Legal Business Blogs

Outsourcing giant Capita unveils plans to enter legal market as first ABS posts healthy financial results

Outsourcing giant Capita is to re-enter the UK legal market, having reached a conditional agreement to acquire Optima Legal Services, subject to approval from the Solicitors Regulation Authority (SRA). Capita submitted an alternative business structure (ABS) licence application last week.

In an ironic twist, Capita’s plans have emerged three years after the SRA ordered Optima to break ties with the outsourcing group after the regulator found the relationship had breached rules governing non-lawyer investment in firms.

The move by Capita, as a non-legal services provider, to invest in Optima in 2006 unsurprisingly caught the attention of the SRA, which severely reprimanded Optima over its relationship with Capita.

But Capita will now acquire Optima, which specialises in property, debt recovery and litigation work, as well as its subsidiary Cost Advocates, which specialises in legal costs drafting and negotiation services, for an undisclosed sum. The proposed acquisition of Optima Legal will create a 600-strong legal services team, with 150 legally qualified personnel and 50 solicitors.

The acquisition will become part of a new wholly-owned subsidiary of Capita -Capita Legal Services- and will offer regulated and non-regulated legal services to the banking, insurance, government, legal and corporate markets.

Head of Capita Legal Services, James Cowan, said: ‘Because of the way globalisation and the recession is driving the agenda towards efficient, effective and value for money services, clients require greater streamlined legal panels and more effective in-house legal teams.’

Optima senior litigation partner Philip Robinson, added: ‘Capita’s ownership will allow us to accelerate our growth plans and build a stronger business and service proposition.’

While Capita and Optima finally got their happy ending, more good news for ABSs emerged this week, with strong financial results from Premier Property Lawyers’ myhomemove – the UK’s first ABS licence holder.

The country’s largest conveyancing business, which became an ABS on 6 October 2011, recorded a 14% rise in turnover in 2012 to £26.6m with net profit increasing from £994,000 in 2011 to £5m.

The company partly attributed the growth to the stabilising of the housing market last year following the launch of the government’s Funding for Lending and NewBuy schemes, coupled with the ready availability of Buy-to-Let mortgages.

Doug Crawford, CEO of myhomemove said: ‘Whilst 2012 ended on a high, with house prices up by 3.4%, it was still a tough 12 months for those working in the sector. It was our ability to respond to the changing market, due to our early investment in our staff, new technology and customer service practices which led to our success.’

Meanwhile, Australian-listed ABS Slater & Gordon has underlined the strength of its purchasing power in the UK with the launch of its first television campaign with a trio of adverts, spending in excess of £1m to boost the brand.

Using M&C Saatchi to create the adverts, with each of the three focusing on key planks of the business: personal injury, employment and family, will air in a mix of both peak and off peak time slots.

The firm said its objective was to ‘build a strong brand that has meaning in an increasingly diversifying UK market, [and] to create resonance with clients.’

The firm’s strategy to make inroads on the personal injury market in particular has been raising heads in the profession, as illustrated by its recent acquisition of Fentons, as well as its landmark £53.8m deal with Russell Jones & Walker, followed swiftly by a tie-up with Goodmans Law and Taylor Vinters.