Entrepreneur and investor James Caan has revealed he found a culture where profit was a ‘dirty word’ when he looked to buy a law firm.
Former Dragons Den judge Caan, whose private investment company Hamilton Bradshaw bought Midlands firm Knights in June, said he had spoken with 20 prospective firms in his bid to enter the legal market.
He encountered a profession dogged by the partner structure, failing to build a lasting relationship with clients and with too little focus on making money, he revealed yesterday.
Caan (pictured) told the NetLaw Strategic Leadership Forum in London that he would be keen to buy into another law firm and that several private equity investors were looking to follow his lead – but only if the culture at firms changed significantly.
‘A lot of people said this is not how this industry works: we’re about service, and profitability was a dirty word,’ said Caan.
‘The minute a business forgets the reality of why it is there it will never grow. Every day you walk into the office you’re looking to make a profit. Being ashamed or embarrassed is not how you grow – every business I invest in, I’m not ashamed that is the strategy.’
Caan said many of the firms with whom he discussed a takeover had a ‘one-night stand’ relationship with their clients. ‘Why can’t I go to a client dealing with me on real estate and talk about employment or M&A? I can assure you he is dealing with other lawyers on areas you currently do yourself.’
Caan, whose portfolio includes more than 30 companies, said the partnership model at law firms was holding back their expansion. He urged firms to consider employing more non-lawyers to management roles with experience in other sectors.
The investor said Knights had recently recruited a lawyer a week after first meeting them, compared with an average time of three to four months that most firms take.
‘After a week she said she would have expected someone just to be reading her CV,’ said Caan. ‘You have to cut the red tape in decision-making to unleash the potential.’
‘I strongly believe if you have only ever worked in one firm with one culture and one environment, the person who has been with four or five has the edge. A managing partner at a law firm is a chief executive – that’s how it should be run. There should be one leader and one decision-maker – it exists in other sectors of the economy, so why should it be any different with a law firm?’