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According to law firm M&A broker Acquira Professional Services, private equity (PE) invested £1.2bn in the legal sector in the five years to 2024. This trend has been driven by commercially led business models increasing their market share, outperforming traditional LLPs and investing in artificial intelligence. 

The Law Society’s Strategic Legal Sector Insights Report, published in association with accountants MHA in January 2026, found that 46% of participants (representatives of mid-sized law firms) identified increased market share as their main growth opportunity, with AI as a driver of expansion and profitability. 

Other focus areas included talent retention, succession planning and geographical expansion. Achieving these strategic objectives is fuelling market consolidation, largely funded by PE investment. Some 70% of mid-sized firms surveyed for the report said they had been contacted by a PE investor or a PE-backed firm in the previous 12 months. Four in 10 firms approached said they would be open to acquisition into a PE model.

Rationale for the deal

PE houses aim to make a profit by identifying businesses which have unrealised value – either because they have been undervalued, or because a lack of investment and flaws in strategy or management are preventing them from realising their full potential. 

This has attracted controversy in other sectors, for reasons that range from accusations of asset-stripping to loading businesses with excess debt, or putting an unfair squeeze on consumers. Supporters of PE’s role counter that its ‘buy to build’ business model boosts economic growth, achieved through commercial expertise. As a people business with few assets, law is arguably insulated against controversial PE practices. 

So what is attracting PE to the legal market? Tom Green is a partner at mid-market PE outfit Inflexion, which is the biggest player in legal PE, having invested nearly £450m over five years. Its portfolio includes conveyancing giant Movera, partnering with Allen & Overy to carve out Movera’s aosphere (its data and compliance business). It also acquired listed law firm DWF. 

‘The legal industry is the largest professional services industry, and the most fragmented,’ says Green. ‘Its unique combination of scale, size and hyper-fragmentation presents a lot of opportunity. We have been very long in the legal space, and it’s no surprise that other PE firms, having seen what happened in the accountancy profession, are looking at another growing market with mission-critical services and good margins to invest into.’ 

So why are law firms opening up to external capital? To fund technology investments that drive growth; and to increase market share, manage succession, and move to a sustainable, commercial business model. PE is thereby following the well-funded transformations of banking and accountancy, its proponents claim.

Paul Bennett, partner at Bennett Briegal, which advises law firms on M&A, business and regulation, observes: ‘Law remains a cottage industry, with around 9,000 firms in England and Wales. The model which comes in and moves the market will gain from the cottage industry fading. Strangely, the platform model of Setfords and Gunnercooke might be the first to showcase this; they now make up a huge part of the market, hence the declining number of law firms. PE and the platforms are transforming the sector, but it is evolution, not revolution.’ 

There is general agreement that PE investment should not change service delivery – even post-consolidation, law firm clients will still have plenty of options. As law is a people business, particularly people often prefer to speak to their lawyer, although investments in technology, including AI, bring efficiency and cost savings through automated processes and combining back-office functions.

PE trajectory

Inflexion took DWF private in 2023 and the firm’s improved trading performance is held out as a high-profile proof of concept. 

PwC reported a record number of PE-backed legal platform deals in 2024 and the pace continued to accelerate through 2025. LDC (a subsidiary of Lloyds Banking Group) invested in Harper James; August Equity invested in Higgs; Sun European Partners backed Fletchers’ acquisition of Scott Rees & Co, Shoosmiths and Rayden Solicitors; and Lawfront, backed by private investment firm Blixt, has completed 13 acquisitions since 2022, including those of Brachers and Trethowans. 

Another big deal involved Express Solicitors, which sold a majority stake to Swiss PE firm Ufenau Capital Partners to fund its expansion by acquisition.

David Sparkes is founder and CEO of Millbourn Ross, which facilitates acquisitions for firms with revenues of between £1m and £80m. He sees the current pattern of around 10 significant PE investments a year continuing.

