Robertson: Entrepreneurial culture
A professional services business focused on finance and accountancy has made its first foray into the legal market with the £6.1m acquisition of a fee-share law firm.
DSW Capital said the deal for Surrey firm DR Solicitors, which only advises primary care providers like GPs and dentists, would establish “a substantial platform for the delivery of legal services”.
DSW, which owns a network of professional services firms under the Dow Schofield Watts brand, is an AIM-listed company whose stated ambition is to become “the most sought-after destination for ambitious, entrepreneurial professionals to start and develop their own businesses”.
It operates a licence model, under which the current 25 licensee businesses – with between them 110 fee-earners – can use the Dow Schofield Watts brand (though not all do) and access its network. DSW can provide start-up funding and offers back-office services.
In return, DSW receives 22% of the licensee’s revenue and, in some cases, a percentage of its profits – turnover in its last financial year was £16m.
The platform is similar to the fee-share/consultancy model seen in the law at the likes of Keystone Law, gunnercooke, Setfords and Taylor Rose, although focused on firms rather than individuals.
DR Solicitors says it was one of the first firms of this nature in the UK, dating back to 2003, when it was set up by solicitor Daphne Robertson and accountant Nils Christiansen. It became an alternative business structure in 2013. But, unlike the typical model, it does not require consultants to generate their own work.
In the year to 31 March 2024, revenue was up 11% to £3.1m, with profit before tax of £1.2m and net assets of £1.6m. DR employs eight staff at its head office in Guildford and has 18 consultant solicitors.
DSW told investors that the acquisition “brings a highly scalable, cash generative, and profitable legal platform to the group”.
It continued: “Importantly, and in line with the board’s stated diversification strategy, the acquisition materially reduces the group’s reliance on the cyclical SME M&A market from 68% of revenue to c.30%.”
James Dow, chief executive of DSW Capital, described it as “a game-changing acquisition”. He explained: “Not only is it immediately and significantly earnings-enhancing, but it also diversifies our revenues, building resilience, and provides an opportunity to expand into new professional markets. “Working with DR’s inspirational management team, we believe we can accelerate the growth of the business using the strength of the Dow Schofield Watts brand, and resources and, over time, build a substantial platform of diversified, niche legal services.”
His deputy, Shrutisha Morris, recently joined DSW with a background in the law, having been chief executive of North-West law firm Napthens between 2017 and 2021.
She said: “Partnering with a niche firm is a good step into the legal space for us without crossing over into our referral network in other markets.
“Specifically, DR Solicitors is an ideal choice due to their business model which dovetails nicely with ours. The platform model is tried and tested in the legal industry, and highly skilled professionals in that field are open to exploring opportunities outside of traditional firms.
“This will enable us to provide a home for law professionals who share our ethos of autonomy and flexibility.”
Ms Robertson and Mr Christiansen – the senior and managing partner respectively – will continue to lead DR. They have been paid £4.3m in cash and £1.8m in shares, which they cannot sell for two years.
Ms Robertson said: “We were one of the first legal firms to own a niche, one of the first to develop a consultant-based operating model, one of the first to embrace alternative business structures, and now we are one of the first to integrate into a truly multi-disciplinary professional services group.
“The entrepreneurial culture of DSW Capital is a strong fit with our own, and this transaction will provide DR Solicitors with the scale and resources to continue building on our successful operating model for the benefit of all our clients.”
DSW said it aimed to scale its model through organic growth, geographical expansion, additional service lines and investing in ‘break outs’ – existing teams in larger firms.
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