Capital investment for law firms has traditionally come from the partners or from bank borrowing guaranteed by them. Partnerships have also normally adopted a full profit distribution policy which partners have viewed as a good trade-off for their investment. But the advent of ABS could change all that. External investors will be looking for a return in the form of capital growth as well as an income stream. So law firms will need to make sense as a financial investment based on sound commercial management.

This poses three key questions:

• What do investors want?
• Is your firm worth investing in at all?
• If so, what is the best structure?

If your firm is not worth investing in, you need to address this, or you may not be able to withdraw your partnership capital when the time comes.

So we will examine:

• What do winners look like?
• How will investors assess their value?
• What actions can you take to become a worthwhile investment?
• How this will affect the way the firm works!

Assuming that your firm is viable:

• What are the most suitable structures (legal, financial, organisational)?
• Why would you consider inviting external investment?
• What benefits could you expect?
• What drawbacks could you anticipate?
• What are the (often hidden) side effects?

This may lead you to conclude that you wish to keep your existing structures. But that should be a positive decision – not a default option!

And finally – if you do think that external investment makes sense for you, what forms could it take? And how should you go about raising it?