‘If you extrapolate that figure, there will be between 25 and 50 investments in the next five years,’ says Sparkes. ‘In five years’ time, 20% of the market may have taken PE investment.’

Platform models 

Jeff Zindani, founder and managing director of Acquira Professional Services, highlights the significant reported revenue of PE-owned platforms and law firms. He adds that those with the highest income specialise in consumer-facing commoditised services (personal injury, conveyancing, family law), consultancy platforms, and full-service regional firms. They are typically process-driven, professionally managed, and do not have many partners, which facilitates the transition to PE ownership. 

Sparkes agrees: ‘The legal sector’s PE journey in the mid-market segment – £10m to £100m revenue – started with Lawfront (Blixt). The model is to build a platform and expand by adding tuck-ins.’

Sparkes plots the platforms and their acquisitions on a map, which shows clusters of activity around regional centres. Lawfront has the broadest geographical spread, while other platforms focus on particular cities and regions. The map also highlights potential areas of opportunity, for example Oxford, Reading and the south‑west. 

‘Private equity in the UK legal sector has shifted from platform building in 2023/24 to consolidation in 2025, with £250m of revenue now under PE ownership,’ says Zindani. ‘But around half of that sits in consumer-facing firms. The reality is narrower than the narrative.’

‘The terminology around selling to private equity is wrong,’ observes Sparkes. ‘PE wants to invest in growing your business so that they make money and you make money. Management structure and discipline is important, which is why we say PE buy management teams, they don’t buy law firms. And external capital supports technology investments.’ 

Platform firms also enable smaller firms to benefit from PE, Sparkes adds: ‘Smaller firms ask me whether PE investment is the way forward for them, and now there is the option to be acquired as a tuck-in. So the answer to whether smaller law firms can benefit from private equity is not until there is a platform in their area.’

Pace of change

Joanna Kingston-Davies is co-founder of MAPD Group, a purpose-driven, debt-backed legal platform with a central shared services operation that has acquired seven law firms in the past five years. She sees a profound difference between the noise around PE in the legal sector and the number of investments: ‘Perhaps that is because legal is, by and large, an occasional purchase and carries a lot more work in progress than accountancy firms, so for many law firms, the metrics may not reflect expectations.’ 

Zindani observes: ‘There’s clearly been a gold rush into legal – but strip it back, and not many investment theses actually work for private equity. That’s driving a shift away from full buyouts toward minority stakes, structured deals and managed services models.’

Green addresses a common misconception about private equity: ‘PE supports management teams and companies in markets. Investors will challenge decision-making and bring a different mindset and different value acceleration capabilities to accelerate growth. But no PE firm will impose a plan on an executive team. In fact, if an executive team doesn’t have a plan that we can understand and support, then we won’t invest. It’s much more of a partnership approach than managing partners may think.’

The right investor

The first challenge for firms contemplating PE is finding the right partner. Zulon Begum, a partner at CM Murray, explains: ‘There’s often a long process involved in making the firm attractive enough to command the multiple they are seeking and finding the right investor. There are also internal challenges, which for any reasonably sized firm include getting all your partners on board with what is strategically a huge change in direction, often requiring an overhaul of the way you’re governed, the way you incentivise partners, and your whole business model.’ 

Begum says the first step ‘is to establish a clear vision of what you want to do with the money, and why it is a worthwhile investment for the PE firm, and the incentive for partners and the next generation of partners to stay in the business and drive it forwards’.  

Because PE investment is predicated on business performance, it is not an ideal succession vehicle. Sparkes observes: ‘While PE is acquiring a leadership team – they don’t want to run a law firm – there are other options. Knights [which is stockmarket-listed] acquires underperforming firms because it is looking for fee-earners, not management.’ So that may be a more realistic succession plan than a PE investor looking for performance and growth. 

Phantom profitability

The partnership model’s annual profit distribution makes it harder to establish a valuation for PE investment. Zindani highlights a common mismatch between partnership perspectives and PE valuation.

