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A U.K. law firm with private equity backing spent almost a million pounds attempting to buy a rival insurance practice in 2015, accounts have revealed.
Insurance specialist Keoghs, which in 2012 sold a 22.5 percent stake in its business to midmarket private equity firm LDC for an undisclosed fee, racked up costs of 893,000 pounds ($1.09 million) on its bid for parts of professional services provider Parabis, including its legal business, Plexus Law.
In early 2012, Parabis became the first U.K. law firm to take on private equity investment, with Duke Street acquiring a majority stake in the volume claims business for 57 million pounds ($69.3 million). But Parabis, which at one point employed almost 2,000 staff across 31 U.K. offices, was severely impacted by reforms of the insurance claims market and went into administration less than a month after its negotiations with Keoghs broke down. The business was ultimately broken up via a pre-pack sale.
A separate filing with Companies House, where U.K. LLPs have to publish publicly-available annual accounts and other key information relating to their businesses, revealed that Keoghs also refinanced its debt and switched lender last summer. Keoghs moved from Lloyds to Royal Bank of Scotland and gave RBS a charge over its assets as part of the refinancing, reports The American Lawyer’s U.K. sister title Legal Week.
Keoghs finance director Alex Hodgson told Legal Week that the firm “took advantage of liquidity in the banking market to refinance our bank facilities with longer-term and more flexible facilities at reduced pricing.”
Keoghs is one of just a handful of large U.K.-based firms to have taken advantage of legislation allowing investors and nonlawyers to hold equity stakes in law firms. Despite external investment helping some firms achieve massive revenue growth, Big Law remains largely unconvinced of the need to bring in outside capital.
Global Banks Face Massive Regulatory Costs
New research has suggested that global banks face costs of more than $200 million each to implement reformed regulations that will require them to significantly increase their capital.
The overall cost to the industry of the new Basel rules could hit $5 billion, according to management consultancy Oliver Wyman, which analyzed the compliance plans of 20 major U.S., European and Asian banks.
Oliver Wyman claims that financial institutions will also have to add 2,000 new staff in order to deal with the changes to trading rules, which are scheduled to take effect by the end of 2019.
U.K. Law Firm Uses Video Game To Assess Trainee Applicants
U.K.-based Taylor Wessing has started using a specialist video game to test trainees applying for positions at the firm.
The ‘Cosmic Cadet’ game uses psychometrics to assess a range of character traits, including appetite for risk, social confidence and performance under pressure.
Robert Newry, director at game developer Arctic Shores, says Cosmic Cadet is like a “cross between Candy Crush and Angry Birds” and requires no previous gaming experience. “As long as you can play ‘rock, paper, scissors’ then you can do our assessment,” he says.
The game is currently being trialed by Dentons’ Dubai office, while magic circle firm Clifford Chance is also considering implementing the software following a successful test involving its summer interns last year.
Arctic Shores will next year launch a new game designed to test senior managers, and is now looking at developing software for lateral partner hires.