Leading investment banks including Goldman Sachs and Rothschild, as well as a host of smaller houses, such as investment manager Fleming Family & Partners, are understood to have contacted a range of major City firms in the run-up to Christmas to gauge their interest in outside investment.
Partners at firms including Ashurst, Lovells and Olswang all confirmed that they have been contacted recently. Allen & Overy, Macfarlanes, Berwin Leighton Paisner, Taylor Wessing, CMS Cameron McKenna and Simmons & Simmons have all held discussions regarding potential investments.
Proposals being taken to firms include pools of investors taking a small stake in the firm, or arranging for the float of up to 20% of the firm on a stock exchange such as the Alternative Investment Market.
However, the potential involvement of Goldman, which is arguably Wall Street¹s most respected bank and has a reputation for spotting new markets, will be regarded as being particularly symbolic of the increasing interest in law firm investment.
A Goldman spokesperson played down talk of discussions with firms, saying it would not look to invest in a small asset class. However, several partners and law firm consultants in the City have specifically cited the bank as a prospective player.
Banks are gearing up to make use of relaxed regulations regarding external investment in law firms in the Legal Services Bill, which is due to come into effect during 2008.
Taylor Wessing managing partner Michael Frawley told Legal Week: "We have partners looking at the issue of external investment but we are currently sitting in the'not totally convinced' camp. The question is, why would we do it when we have banks saying to us that they will lend us money without any external involvement in management?"
Olswang corporate banking head Moni Mannings said: "It is definitely something that is being touted around. The idea is for investors to have a fixed income. They will be looking at law firms like utilities - by and large law firms are not going to go away and they produce the closest thing to a guaranteed return."
Meanwhile, several well-known companies are preparing to take advantage of the reforms which will allow them to offer legal services to the public. Motoring giant the AA has become the latest organisation to launch its own legal services division, following in the footsteps of Halifax and The Co-operative Group. The AA¹s new service, which offers wills & trust, conveyancing, tax and personal injury advice, was launched at the end of 2006 in conjunction with Irwin Mitchell and Hammonds Direct. Two leading insurance companies are also understood to be plotting legal moves.
Additional reporting by Ben Mitchell.
Talkback: Will partners take the money and run?
