Law Firm Breakfast & Learn 2026 This summary provides an overview of the key topics discussed at the Law Firm Breakfast and Learn event held on Tuesday, 10 February 2026. The session focused on current challenges and opportunities within the legal sector, with insights and practical guidance from Hazlewoods Legal specialists. The content covered updates on SRA and financial compliance matters, including the potential impacts of recent budget announcements and perspectives on the Ministry of Justice consultation regarding client account interest. It also explored the current market landscape, offering financial benchmarking insights and highlighting strategic considerations for law firms planning for the future. The following sections outline the main themes and takeaways shared during the event.
Trish Kinahan’s “state of the nation” One conversation that dominated the profession above all during 2025 was private equity and its interest in the legal sector. It was probably the biggest year for the number of deals that were actually done, but there have been many more conversations, with one report suggesting 70% of regional firms between £15m and £50m have been approached. This might make law firm owners hopeful about increased multiples, as we’ve seen in other industries, but the two challenges facing law firms are retention of talent and the ability to grow. Higher multiples are only going to come from the latter and how many firms can execute that strategy well? It is also important to remember that there is a difference in the approach to valuation if you are selling part of the business (i.e. not a controlling interest) as an internal sale, to selling the whole business to a third party. By the end of 2025 we had lost another two law firms off the market, leaving Knights, Keystone, Gateley and National Accident Helpline. Knights are always interesting to monitor and when it released its half year results in early January they showed that underlying income was up 30% to £103.2m but organic growth was just 2.6% (still slightly better than the year to April 2025 when it had negative organic growth). However, the acquisitions are coming at a real cost, as pretax profit fell from £9million in the first half of 2024 to £2.4million. In mergers and acquisitions, the run up to the October 2024 Budget saw a surge of activity, where transaction numbers doubled above the prior 12-month average and, as a result, in the first half of 2025 deal volumes fell by over 19% compared to the first six months of 2024. In Q3 the number of completed domestic M&A deals fell to the lowest level since 2017, although the value of those deals rose. What we are expecting to see is very busy final quarter for the larger law firms dealing with the larger value deals and a quieter period for the SME market.
We now have over 30 law firms that are owned by Employee Ownership Trusts (EOTs). Under the October 2025 Budget EOTs will no longer be tax free, but effectively taxed at 12%, which is still favourable against 24%. They are still a viable option, but law firms will always need a person or group of people that will continue to drive the business forward. If you have those people, why would they want to do an EOT when then can get better rewards personally for their investment of time and energy. There have been several scares around the status of Fixed Share Partners (FSPs) following recent Budgets. As a brief reminder, the factors to be considered are: FSP status is part of career progression FSP have the characteristics of a partner Capital contributions are part of an overall capital structure All capital contributions represent genuine risk capital Capital satisfies the 25% test, at all times The firm’s need for capital is documented. The number of fixed share partners is growing in comparison to equity partners. There is still a talent shortage in particular areas, and talent is a key differentiator between firms. To attract and retain staff more layers are being added to give longer career paths, with the option of more discretional awards to reflect exceptional performance. By comparison, we are starting to see signs of changes away from investment in people at the top end of the market, with a drop in the number of people in the largest law firms of 2% and the number of