‘This will be a big moment for the sector to see if the “PE in the UK” legal thesis holds up.’
That is the view of private equity dealmaker Adil Taha, founder of consultancy Taha & Co, following a recent Sunday Times report that private equity-backed LB100 firm Setfords has appointed investment bank Baird to explore strategic options, including a potential sale.
Setfords, which was founded in 2006, is a ‘platform model’ firm, similar to Keystone and Gunnercooke, with its 650 lawyers operating as self-employed consultants supported by a centralised operations team.
It has grown rapidly in recent years, with revenues rising by more than a third during 2024-25 to reach £67.8m. The firm’s expansion has been supported by mid-market UK PE house Phoenix Equity Partners, which invested in the firm in 2021 after the Business Growth Fund sold its minority stake.
If a further transaction proceeds, it would mark one of the largest private equity exits from a UK law firm, amid a broader wave of PE interest in legal services. Setfords declined to comment when approached by LB.
Despite the rising PE interest in law in recent years, scepticism persists in some quarters about whether there is sufficient appetite from larger buyout firms to take things to the next level.
Keystone Law chief executive James Knight, whose firm recently broke through the £100m revenue barrier, cautions that questions around AI’s impact on the law firm model could dampen investor appetite.
‘The timing may present some challenge,’ he says, citing ‘concerns that institutional investors currently have about AI and how that could negatively impact the legal profession.’
Taha also has reservations about the prospects for a high-value exit. While describing Setfords as ‘a decent business’ and praising Phoenix Equity Partners for having ‘done a good job’ growing the firm, Taha questions whether the consultancy model can scale sufficiently to deliver the kind of valuation uplift private equity investors typically seek.
‘I don’t think the consultancy sector is big enough. To take this on now as a secondary, you’re going to have to think you can take them from £60-70m to probably twice that.’
‘The next investor that comes in – that’s the true acid test.’
Keystone’s Knight is understandably more bullish about the future of the platform model. ‘This is a nascent niche,’ he says of the model he pioneered when launching Keystone in 2002. ‘It’s got a long way to go.’
This view is echoed by Chris Hume, chief executive of data intelligence platform Codex Edge, which recently produced a report showing that Setfords was one of the top two most active law firm recruiters during 2025, alongside consumer law platform Lawhive.
‘It’s the most scalable legal business model there is,’ Hume says of the platform model.
Crispin Passmore, consultant at strategic advisory business Passmore and Oliver, argues that investment in law firms is ‘on the rise and doing well’, and that the drivers of success in legal services are shifting rapidly.
‘The things that have made law firms successful over the last 30 years are unlikely to be the same for the next 30 years,’ he says. ‘The emerging challenges are investment in technology, attracting and retaining talent and driving growth through laterals and M&A. All of them are easier if a firm has a balance sheet that it can leverage to accelerate those investments.’
While activity has slowed, deals are still happening. Personal injury firm Fletchers, which is backed by Sun Capital, this month acquired the clinical negligence and Court of Protection teams of Freeths, adding 42 people to its ranks.
In April, Field Seymour Parkes, a £15m-turnover practice based in Reading, became the seventh major regional firm to join private equity-backed Lawfront.
But Taha remains unconvinced, pointing to the absence of meaningful exits and the reappraisal of values in the market.
‘There’s been very little evidence that there are any credible exits out there. A lot of investors have woken up to the fact that law firms are not as resilient or as profitable as they thought. I think the PE bubble has popped.’
