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February 2, 2012 7:52 pm
Taylor Wessing, the UK’s 18th-biggest law firm by revenue, is preparing to spin off its document review business into a separate entity in the latest move by a firm to shake up its business model.
New Street Solutions, which mines and manages documents for due diligence and property transactions, will be demerged from Taylor Wessing by the autumn.
A £5m ($8m) fundraising from outside investors to invest in staff and operations is planned after the demerger.
It is envisaged that the investors will own 51 per cent of the company, with Taylor Wessing partners owning the rest.
An initial public offering or sale is planned in the longer term.
NSS wants to be able to offer its services beyond current clients such as banks and commercial landlords to other law firms, which might be put off if the business were not independent of Taylor Wessing.
NSS started in May 2011 with 10 employees and has revenues of £213,000 from nine transactions since then.
It has other “revenue opportunities available” of £1.2m, according to a copy of its tender document seen by the Financial Times.
“New Street Solutions can deliver up to 60 per cent efficiencies to its clients,” said Tim Stocks, the company’s chairman, who is also head of Taylor Wessing’s financial institutions and markets group.
“With a more efficient process, legal experts can invest more time in understanding client businesses and providing value-added services to clients,” he said.
Document review, which does not have to be done by experienced, and therefore expensive, lawyers, is one area where firms have looked to cut costs since the financial crisis hit.
Allen & Overy and Herbert Smith have both moved their review teams from London to Belfast, while a market has grown for companies such as Axiom, which offers advice to in-house lawyers on what parts of their legal work can be sent to organisations other than law firms.
The Legal Services Act, which came into force in October, has also been a catalyst for firms seeking to move away from the traditional partnership model.
The act makes Britain’s £23bn legal market one of the most liberalised in the world, and allows non-law firms to offer legal services and firms to accept external investment for the first time.
While Taylor Wessing would have been able to spin off a business under the old regulations, the act gives the demerged NSS the ability to offer legal advice on what it finds from document review, according to Mr Stocks.
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