In this fourth video in our series focusing on Private Equity investment in professional services firms, Partners Zulon Begum, Corinne Staves and Nick Leale discuss the key regulatory considerations that firms should be thinking about when contemplating PE investment for their firm.
In this video, Zulon, Corinne and Nick discuss:
- How does PE investment reshape law firm ownership? ABS structures are essential, enabling non-lawyer ownership—but they come with increased regulatory scrutiny and risk
- What are the key regulatory risks in PE transactions? Post-Axiom Ince, the SRA is laser-focused on client consent, money handling and due diligence to avoid intervention
- The impact on a firm’s growth strategy: Regulatory complexities may lead to cost and delay, but should not halt the ambitions of a firm or its PE investors. With evolving SRA expectations around acquisitions and client money, firms must plan ahead
- How does PE impact firm culture and ethics? Value-driven strategies may put pressure on partners and senior management – potentially increasing the risk of burnout, misconduct or ethical compromise
- What role do PE investors play in compliance? The importance of appointing board members with a deep understanding of the legal sector and regulatory environment, enabling effective participation in firm governance and to support robust compliance systems
- How are conflicts and confidentiality managed? PE-backed firms must prevent conflicts with investors and between portfolio firms – strong protocols are essential
- Is EDI at risk, or can PE drive progress? The SRA demands an inclusive, discrimination-free workplace that promotes fairness and diversity. PE investors can encourage integration of EDI initiatives into business strategies and cultural practices
- What are the ongoing compliance obligations post-investment? Serious breaches must be reported promptly and compliance must be embedded in a firm’s senior leadership and supported by regular training
- What does the future hold for regulation? New guidance on client money management is expected, following the Axiom-Ince consultation and increased scrutiny on mergers, acquisitions and external investments, emphasising the balance between regulatory enforcement and efficiency
Watch the full video above or listen to the recording.
Watch the other videos in the series below:
- Governance Issues for Firms Considering Private Equity Investment
- The Private Equity Proposition: Strategic Considerations for Law Firm Management
- Remuneration Issues for Firms Considering Private Equity Investment
If you would like to discuss any aspect of private equity investment in relation to your firm, or if you have any questions arising from this recording, please contact Partners Zulon Begum, Corinne Staves or Nick Leale.
