We have a specialist team of lawyers, all who have a wealth of experience and sector-specific knowledge in advising law firms, legal partners and investors.
Herrington Carmichael’s team provides a full service for all matters relevant to law firms, including mergers, acquisitions and practice sales, law firm set-ups (including ABS), private-equity investment and general SRA & CLC regulatory advice.
There are many reasons to sell or merge a law firm, including succession difficulties, continuity of legacy clients, avoiding run-off and closure costs and/or joining forces to navigate increased consolidation in the local market.
Selling a law firm is unlike selling most other businesses as the nature and regulation of the practice prompts unique considerations in the context of a corporate transaction. These range from the requirements of the SRA or CLC, managing client funds, client confidentiality, successor practice status & past-advice coverage, reconciliation of work-in-progress & book debts and client notifications.
Led by Alex Canham and Harry Winkley, our dedicated team of lawyers in the sector provide specialist advice on all aspects of transaction work in the legal industry and have extensive experience of navigating these points during a sale.
Our corporate offering is supported by our Regulatory team led by Mark Chapman as well as our wider departments to seamlessly provide any regulatory, employment or property advice required for the transaction.
Our approach is to provide you with pragmatic legal solutions to achieve your objectives both from a legal and commercial perspective.
Our support includes:
The team are frequently invited to speak at industry events and forums and are recognised as specialists in this area of law.
Growth through acquisition has become one of the most effective ways for law firms to expand geographically, enter new practice areas and increase profitability.
The market has seen a recent inflow of private equity investment causing the M&A market to be more buyout than seen previously. We support firms who are either backed by funding in a buy & build strategy or independent firms who are looking to maintain or grow their position in the market through acquisition.
We work with you to understand your commercial objectives when undertaking an acquisition as not all acquisitions in the legal sector have the same objectives.
For example, some acquirors may be focused on diversifying their client base and the bolt-on of cross-selling opportunities within their existing practice, retention and the indirect recruitment of staff / junior partners, economies of scale opportunities, geographical expansion, acquiring a firm with a strong claims’ history or a combination of all.
Our dedicated team of lawyers in the sector led by Alex Canham and Harry Winkley provide specialist advice on all aspects of acquisitions in the legal industry. This ranges from the requirements of the SRA or CLC, managing the retention of staff and referrers, client confidentiality, successor practice status & past-advice coverage, reconciliation of work-in-progress & book debts and client notifications.
This support includes:
Our Regulatory and Compliance team has extensive experience advising law firms on a range of SRA or CLC matters, whether in respect of an M&A transaction, the formation of a new law firm or general regulatory compliance.
Our Regulatory Team regularly advises clients on law firm M&A matters including regulatory due diligence, SRA rules relating to owners and managers, as well as drafting bespoke policies and procedures.
Key discussion topics often include whether the acquirer will be a successor practice for the purposes of professional indemnity insurance purposes and if not, the mechanics around that.
Our Regulatory Team assists clients in applying for SRA authorisation of new law firms, including alternative business structure (ABS) firms, together with the associated items, for example, bespoke policies and procedures and obtaining professional indemnity insurance. We interface directly with the SRA directly on behalf of the client and advise on any questions received from and responses to the SRA.
Our Regulatory Team also provide advice on related matters such as data protection in relation to the transfer of client banks, and also the associated anti-money laundering considerations and requirements including providing advice on in scope activities and associated policies, procedures and training. We have the benefit of being able to call on the expertise of our governance team where required to ensure that the ever-increasing topic of governance is also addressed.
The Regulatory Team headed up by Mark Chapman, himself a compliance officer for legal practice (COLP), ensures the team is able to bring a practical real world approach to the advice they provide.
Private equity investment is reshaping a section of the legal sector, providing firms with capital to accelerate growth, investment in technology and AI and reward partners in a way that is unique to what would be possible under the traditional partnership model.
Taking private equity investment has bespoke considerations in the context of a law firm. These range from corporate structuring and the necessity of an Alternative Business Structure (ABS), the requirements of the SRA or CLC for “owners” and “managers” and the retention and incentivisation of staff.
The existing partners also need to consider how taking PE investment will impact their control and the law firm’s day-to-day operation which will predominantly documented in an investment agreement.
We advise partners, management teams and investors on private equity investments, minority and majority investments, management equity arrangements, legal and corporate structuring and investment agreements.
From there, we support in implementing buy and build strategies, from your first acquisition through to sophisticated multi-acquisition programmes.
We have extensive experience in assisting with the acquisition process including the use of investment and debt-finance to fund any acquisitions and providing legal advice to ensure the consideration structure of such acquisitions is affordable for your business, including the use of deferred consideration and earn-outs.
We are flexible with how we provide acquisition services for buy-and-build clients, including agreeing template documents which can be used as first drafts for numerous acquisitions you are looking to conduct to improve efficiencies and costs.
Whether as part of a discrete project or part of a wider investment or acquisition strategy, our specialist Corporate and Regulatory teams provide support and advice in establishing new legal practices.
Our Regulatory Team assists clients in applying for SRA or CLC authorisation of new law firms, including alternative business structure (ABS) firms, together with the associated items, for example, bespoke policies and procedures and obtaining professional indemnity insurance. We interface directly with the regulator directly on behalf of the client and advise on any questions received from and responses to the regulator.
Similarly, our Corporate Team support in advising on the general corporate structuring, ownership models and partner / investment agreements to ensure that your new practice has the correct foundations for its day-to-day operation and future growth. This work overlaps with our general M&A offering in the legal sector where new entrants look to acquire an existing smaller or shell practice to establish its new legal services firm.
Being a full-service law firm, we frequently provide support to law firms and partners on a range of matters both in and out of an M&A setting. This includes, Corporate, Commercial, Regulatory, Employment, Real Estate and Dispute Resolution support.
For example, our dispute resolution team led by Stephen Baker has extensive experience in advising individuals in partnership disputes, dissolutions and contentious buyouts.
Similarly, our Employment Team has a wide range of specialist lawyers to bring employment-based solutions to employers across the realm of employment law.
In the legal sector specifically, this can include advising on consultancy arrangements, TUPE transfers and consultations, restrictive covenant enforceability and employee incentivisation.
Get valuable insights from our articles.
Dedicated professionals ready to assist you.
Find answers to your most pressing questions about our services and processes.
There are various notifications and approvals that may be required by the SRA including for “Managers”, “Owners”, Role Holders (COLP, COFA), BOOMs. If the buying entity is not an SRA authorised law firm, the entity itself will need approval by the SRA, there are also wider considerations where a firm is a licenced body versus a recognised body.
Confidentiality is a core principle of legal services, and this duty is not diminished by M&A activity. Sufficient steps will need to be taken to protect client information during the transaction process and we work with you to advise on how to best manage this obligation whilst balancing the wider practical realities involved.
Yes.
M&A transactions require specialist legal knowledge, especially in a regulated sector, both in terms of document production but also wider market and sector considerations. In the same way that you wouldn’t engage an employment lawyer to advise on a complex probate matter!
Furthermore, engaging external legal support helps mitigate the time and general deal pressure involved in an M&A transaction. This allows you to focus on the day-to-day operation of your practice whilst your external legal support leads the transaction and the progression of negotiations.
We also provide support to law firms who have internal corporate and regulatory teams. This is usually preferred by funders, but it also means that your existing team can focus their efforts on chargeable work and internal growth.
For law firms, unbilled costs (WIP) represent a significant unrealised asset.
Given it is unlikely that all time recorded for existing clients will be billed prior to completion of the sale, it is essential for the purchase agreement to contain a clear mechanism for reconciling and valuing work in progress.
