Vandermark:
The traditional partnership model is losing its grip on solicitors, according to the boss of a private equity-owned firm who says it has been able to do things it could not before the takeover.
East Midlands firm Nelsons recently marked its first year of ownership by Lawfront, which now owns four significant regional practices as it pushes to build a £150m national group.
The group, which is backed by private equity house Blixt, is already half way there.
In an interview with Legal Futures, Nelsons chief executive Stewart Vandermark explained that the firm had been committed to growth pre-Covid and then, on the other side of the pandemic, saw that the market was set to change.
“We felt that, if we could get ourselves in position with some support and backing, we could be at the forefront and drive that rather than sit back and see who else did what.”
A secondary issue was succession. With the equity model “becoming less and less attractive to people”, and amid pressure to invest in people and technology, they had to consider alternative approaches.
Initially, private equity was low on the list of options but “a random call one day from a private equity house that said ‘we are looking to invest in a law firm’ led us to be interested in exploring the market in more detail”.
At around the same time, Lawfront got in touch. “It was clear from the off that strategically there was a nice alignment. What they wanted to do was what we wanted to do.
“We wanted to try and consolidate within our space in the East Midlands. We weren’t looking to become a big national firm with offices all over the place… [They wanted] regional firms that they could back.”
While Nelsons explored its options, “Lawfront was the one we kept coming back to. We felt that strategically it worked. We felt culturally it worked. They were visible in the market, they were well thought through.”
Key to the offer was that the Lawfront model allows individual firms to retain their brand and local management.
This has led to a year of “unprecedented growth”, he went on, with two bolt-on acquisitions unveiled towards the end of 2023.
“This year we’ve had a series of teams joining us… People seem excited by the journey we’re on and want to get on board with it. They seem to feel that the ownership model is a more modern way of running a law firm.”
Not being equity partners has not been a barrier to recruitment, he insisted. “What people want is to feel that they can develop their career, continue to learn and grow,, with a remuneration model that is competitive on the market.
“If you can offer those things, I don’t think per se anybody is missing the fact that we’re not equity partners in that way anymore.”
It has been an adjustment as chief executive – from having complete control to being accountable to the owners – “but for me the benefits of outweigh the negatives in that”.
Mr Vandermark said Lawfront has invested “in a way that we couldn’t have done as an independent firm”, from support for acquisitions to marketing, particularly digital marketing, and people, with enhanced benefits packages for staff.
There has also been money put into technology, “allowing us to explore and experiment with AI” and upgrade Nelsons’ practice and case management systems, while the IT teams at the various group firms are working to create a joined-up IT strategy.
He added: “Lawfront are not afraid to invest for a longer term than you probably are running an independent law firm, where you are more focused on trading this year to next.”
Practice groups at the different firms in the group have also had opportunities to meet, “which I think the fee-earners have really enjoyed because it’s not often you get speak to [counterparts] in another firm and find out what problems they have and how they solve them”.
More broadly, Mr Vandermark said Nelsons has benefited from the Lawfront team’s management expertise.
Of course, one issue with private equity is that it will eventually want to realise its investment, as happened last month with Stowe Family Law.
For Mr Vandermark, this was another part of the attraction of the Lawfront model – central management acts as a “buffer” between the lawyers and the investors, and promise continuity even if the money men change.
The future, he predicted, would see a variety of ownership models coexisting in an increasingly polarised market of large firms and niche practices, with mid-sized firms being squeezed.
“I don’t think equity ownership is ever going to completely disappear, but there’s much less of it now than there was 10 to 15 years ago.”
Nelsons was attracted by the early mover advantage of joining forces with Lawfront. “There are bound I think to be other private equity moves because our experience told us there’s a lot of interest in the sector from that world.”
The plan now is to accelerate Nelsons’ growth. “We want to continue to build our strength in depth so we can offer better service to clients, fill in the gaps that we’ve got and ultimately be in a position where we can genuinely compete with the top 100 firms.
“You have to be able to offer every bit as good a service to clients as they can, and offer an attractive proposition to employees as they can.
“So our aspiration is to keep driving and keep growing and see where that takes us.”
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