The chief executive of private equity-backed firm Knights Professional Services, which this week announced it is entering the top 100 UK law firms with the acquisition of Darbys Solicitors, says that moving from an equity partnership to a corporate, more efficient structure has been the single most important factor in the firm’s success.
Knights in 2012 became the first commercial law firm to receive private equity funding, from Hamilton Bradshaw, the private equity house backed by entrepreneur and former Dragons Den investor James Caan.
The then 60 fee-earner and 90 support staff firm used the undisclosed sum to invest in far more integrated technology, namely Tikit’s Partner for Windows practice management solution, to underpin its ambitious growth plans.
Since then the firm has grown from 150 staff to 250, of which 200 are fee-earners and only 50 support staff.
Knights’ transformation is a result not only of overhauling its technology but also its partnership structure, using the investment from Hamilton Bradshaw to undertake the costly exercise of moving completely away from equity partnership.
Explaining the firm’s growth and transformation CEO David Beech told Legal IT Insider: “The biggest reason is the change of culture, which is the most important way of making efficiencies.”
In 2012 Beech became CEO and a management team was set up with the appointment of a finance director, operations director and four office leaders.
Underpinned by Tikit, Knights lawyers have been trained to be far more independent, opening matters and dealing with engagement letters themselves, which Beech says means “they do it far faster than asking others to do it for them.”
Beech adds: “In an equity partnership there are lots of cultural issues, some partners say ‘yes, do it’ and some say ‘no’. It makes it very difficult to do anything. You need one culture coming from the top.”
This speed of decision making is in evidence in Knights’ recent acquisition of successful regional practice Darbys, run by managing partner Simon McCrum, with the pair having been in talks “several weeks.” Beech says: “They’re going down a similar road to us, it’s a good cultural fit.”
As of January, Darbys will take on Knights’ brand and the acquisition will mean that Knights – which has offices in Staffordshire, Cheshire, Gloucestershire and Derbyshire – will reach a combined turnover of £40 million and employ more than 300 professionals across seven offices, including Darbys’ offices in Oxford, Manchester and Colchester.
It means that it has taken Knights just three years since its private equity cash injection to achieve its stated ambition of reaching the top 100 . It now offers clients a choice of fixed-fee, weekly or monthly billing, retainers, or billable hours for any of the services it provides.
Beech said: “The challenge is not to charge for process and to continue to enhance your offering by managing the costs of delivering professional services.
“In a rapidly changing sector, you won’t just achieve that by buying IT, it’s by changing the culture.”
Knights will now be looking to continue its acquisition programme throughout 2016.
It is actively seeking professional services businesses to add to its core law offering. Regional accountancy groups, tax specialists and real estate advisory organisations located outside of the major cities of Birmingham, Manchester and Leeds, are the main focus.
Beech said: “Future acquisitions and increased recruitment of professionals who seek to join a functional business and cohesive culture are integral to our ambitious growth plans.”