Proposals to reform client accounts and use the interest to capitalise the justice system, including legal aid, could be affecting the appetite of private equity to invest in law firms.
An article in the Sunday Times newspaper suggested private equity companies could be deterred from investing in law firms until the outcome of the Ministry of Justice consultation into the use of interest on client account money to fund the justice system.
The Interest on Lawyers’ Clients Accounts Scheme (ILCA), proposed in January of this year, will see a proportion of the interest earned on client accounts in England and Wales, including third-party managed accounts, remitted to the government. Firms would retain a portion of the remaining interest, which would continue to be subject to existing sectoral rules on client interest.
The article claims Nordic Capital, a transatlantic investor, was reviewing whether to invest in hybrid firm Taylor Rose, which delivers legal services through a mix of both traditional employed lawyers and consultant-style lawyers. But the sale fell through after the buyer raised concerns over the proposals and their potential impact.
Private equity has been active in the UK legal services market in recent years, with data from merger consultancy Acquira Professional Services showing total investment since 2019 exceeds £1.5 billion. The company estimates that in 2024 the total investment in law firms was £534 million. Although that fell to £250 million in 2025, the volume of investment went up.
In 2021 private equity completed four deals: both 2024 and 2025 saw 12 deals, and in 2026 there have been more than 15 deals to date.
According to Acquira, mid-market firms are the prime target, citing recent deals including the merger of BBS Law, Carter Bond and Clarkslegal to create the newly rebranded Orwins; Lawfront’s continued growth with the addition of Field Seymour Parkes; and the investment into conveyancing practice Muve.
Speaking to the Sunday Times, Adil Taha, founder of Taha Capital, said the MoJ proposals were putting off potential investors. “In 2024, most PE firms stopped providing any multiple on interest income as (they) spotted it was propping up a lot of firms, who without it would be facing existential challenges”, he explained. “PE are all about risk, and it is clear that the area of law they have been fishing in has been marked as too high-risk now.”
In a response to Today’s Conveyancer, Taylor Rose, which is owned by AIIC Group, said the group’s 2025 financial results showed adjusted EBITDA of £5.5 million excluding net client interest, including investment of over £10.5 million in its multi-year IT transformation programme.
It also recently announced long-standing CEO Adrian Jaggard would step down to focus on his role as CEO of AIIC, with his brother Antony Jaggard taking on the CEO role at Taylor Rose. AIIC said it had notched over 1,000 fee earning legal consultants across its Taylor Rose, FDR Law and Kingsley Wood brands at the end of 2025 in addition to its employed staff.
In April, Taylor Rose was fined £160,000 for historical failings related to the effective systems and controls required to comply with the SRA’s regulatory requirements, failing to report possible serious breaches and failing to return client money promptly.
In its decision, the SRA said it did not identify any loss to clients and, while concluding a fine was appropriate, it assessed that the impact of harm and risk of harm were low. The regulator added that as of August 2025, Taylor Rose was deemed to have complied with the SRA’s requirements around these historical issues.