New York law firm Cohen & Gresser in talks over £30m private equity deal
New York law firm Cohen & Gresser is in talks to sell a stake to a private equity group, weeks after McDermott Will & Schulte expressed interest in restructuring the firm to secure outside funding.
The firm has been in talks around the sale of a $40m (£30.5m) convertible note that would ultimately be swapped for equity in the business.
Lawrence Gresser, the firm’s co-founder and managing partner, told the Financial Times, “We have been preparing our firm for the entry of modern finance into the legal sector for over a decade.”
If a deal were struck, it could be in the works as early as the first quarter of next year.
Cohen & Gresser was founded in 2002 and launched an office in London in 2018. The firm has represented high-profile clients such as Sam Bankman-Fried and Ghislaine Maxwell.
This move reflects a growing trend in the US legal industry to attract outside investment by using complex structures, such as a managed service organisation, to overcome the historic ban on non-lawyer ownership of law firms.
It is difficult for private equity and other funding types to invest in law firms in the US due to stringent laws that restrict non-lawyers from owning legal practices. However, some states, such as Washington, Utah and Arizona, have allowed alternative business structures (ABS) to come into force, which permit non-lawyers to invest in legal service providers.
Continued interest in PE
Earlier this month, US law firm McDermott Will & Schulte reportedly explored a complex restructuring to allow PE to buy in, with Chair Ira Coleman explaining McDermott is “constantly approached and we always listen to new ideas,” and is “excited to learn from other leading organisations as we challenge the status quo.”
Back in August, it was reported that legal financial firm Burford Capital was in talks to buy stakes in US law firms, the identities of which were not disclosed.
Over the last year, private equity has been circling the professional services industry, particularly in the mid-level accountancy sector, on both sides of the Atlantic.