It’s a deal that brings together one of the most touted ‘alternative’ legal service providers with one of Europe’s top private equity investors – just a few days into 2014. The announcement this week that Permira is investing over £100m in LegalZoom is a reminder of the growing interest from financiers in the legal sector.
Fried Frank Harris Shriver & Jacobson advised European private equity house Permira on the £122m investment in US-based LegalZoom making it the largest shareholder in the much-tipped online legal document company.
LegalZoom was founded in 1999 and provides legal services to small businesses and families. The company, which along with Google-backed Rocket Lawyer has been touted as at the vanguard of a new wave of online-driven service providers, is not a law firm but provides online legal documents and helps put clients in touch with lawyers.
‘LegalZoom is the clear leader in the huge untapped market for small business and family law,’ said Dipan Patel, a principal at Permira. ‘We’ve been impressed by the team’s development of multiple successful subscription products which, in less than four years, now represent more than 30% of revenue, growing in excess of 35% per year. We are excited to back [LegalZoom chief executive] John Suh and his talented team as they continue to lead this emerging industry.’
Permira’s investment has allowed LegalZoom to cancel plans for a public share offering. Despite Permira’s position as the largest shareholder, other investors include Polaris Venture Partners and Institutional Venture Partners.
The deal sees Permira follow private equity rivals such as Cinven and Duke Street, which have in the last two years respectively made major investments in legal process outsourcer CPA Global and Parabis Group, underlining expectations that financiers will enter a deregulating market in the UK under the Legal Services Act. Since the introduction of alternative business structures in early 2013 more than 200 licences have been awarded.
LegalZoom is expected to this year expand out its offering in the UK, having trialled a project with the high-profile UK ‘franchise’ QualitySolicitors.