Professional Practices Survey 2007 - An Appetite For Capital

Originally published in Professional Practices News, December 2007

Following the changes introduced in the Legal Services Act, Giles Murphy looks at what Smith & Williamson's most recent survey tells us about law firms' attitude towards external capital.

The opportunities to access external capital as an alternative source of funding for legal practices, as allowed by the Legal Services Act, seem to be gathering significant interest in the legal market, according to our professional practices survey.

Of the firms we surveyed, 57% believe that professional firms will seek to increase their financial resources through the use of private equity. This is a surprisingly high figure given that the objectives of private equity do not necessarily coincide with those of legal practices. Traditionally, we have not seen significant long-term use of private equity in 'people businesses'.