10.16.2007 / Michael Flock
Who Says You Can’t Buy and Sell Law Firms?

Legal restrictions have typically prohibited the buying and selling of law firms between parties other than attorneys. These barriers have limited M&A activity in the collections law firm segment until very recently.

In 2007, new ground was broken. A private equity fund in New York, Accretive LLC, effectively acquired the non-legal capabilities of three collection law firms: Mann Bracken, Atlanta, Georgia, Wolfpoff & Abramson, Rockville, Maryland, and Eskanos & Adler, PC , Concord, California.

Today, this group of companies, now called, “Axiant”, promises to become the largest and perhaps most profitable in the collection law firm industry. It boasts of blue chip customers, excellent margins, and high revenue growth rates, in addition to a wide national attorney network.

The creation of a new operating company associated with the law firm allows strategic and financial buyers to invest in the collection law firm capabilities without violating legal regulations. This new structure reflects the true operating nature of collection law firms and could be useful in addressing issues as succession planning where non-lawyer family members are interested in getting equity in the family business.

Similar deal structures have been used in other law firm verticals. Two years ago, Great Hill Partners, a private equity fund in Boston, acquired the capabilities of McCalla Raymer, LLC, an Atlanta-based law firm specializing in bankruptcy and foreclosure processing. Today the new firm is known as MR Default Services.