The Rise of Private Equity

A major shift in the commercial landscape is significantly reshaping the UK legal market. Private equity (PE) and private credit have enjoyed a marked rise to prominence, disrupting the traditional power balance.

Historically, the banks controlled company acquisitions and sales, dictating the flow of capital through the economy. Today, that picture has changed dramatically. PE firms have emerged as increasingly dominant players.

Crucially, PE investors operate under significantly less regulatory scrutiny than their banking counterparts. Generally not listed companies, they enjoy greater freedom than traditional financial institutions, which facilitates their growth and expansion.

The Impact on Law Firms Operating in the UK

This transformation has profound implications for law firms. The rise of PE is no longer a peripheral concern—it has become a central driver of business strategy.

Law firms increasingly feel compelled to either hire experienced PE lawyers or build these capabilities organically, developing robust PE departments from the ground up. In doing so, many are reorienting their firm strategy around this sector.

The shift is visible across the entire market. Within the Magic Circle, traditionally dominant firms like Clifford Chance and Freshfields have seen their PE departments become increasingly central to their operations and profitability. Slaughter and May, which historically focused more on public mergers and acquisitions (M&A) than PE specifically, is now investing significantly in this area as it recognises the market reality.

Meanwhile, US-headquartered firms are seizing the opportunity this trend presents. This is especially apparent in the case of Kirkland & Ellis, which was a relatively minor player in London just two decades ago. Today, it has grown into a formidable competitor, in large part due to its commanding PE practice.

These firms benefit from deep roots in New York, the global centre of PE activity, giving them privileged access to the massive flows of capital originating in American PE funds. It is no surprise that most of the Magic Circle have been focused on bulking out in the US and — as with legacy Allen & Overy and Herbert Smith Freehills — merging with US firms.