Private equity firms have backed the creation of the first corporate law firm specialising in alternative investment in the UK ahead of the implementation of new legal services act next year.
Matthew Hudson, who has previously formed new regional offices for two US law firms, Proskauer Rose and O’Melveny & Myers, in Europe and helped found the SJ Berwin private equity team in the late 1980s, has formed a new law firm. MJ Hudson will provide high-end legal advice on the formation of specialist investment funds and structuring deals.
Similar to the move by the earlier move by investment banks away from charging by time worked on advising clients, MJ Hudson will be able to charge a percentage of a successful fund or transaction. In addition, the firm can further align its fees with its clients’ returns, by investing equity in their funds and transactions.
Jeremy Coller, founder and chief investment officer at Coller Capital, which is a founding client of MJ Hudson along with Parish Capital, Ethemba Capital and Richmond Park Partners, said: "It’s a breath of fresh air to clients of the traditional legal profession to be able to use a law firm that prices transactionally and can also invest in a transaction, thereby showing an understanding of and interest in the client and their returns. I have known Matthew for over 20 years and, with his track record, it doesn’t surprise me that he is the one breaking the mould. MJ Hudson’s formation and stance will help bring the corporate legal profession into the modern business world."
The different business model of MJ Hudson has also seen undisclosed private equity firms buy minority stakes in MJ Hudson itself as the changing regulation allows the law firm to pay dividends as a company rather than remain a partnership.
The UK passed in 2007 the Legal Services Act, which allows for Alternative Business Structures.
The Act will be implemented next year and will enable MJ Hudson to operate a partnership culture within a modern corporate structure: retaining earnings, paying dividends and attracting external capital from clients and others.
This legislation should assist the transformation for a traditional law firm away from an annual cash flow model into a long-term balance sheet based business, developing an annuity-based and deeper relationship with clients, Hudson said. Hudson has previously worked as an investment principal in three private equity groups, including an investment bank and Coller Capital.
Hudson, who is the only UK lawyer to be ranked by Chambers as a leader in private equity fund formation and M&A transactions, added: "This structure brings out the benefits of traditional advisory partnership while adding superior 21st century service and pricing. It is an idea whose time has come. The last two years have emphasised the need to re-think many of the ways people in the financial and legal world do business. From now on, clients will want to know that law firms genuinely understand their needs and want to develop a long term alignment of interests. Our clients are both backing the formation of MJ Hudson and using its legal counsel. We are creating a true partnership between our firm and our clients."