Legal services: Investment opportunities across the value chain
Armstrong has been busy supporting investors across professional services deals including consultancies, accountancy and legal services.
In the legal services sector, we have worked on deals in high street legal, flexible law resource and tech-enabled law firm specialist areas like intellectual property (IP) services.
In 2020, we published an article with Clearwater on legal services with a useful framework for how to think about investment opportunities given the growing adoption of technology. One area where we are seeing attractive and scalable M&A opportunities to build tech-enabled law firms today is in the IP services subsector.
Large law firms have scale, experience and capacity. However, smaller IP specialists will continue to differentiate where their senior staff build close working relationships with clients based on their technical and legal expertise and understanding of their clients’ businesses.
Key commercial questions for investors evaluating opportunities in the legal services sector:
- What is the likely future demand for IP services in each host market, given the macro environment and key drivers? How international is the target company and which are the best expansion opportunities?
- What are the target’s differentiators and how sustainable are they? How deep are the firm’s specialisms (e.g. patents, litigation) and end-industry focus?
- How have client needs evolved and how has the target developed its capabilities to adapt to this?
- Has the target been able to deploy technology to change the way it delivers its services (e.g. automate lower complexity services) and free up staff to do higher value work for clients?
- How ‘sticky’ are client relationships? Which other IP law firms do clients use, e.g. by country or by service, and what does this mean for the growth strategy?
- Does the target have a pipeline of attractive acquisitions to help them build capacity and expertise in key industries?
- Is the target an attractive place for specialist lawyers to join and can management access enough talent to deliver their business plan?
We have been helping investors and management teams answer these and related questions on their transactions. Speak to Rupert, Simon, and the team if you would like to discuss opportunities in legal services.
Rupert Cookson, Senior ConsultantEmail Rupert
Simon Hemsley, PartnerEmail Simon