Knights attract a Dragon

It would be true to say there has not been a flood of private equity houses seeking to back legal businesses in the wake of the Legal Services Act reforms, but there have been a small handful of deals done, and a number (such as Irwin Mitchell and Keoghs) are believed to be interested.

Today, Midlands-based commercial law firm Knights Solicitors, become the latest to attract PE investment, from Hamilton Bradshaw, a PE house headed up by ex-Dragons' Den star James Caan.  The deal is still subject to regulatory approval from the Solicitors Regulation Authority, and if the experience of others is anything to go by, then they can expect some significant delay before the green light is officially given to the deal.

Knights, which specialises in commercial and wealth management advice currently has 23 partners and 150 staff working across offices in Newcastle-under-Lyme, Cheltenham and Alderley Edge in Cheshire, but has ambitious growth plans, aiming to be in the top 100 of revenue earners within a 3 year time frame.  This would mean the firm needs to be generating revenues of roughly £22 million, a more than doubling of its current £9.2 million.

Entrepreneur Caan will join Knights' board as part of the deal, working alongside managing partner David Beech.  It will be interesting to see whether an person from a strong business/entrepreneurial background will thrive in a professional services environment – in my experience, the politics of getting things done in a law firm are very different than in many conventional businesses, and whilst many lawyers like to describe themselves as entrepreneurial, very few truly are.

Knights are following a path trodden by Parabis, who obtained investment from Duke Street earlier this year, in the first leveraged PE deal in the sector, by Quindell Portfolio’s acquisition of Silverbeck Rymer, and by QualitySolicitors, the High street law firm franchise, which secured investment from Palamon Capital Partners.  Knights seek to differentiate this deal on the basis that it is the first commercial, as opposed to consumer, focused PE investment – although Parabis for one would not be happy to be labelled as a consumer business.