Are Magic Circle Firms Set For Outside Investment?

I have blogged and spoken many times about the potential impact of the Legal Services Act on both the legal process outsourcing industry and the legal profession as a whole. I have been convinced for a number of years now that the profit margins routinely enjoyed by the world's leading law firms would prove to be extremely enticing to the private equity market and that once the legislative restrictions on external investment were lifted, it was inevitable, what would follow. All that I felt was up for debate was the timeframe involved.

Back in November 2007, (click here for full article) I wrote a detailed overview of the then recently approved Legal Services Bill, commenting as follows:

The particular section of the Bill that will have the most far reaching consequences on the legal profession and provide a colossal boost to the growth of offshore legal outsourcing, is the provision allowing the formation of Alternative Business Structures. The summary to the Bill at paragraph 15 states as follows:

Alternative Business Structures (ABS) will enable lawyers and non-lawyers to work together on an equal footing to deliver legal and other services. External investment will be possible.

I realize that while many people have disagreed with me in the past and regarded my viewpoint on this issue as nothing more than a scare tactic, it appears that if anything I may be a little behind the curve!

According to the U.K. Law Society Gazette, Citi, the world’s largest bank, has brokered meetings between the UK’s biggest private equity houses and major law firms in a bid to strike investment deals. The front page article goes on to say that:

Highly placed sources indicated magic circle firm Clifford Chance had met private equity representatives.

I'll continue to keep readers fully up to date on all developments as I come across them. My prediction is that within 12 months from the date of this blog piece there will have been, at the very least, formal announcements from one or more magic circle firms confirming their intent to take in outside investment. For the full gazette article click here.