‘Partners point to strong profitability, but this is partnership economics, not corporate earnings. Strip out drawings, replace them with salaries, and much of that profit disappears. What’s presented as EBITDA [earnings before interest, tax, depreciation and amortisation – a measure of a company’s operating profitability] is often “phantom” EBITDA,’ he says.

Kingston-Davies sees addressing potential misalignment between law firms and PE investors around financial management as a critical success factor. ‘Most law firm partners haven’t worked in businesses that have a corporate operating model. Therefore, lawyers will say we run like a company, but they haven’t got a frame of reference for that, so for me the biggest single challenge is aligning seller and PE expectations.’

Green explains the standard formula he and other PE investors apply to investing in LLP member firms: ‘We create a corporatised EBITDA and a corporatised profit level, and then we retain earnings for investment into the firm. DWF was already corporatised because it was listed, and that was one of the reasons that made it more attractive.

‘It is very common for us to look at partnership models in all sorts of industries, and it is a tried and tested path of creating a corporate EBITDA that is investible,’ he continues. ‘It is not unique for law: everyone has to do it if they are going down the PE route. There is a very competent advisory community that helps organisations establish a solid EBITDA that’s referenceable.’

Client interest challenge

The Ministry of Justice’s consultation on a proposed Interest on Lawyers’ Client Accounts Scheme (ILCA), which would divert 50% of interest from client accounts, follows a Solicitors Regulation Authority review on whether allowing firms to retain interest on client money is in the consumer interest. The SRA’s response did not make it clear whether it was in favour. 

While PE does not factor in the money firms make on their client account interest into valuations, Kingston-Davies says: ‘There are so many law firms who will be impacted if that goes through, because their revenue from client interest is more than their profit.’ 

This proposal would affect a significant income stream for consolidator firms that reinvest their profits, as well as smaller law firms, potentially driving them to PE-funded platforms with centralised business functions.

Former SRA executive director Crispin Passmore recently gave a keynote speech on law firm growth, in which he observed: ‘The [PE] investment horizon, typically five years, is actually longer than the partnership model it replaces. Law firm partners are overly focused on year-end profit distribution – investment equals lower pay. Their effective investment horizon is 12 months, perhaps less. Private equity thinks in years.’ 

Green explains that while the PE model is typically a five-to-seven-year investment, the investor perspective is significantly longer.

‘In order to make an institutional return, I look at a 13-year window,’ he says. ‘I typically look back three years to see how the company is performing before I make an investment. Then I have a five-to-seven-year hold period. But I’m selling the company at the end of that period, so I need to sell another five-to-seven years. At the end of five years, you need to have built a better business that someone else wants to invest in! For example, we have a 10-year vision for DWF. The process is much longer than people think.’ 

This brings in the concept of patient capital – investments that span 10 years or more.

Fletchers’ PE owner, Florida-based Sun Capital, extended their ownership to a second term via a single asset continuation fund (see box, p18). Fletchers CEO Peter Haden explains: ‘This is a way for Sun to continue owning the firm for another four or five years, but at some point we will look for new owners. There is a perception that PE is short-term in its thinking, but PE owners have to make the firm attractive to the next investor, who will want a credible growth story.’ 

Since it was acquired by Sun Capital in 2021, Fletchers has grown, organically and through multiple acquisitions, and its revenue has tripled. There is a sharp focus on shared values and retaining colleagues who join from acquired firms – 90% of whom have stayed – to support the objective of adding value to the business, which also means maintaining liquidity and investing back into the business. That contrasts with an LLP, which distributes profits every year. LLPs were of course introduced for accountants, but cultural considerations explain why PE investment is more widespread in accountancy than law.

‘Accountancy is typically more repeatable, scalable and predictable, which makes earnings more stable and easier to leverage. That allows capital to build platforms and drive consolidation at pace,’ says Zindani. ‘By contrast, much of legal work is dependent on individual partners, which introduces talent risk and reduces the ability to scale. As a result, capital is far more selective in law. Capital doesn’t transform sectors uniformly. It selects what it can scale.’

