What next for private equity investors in law firms?
Our story on Lawfront suing five Slater Heelis partners signals a game changing moment
Hello Rainmakers,
As recruitment strategies for a buy and build business, filing legal action against five partners of a business you bought just a few years ago probably doesn’t figure.
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The shock exclusive revelations published on TheBusinessDesk.com this week that Lawfront has filed a High Court claim against the five partners of Manchester firm Slater Heelis, three of whom still work there, has sent shockwaves through the professional services world.
Backed by private equity investor Blixt, Lawfront is led by Neil Lloyd (far left), who has been around the block with a buy-and-build in the dental sector. But does this case highlight a fundamental flaw in the valuation process for professional services firms, accurately calculating work in progress?
Any business needs to forecast, but when it comes to a purchase, the hard headed reality of private equity businesses seems to have collided with the character of the firm they bought. The question everyone is asking now is why has this only come to light at this stage in the relationship?
And now that it has, surely something like this should be settled out of court. Who would want to risk selling to Lawfront now?
Strategy Specialist, Private Equity Operating Partner & Law Firm COO Adil Taha, who knows a thing or two about the rough ride of law firm ownership was blunt: “Not surprised at all that Private Equity didn’t know how to value a law firm properly. Most surprising fact here is they paid £17m for it! This will decimate trust in that group now, pushes a sale even further away. Massive scoop this.”
Let’s recap what we know so far.
Lawfront has launched a £4.6m High Court claim against five Slater Heelis partners, more than two years after the acquisitive group bought the Manchester law firm.
