States; most states prevent non-lawyers from owning law firms.
Meanwhile, outside investment of law firms on the Continent is possible but challenges remain. For example, in France, PE firms aren’t allowed to be the majority shareholder.
The industry appears ripe for further consolidation. Deep-pocketed US legal firms are hunting for European opportunities, able to subsidise their overseas operations and out compete them in the war for talent.
Meanwhile, established European law firms look for entry points into the lucrative US market as they defend their home turf against US competitors.
Read: the legal / comms agency relationshipWhereas a major law firm would have traditionally made one M&A move over decades, alternative investment models have spurred firms such as Dentons to conduct over 60 in total.
The Buzz at LegalTechTalk 2025
LegalTechTalk 2025 is one of Europe’s leading conferences focusing on legal industry transformation, which attracted more than 5,500 attendees in London in June 2025.
Against the backdrop of legal profession consolidation and Private Equity firms further enticed by the promise of Artificial Intelligence (AI)-driven efficiencies in the sector, there was a really interesting LegalTechTalk panels, chaired by RealDeals’ Stephanie Ball.
Featuring former DWF CEO Sir Nigel Knowles and Dentons’ Global CEO Emeritus, Elliott Portnoy, the panel made some great points.
First and foremost, private equity can’t actually run a law firm…What PE brings is invaluable experience from the business world on growing and investing at pace.
First and foremost, private equity can’t actually run a law firm; it’s the partners that have the knowledge and skill of running the show successfully, whether a global or regional firm. What PE teams can do is bring invaluable experience from the business world on growing and investing at pace.
Whereas a major law firm would have traditionally made one M&A move over decades, alternative investment models have spurred firms such as Dentons to conduct a series of deals, 6 in total.
Another key consideration is understanding what leadership wants a firm to achieve and being strategic in pursuit of this goal. For example, firms are under increasing pressure to invest in the latest technology or risk losing out on game-changing efficiencies.
For some, private equity offers the additional capital required to make such investments, but that doesn’t mean it’s the right option for everyone within the industry. Jumping on the private equity bandwagon because it’s the popular choice with peers right now, doesn’t necessarily lay the foundations for future success.
Conclusion
Even beyond the top-tier of legal services, legal industry-wide consolidation is taking place at an exponential rate. The legal sector may be worth around $1 trillion globally, but individual market share remains remarkably diluted with competition as fierce as ever.
Some smaller or less-specialised firms are now looking to grow to survive, and private equity investment appears to be the way forward for an increasing number of them. It would seem that for good or bad, this is happening.
It’s hard to forecast where this growing trend will ultimately leave the legal industry. However, it’s important to remember that seeking external capital is not the end goal, but the means to an end.
It’s what comes next that will determine whether private equity will make or break a firm.
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