'You tell PE investors what you need the money for; they make some decisions based on that, and then you have your feet against the fire until you deliver in the required period'

Corinne Staves, CM Murray

Kingston-Davies reflects on the cultural factors in successful PE investment: ‘Lawyers need to be clear that if they take on PE investment, things will be different. So cultural alignment and clear and transparent communication are key.’ She observes that with the exception of DWF, there has been no PE involvement in big partnerships, which tend to employ professional management. Partnership is about status and ownership rather than management strategy. 

Culture plays into the post-acquisition growth trajectory, not least in relation to the need to retain and incentivise next-generation partners. Corinne Staves, a partner at CM Murray, highlights the change of pace required of firms working with PE investors.

‘The growth that PE backers are looking for is huge, therefore a firm’s growth objectives will have to be delivered a lot more quickly,’ Staves says. ‘So to make that capital work, your governance structures need to be really effective. [PE investors] are investing in the management’s vision for their firm and their understanding of their people and their firm. You tell PE investors what you need the money for; they make some decisions based on that, and then you have your feet against the fire until you deliver in the required period.’

Green acknowledges law firm culture as a critical success factor: ‘We spend a lot of time doing cultural due diligence because we’re also a professional services practice, so we understand that culture matters. Private equity firms want to make their investments better, and better doesn’t necessarily mean more profitable. We want the best employee value proposition, the best client service, the best technology and the best culture. Because getting that right tends to deliver the best and most sustainable growth. And ultimately, what we’re looking for is to build companies that have sustainable ongoing value.’ 

Green acknowledges that because law is a client-focused profession, a great deal of value resides in its people: ‘Most clients still want to speak to a person, whether that person uses an Excel spreadsheet or AI to help deliver a better service.’

Adrian Jaggard is CEO of Taylor Rose, a legal consultancy that has made several acquisitions. He highlights another strand of complexity around bringing together corporate and legal business models. ‘[A law firm] is not a straightforward investment,’ he explains, ‘because legal services are not just commercial enterprises. Legal has an important societal function. Every lawyer feels that duty, to society and to their clients, and for many of us, it’s why we’re in the law.’

Arms race

So what of the future? The impact of PE investment is reaching beyond the mid-market. Passmore highlighted the potential impact on the UK legal market of US law firms taking on PE investment. Currently, only Arizona allows law firms to use alternative business structures, so in most of the US, external capital is limited to managed services organisations. But the potential implications of US firms opening up to external capital are so profound, however, that ‘if London’s elite firms do not act, the next generation of truly global legal businesses may be built around firms with a stronger focus on building capital value. And again, they may well be US‑headquartered.’ 

'There’s also a fear of missing out; that if they don’t take external capital to invest into AI or expansion, they’ll get left behind. There’s a bit of an arms race going on'

Tom Green, Inflexion

Green sees PE continuing to invest in the legal sector. ‘We don’t think PE is the right solution for every law firm, but for law firms with ambition and a clear strategy and plan, taking external capital to drive their firm is a super-accretive solution,’ he says. ‘The combination of a different mindset – an investor mindset, a growth mindset – with an organisation that naturally puts its clients first… can be very advantageous. So I think there’ll be more activity.’ 

Larger corporate law firms are already responding to Passmore’s point about the potential impact of liberalisation on the US legal market. UK firms are conscious of the opportunity of first-mover advantage. 

‘We’ve had conversations with top-50 law firms who are considering what to do with external capital,’ adds Green. ‘There’s also a fear of missing out; that if they don’t take external capital to invest into AI or expansion, they’ll get left behind. There’s a bit of an arms race going on.’ 

The effect of this arms race will be to accelerate consolidation.

‘Our macro hypothesis is that the rate of consolidation will increase, as it has in the accountancy space, and the top 10 firms will increase their market share,’ says Green.

The PE bandwagon has a distance to travel yet. 

Joanna Goodman is a freelance journalist