Spring 2012: The Lawyer News Review

By the time you reach practice the legal profession will look very different. The Legal Services Act (LSA), which has just been passed, allows external organisations to invest in law firms. It has been a revolution more talked about than acted on until recently, but since the start of the year some important developments have underlined the fast pace of change.

Your future is taking shape

By the time you reach practice the legal profession will look very different. The Legal Services Act (LSA), which has just been passed, allows external organisations to invest in law firms. It has been a revolution more talked about than acted on until recently, but since the start of the year some important developments have underlined the fast pace of change.

The firms involved operate ­consumer-focused legal services, ­primarily in personal injury (PI).

The most spectacular acquisition was that of Russell Jones & Walker (RJW), a national firm that focuses on employment, family, PI and general litigation. It was bought last month by listed Australian law firm Slater & Gordon.

Interestingly, while Slater & Gordon – a firm largely built on PI legal work – has been listed on the Aussie stock exchange for several years, its example has not been followed by others in the Australian market.

But Slater & Gordon, which has built up a war chest of funds, has been eyeing the UK market for a while, and the moment it was allowed to it took over RJW in a deal valuing the latter at £53.8m. RJW’s senior ­management will receive shares in Slater & Gordon and be locked in for three years

The Slater & Gordon-RJW move came hot on the heels of the £20m acquisition of Liverpool PI firm ­Silverbeck Rymer by UK-listed ­Quindell Portfolio.

Then, a week after the RJW deal was announced, came Parabis Law, which announced that private equity house Duke Street was taking a stake in Parabis, whose business can be divided in two: Plexus, a defendant firm that advises insurance companies on claims, and Cogent, which acts for claimants, usually individuals.

Last year The Lawyer UK 200 Annual Report 2011 – the definitive guide to law firm financials – revealed that Parabis had revenues of £100m just 10 years after its launch, which is some growth rate. The Duke Street deal values Parabis at between £150m and £200m.

Parabis’ roots were established in 2000 as Rymills Law, a road traffic accident claims handling firm, with former Berrymans Lace Mawer partner Tim Oliver at the helm. The Plexus arm was established through the acquisition of Williams Davies Meltzer in 2001. Around the same time claimant firm Cogent was launched, absorbing the claimant work belonging to Rymills.

Then the operating partnership of Parabis was set up in 2002, when it effectively became a parent group overarching several legal and non-legal brands.

Initially, its focus was outside the law and Parabis took in two rehabilitation providers, Human Focus Return to Work and RTW Plus.

In 2007, with the introduction of the Legal Services Bill, Parabis switched its attention back to the law, first absorbing Colchester-based ­Gaston Whybrew Law before expanding into the North through the takeover of the defendant arm of Cheshire firm Bott & Co.

In 2009 Parabis Law became the parent group of defendant firm Plexus and claimant firm Cogent, while Parabis Ltd became an outsourced claims management group and consultancy, and Argent was established as parent of the group’s professional services firms, which include loss adjustors.

Which lawyers are advising external investors?

As the LSA effect spreads we will see a small band of experts building up track records in advising law firms with regard to external investment. While law firms are no more tricky to invest in than any other companies in legal terms there will always be regulatory wrinkles to smooth out. So far, the law firms acting have included Macfarlanes (advised RJW), LG (advised Slater & Gordon), SJ Berwin (advised Duke Street) and Norton Rose (advising investment bank Espirito Santo with regard to Irwin Mitchell).

Thinking big

2011 was the year of mergers; there was the union between Clyde & Co and Barlow Lyde & Gilbert, and that between Beachcroft and DAC.

And the consolidation has not stopped; two big sets of merger talks have been going on this year, but only one has come to fruition. That is the deal between Anglo-Scottish firm McGrigors and national practice ­Pinsent Masons, creating a £282m firm with more than 2,500 people including 1,500 lawyers, making it the 12th-largest firm in the UK.

Apart from its London HQ, Pinsents has offices in Birmingham, Edinburgh, Glasgow, Leeds and Manchester. The firm also has offices in Beijing, Dubai, Hong Kong, Shanghai and Singapore.

Meanwhile, McGrigors has seen significant expansion in the past four years. The firm has branched out from its Scottish roots, buying London litigation boutique Reid Minty in 2008, taking over Belfast firm L’Estrange & Brett in 2009 and bulking up its Manchester offering in 2010.

One set of talks that did not reach a conclusion was that between two North West powerhouses DWF and Cobbetts. DWF (turnover £83m) has been particularly acquisitive of late – it took over Newcastle firm Crutes last November – but Cobbetts (turnover £44.5m) may have been too big to swallow in one mouthful.