For the last few years,
many law firms have been predicting that the Legal Services Act, which came into
force on 6th October 2011, would be something of a damp squib and make little
impact on the majority of law firms. However, early signs are that in the
commodity end of the market at least, where personal injury insurance litigation
is big business, there are some big changes coming to the competitive landscape,
with the announcement of the first ever leveraged buy-out of a UK law firm.
Private
equity house Duke Street has today announced that it has acquired a majority
stake in the Parabis Group, the parent company of insurance litigation law firms
Plexus Law and Cogent Law, in a deal which values the combined group at between
£150m and £200m. Although EBITDA figures are not available, it is understood
that revenues for Parabis are expected to be approximately £160 million in the
current financial year.
Parabis provides personal
injury litigation services via its Plexus and Cogent Law arms, and acts for a
large number of insurers in the UK. But the firms have gone further than the
provision of traditional legal services, as, like Jersey's CPA, they have a
number of other non-legal service deivisions, which handle claims management
outsourcing, rehabilitation, loss adjusting, health & safety assessment and
audit work.
The combined Group has 60
partners, approximately 400 lawyers and 600 paralegals and is led by chief
executive Tim Oliver and commercial director Tim Roberts. They will be joined
by Paul Lester, former chief executive of VT Group, and Bob Scott, former group
CEO of Aviva, who will be appointed as non-executive directors. Lester will
become chairman of Parabis on the deal's completion, which is expected to be
within 3 months, and is dependent on regulatory approval.
Duke Street, who follow a
buy-and-build model, are expected to focus on extending the business process
outsourcing elements of the business, and will be looking to acquire other
complementary firms.
The annoucement by Duke Street
follows on from Australia's Slater & Gordon, the world's first publicly
listed law firm, having acquired UK personal injury specialist law firm Russell
Jones & Walker, and the Liverpool-based personal injury law firm Silverbeck
Rymer having been acquired by software and outsourcing firm Quindell Portfolio.
There
will no doubt be a temptation for those working in other parts of the
legal market to dismiss these developments as something which are unlikely to
spread outside of the specialist work of personal injury, but to do so could be
a dangerous misjudgement. The introduction of significant investment capital
into providers of outsourced services for law firms is likely to have an impact
on the wider legal sector, as clients become increasingly unwilling to pay top
City rates for relatively low level work. Firms who ignore this dynamic do so
at their peril.
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