When the legal market was deregulated there was much speculation about an impending tide of external investment in law firms. The tide certainly can't be considered a flood - perhaps a ripple in the water at best.
The news that Duke Street is in talks to sell off parts of the Parabis Group raises a few interesting questions, notably what happens to the law firm when the backers depart?
One of the key reasons firms like(d) the idea of external money coming in was the opportunity to invest in new systems and processes - particularly IT based. They thought this would be a source of competitive advantage when pitching to clients.
In some ways it was. However, a number of clients I've spoken voiced the same concern; how long would the investors stay for and what happens when they leave? Is everyone there for the long term? Will the client be left in the lurch if they enter a long-term relationship with a firm that then experiences a huge exodus of cash?
There are lots of unknowns, but the one certainty you have with private equity is that they'll want their money back when they leave.
I'd love to be a fly on the wall when Parabis are having these conversations with their clients...
Following a number of restructurings and a Christmas-time capital injection from its private equity owner, insurance-focused law firm Parabis Group is in talks to sell off parts of its business. Parabis, which was purchased in 2012 by private equity firm Duke Street Capital, has suffered from a raft of legal reform and regulation that has reduced the value of insurance work in the UK, in particular personal injury.