The Law Gazette yesterday reported that many finance directors at the jurisdiction’s top 100 law firms remained adamantly opposed to the concept of private equity investment in legal practices.

Inappropriate listings

According to the newspaper, 77 per cent disapproved of private equity cash for law firms, while 88 per cent described the ability of practices now to list on stock exchanges as ‘inappropriate’. It quoted researches at Thomson Reuters Sweet & Maxwell as saying that law firm finance directors feared that ‘pressure from shareholders to deliver short-term returns would radically alter the culture at their firms’.
The survey falls against the backdrop of moves by English several firms to consider private equity and stock exchange listing as part of their conversion to alternative business structures, which has been permitted since the beginning of the year by the Legal Services Act 2007.
The researchers maintain that top figures at law firms fear that injections of external capital would ‘demotivate’ lawyers ‘by allowing partners an easy exit route’. And the Gazette also makes the point that law firms continue to be concerned that external investment would open their businesses to increased – and arguably unwanted – public scrutiny.

Establishment figure

While the research highlighted the innately conservative nature of law firm finance directors, there was at least one legal sector establishment figure calling for reform. Writing several days ago in the Financial Times, Nigel Boardman, a partner at London magic circle practice Slaughter and May, said lawyers have been slow to react to changes forced by the cataclysmic financial crisis.
‘The legal profession ... has not given an adequate response to the change in the economy since 2008,’ he writes. ‘We are still too keen to protect our own short-term interests when we should see that our and Britain’s long-term prosperity depends on a vibrant and fair legal marketplace, in which law assists business rather than impeding it.’
Mr Boardman targets high litigation costs, the need for an accelerated rights issue process similar to that used in Australia, and a desire to reform company legislation more widely as areas crying out for reform in England.