The legal sector has entered a new phase in the mergers and acquisitions (M&A) cycle. This phase is defined by scale, ambition and increasing scrutiny, with publicly listed firms and private-equity-backed practices driving the pace of consolidation.
The period has seen high-profile activity. Knights plc confirmed a £30 million acquisition of IBB Law, closely followed by the £16.6 million purchase of Birkett Long. Private equity has also continued to move into the sector. Express Solicitors has announced new investment to support expansion, and Greenwoods secured funding from Gresham House Ventures to support technology development and future acquisitions. Fletchers Solicitors reported that it had spent “millions” on acquisitions in the past year, underlining the continuing appeal of consolidation for investor-backed firms.
While larger organisations are accelerating their growth strategies, small and medium-sized practices appear more cautious. A recent LexisNexis survey of 308 lawyers found that only 5 percent are considering M&A as a route to growth. Many firms identify the real challenge as finding the right partner rather than financial barriers. This represents a decline from previous years, where 10 percent and 13 percent of respondents were open to merging.
Recent Market Activity
To illustrate the momentum in the sector, here are some of the most notable UK law-firm M&A and investment announcements from the last eight weeks:
• Express Solicitors received private-equity investment to support expansion and potential acquisitions.
• Greenwoods secured investment from Gresham House Ventures to fund technology and future M&A activity.
• Fletchers Solicitors confirmed that it has spent “millions” on acquisitions over the past financial year as part of its growth strategy.
• Knights plc announced the £30 million acquisition of IBB Law and £16.6 million acquisition of Birkett Long
The Market: Appetite for Growth, but at What Cost?
Commercially, these acquisitions often make strategic sense. They provide opportunities for market expansion, brand consolidation and economies of scale. However, they also introduce significant compliance challenges that law firms must address early and rigorously.
Key questions for acquirers include:
• What happens to systems and controls when two firms with different processes, cultures and risk appetites merge?
• Is the acquiring firm inheriting dormant or historical risk that has not been identified during due diligence?
• How is financial crime risk being assessed across inherited client files?
Systems, Supervision and Suitability
The SRA’s June 2024 warning notice on M&A activity emphasised that the regulator expects strong and effective governance throughout the acquisition process. The notice stated that managers must ensure acquisitional growth does not weaken systems, ineffective supervision or client detriment.
The SRA also highlighted specific concerns relating to the quality of due diligence:
• Acquiring firms failing to conduct adequate pre-deal due diligence or failing to assess whether they have the systems, staffing or competence to undertake new areas of work.
• Selling firms failing to investigate whether the acquiring firm can meet the best interests of their existing clients after the transaction completes.
Key Compliance Takeaways for Law Firms
Whether your firm is buying, selling or exploring a merger, the following actions are essential.
1. Strengthen pre-deal compliance due diligence
Ensure you review:
• Client base risk profiles
• Open or historic complaints
• Regulatory history
• Quality of file management and evidence of compliance processes
2. Assess cultural compatibility
Compliance culture is often the biggest post-deal risk. A firm with a structured compliance environment will face significant challenges if it acquires a practice with inconsistent file management or informal controls which are not addressed.
3. Develop a regulatory integration plan
This should include:
• Harmonisation of compliance programmes
• Integration of conflict checking systems
• Training for incoming staff
• Review and redesign of supervision frameworks
Do not assume all regulated firms are uniformly compliant. A clean regulatory history and clear claims history can give a false sense of security.
4. Appoint a deal-risk lead
A senior individual, often the COLP or compliance manager, should hold the authority to raise concerns or pause progress if risk becomes unacceptable.
5. Engage with the regulator early
If the deal involves high-risk sectors, vulnerable clients or complex transfers, early engagement with the SRA can support transparency and reduce the risk of post-completion issues.
The Road Ahead
M&A activity in the legal sector shows no sign of slowing. Listed law-firm structures, private-equity interest and succession pressures are all driving consolidation. Larger firms are in acquisition mode, while smaller practices are increasingly considering mergers to secure scale, exit routes or both.
However, scale alone does not shield firms from regulatory scrutiny. Rapid growth without proper investment in compliance, governance and cultural alignment presents a clear risk of supervision or even sanction.
For compliance leaders, the challenge is to enable commercial ambition while ensuring that risks are fully understood and properly managed. M&A can be a powerful catalyst for growth, but only when supported by strong due diligence, sound judgement and a regulatory focused approach.