CWC Investing in Legal Practices

The Legal Services Act 2007 is a significant and noteworthy piece of legislation which reformed the legal services sector in England and Wales. It introduced various reforms aimed to increase the number of consumer-focused legal services providers by creating a new regulatory structure.


One of the key changes introduced by the 2007 Act include the creation of Alternative Business Structures (ABS). The new ABS legal structure allow lawyers and non-lawyers, to form business together and for non-lawyers to be involved in the management and ownership of businesses that provide legal services.  An ABS, in the context of the legal profession, is a business that allows non-lawyer ownership and management; meaning a non-lawyer can be involved as an investor, partner, or director provided the business obtains a ABS licence.


CWC's focus in this context allows us to bring investment capital for growth as well as funding capital for litigations claims through our Private Debt investment structures.

Benefits of an ABS for legal practices


  • The ability to raise equity capital outside of the legal sector


  • Possibility for greater employee intake and retention


  • Encourages a multidisciplinary practice


Shared Objectives


CWC Capital Consultants work to develop a strong link between shared objectives when looking to invest in a legal practice to bring it into our group structure. Shared objectives that encompass a multitude of benefits through diversification, growth, succession, exit strategies and mergers. We consider all the factors that make up the true value of a legal practice, including, staff, premises, clients, WIP and goodwill to identify synergies. These synergies and our ability to bring funding for claims in litigation, allow us to create capital integration and economies of scale.


Raise equity outside of the legal profession

Since an ABS can operate beyond the legal sector, they can raise funds from outside the legal sector. CWC's focus in this area enables firms to attract new investment and go beyond relying on financing from banks to raise equity from a wider range of potential investors such as from within the Private Debt sector - our specialism.


Greater employee intake and retention

An ABS structure allow non-solicitor employees to be promoted to have a direct stake in the firm. This allows the legal practices that CWC invest into to retain high performing non-lawyers and attract outside legal talent to fortify their reputation.


Encourages a multidisciplinary practice

A wider range of services may be provided to clients through an ABS rather than just legal services. Law firms can now become multidisciplinary, as legal services can be provided alongside non-legal services. This can promote greater client retention as they are less likely to have to source advice and services elsewhere, thus creating stronger and long lasting client relationships.

Building Growth through Investment

Investing for growth in a legal practice allows a law firm to build more firepower to compete, through assembling a bigger bench of experts in a particular area of law, or by delivering increased economies of scale. Firms can consolidate their existing staff into one office network and reduce rental costs, or sublet excess space. Another common way to improve cost-to-income ratios is through the sharing and integration of IT systems and other back-office functions across more lawyers.


Through CWC's growth investment into a law firm practice, firms can expand their practice sector offerings or move into new regions; and incorporating an already successful team is much less risky than launching into a new region or a practice area from scratch.

We are seeing a significantly higher number of law firms seeking investment capital that is being driven by an appetite for growth while allowing cost savings and synergies.

Over the last decade, legal practices have been getting larger..


This growth has increased the average number of lawyers per firm; an increase delivered in part by a rise in lateral hiring by larger firms who have been much more successful than smaller firms in attracting top talent. This has lead to a gradual shift of lawyers from smaller to larger firms.


Niche Firms are open to Investment



Changing economic conditions, including higher interest rates, energy costs and insurance costs, are encouraging smaller niche firms to seek investment to compete for business. Costs such as professional indemnity insurance, when looked at on a ‘per lawyer’ basis, are significantly higher for smaller law firms. Smaller niche firms may also find traditional finance more expensive and harder to find than a larger firm would do, as small firms are seen as a higher credit risk than larger firms by banks and other lenders. Large accountancy firms and tech-focused alternative legal service providers are making it harder by taking market share away from smaller niche law firms.


CWC identify overlooked niches within the legal sector where capital supply is scarce and is underserved by larger funders.


Legal practices do opt to grow organically, with a focus on hiring staff to handle an increasing caseload, however, this presents its own challenges - whereby attracting and retaining high-quality staff has always been a primary challenge for law firms. A legal practice structured as an ABS allows high performing employees to share in the profitability of the firm without relying on having to make partner.