'It's not right for everybody': DWF boss Matt Doughty on why PE won't sweep Big Law

Private equity may be circling the legal sector, but DWF CEO Matt Doughty is clear: “It’s not right for everybody.”

There is, he says, a wrong premise underpinning much of the industry chatter - namely that every large law firm is capable of attracting private equity investment. “That’s not true,” he tells us on The Non-Billable Podcast.

The real question is: “What is the investment proposition of a given firm? Why do they think they can attract private equity investment? What’s private equity going to get out of that investment?”

Why insurance makes sense for PE

For DWF, the answer lies in its insurance services arm, a business serving large global insurers “on long-term framework agreements” with “a lot of repeat business.” Investors, he suggests, need certainty around future cashflows. By contrast, “if you’ve got a very transactional business where all your partners are doing one-off deals, that’s a less attractive investment proposition for any kind of outside capital.”

Doughty’s comments come two and a half years after private equity firm Inflexion took DWF private in a £342 million deal, ending the firm’s four-year stint on the London Stock Exchange. DWF had listed in 2019 in what was the largest ever law firm IPO.

Life as a public company, he says, was “different.” Governance shifted to a “classic corporate board structure,” information flows were constrained by market disclosure rules, and the share price became a daily barometer. “It’s great while the share price is ticking up, not so great when the share price is coming back the other way.”

PE benefits

Since going private, decision-making has become simpler. “Dealing with one investor who sits on your board, you make decisions a lot more quickly,” he says. Private equity, he insists, is not about slash-and-burn cost cutting, but “very much focused on growth.”

Still, Doughty does not expect a “tidal wave of private equity investment into law.” Moving from a traditional partnership to a PE-backed model is “a very big jump,” requiring a clear equity story, cultural alignment and a reason beyond simply cashing out retiring partners.

For DWF, the focus now is disciplined growth across five core market groups, and preserving what Doughty calls an “incredibly positive culture” as the firm grows.

Listen to the full conversation on The Non-Billable Podcast.