Knights plc is one of the most talked about, and fastest-growing, legal services businesses in the UK. One of its Client Services Directors, James Sheridan, tells The Brief about the company’s regional growth strategy, its recent acquisitions, and why he believes a corporate structure can lead to longer-term thinking than the traditional partnership model.
While an ever-growing number of law firms have either reconstituted themselves as Alternative Business Structures (ABSs), or established themselves as such from scratch, Knights plc has arguably led the way in demonstrating what can be achieved when not just the ownership structure, but also the culture, of a corporate business are applied to the legal sector.
The business traces its history back to 1759 but it took its first steps on its current growth journey in 2012, when it was acquired by its current CEO David Beech with the backing of a private equity investor. At this point Knights had two offices, one in Stoke-on-Trent and the other in Cheltenham, and employed approximately 150 people.
Over the six years that followed, Knights acquired five other law firms. In June 2018 it floated on the Alternative Investment Market (AIM), the London Stock Exchange’s market for growth companies.
It has since acquired a further 16 legal businesses, and recently announced its 17th acquisition, Langleys Solicitors LLP, which has offices in York and Lincoln. This acquisition is expected to complete in March and will increase the company’s headcount to approximately 1,350 people.
“It isn’t for sale”
At the time of its flotation Knights acquired the independent Manchester firm Turner Parkinson. This transaction saw Turner Parkinson’s corporate Partner James Sheridan, who had purchased the founder’s stake in that firm in 2011, join the business.
Reflecting on Turner Parkinson’s sale to Knights plc, Sheridan says, “An old friend who was part of the management team at Knights came to see me and said they were interested in having a look at the business. I said, ‘It isn’t for sale, and you couldn’t afford it anyway.’
“But it turned out that it was, and they could! So that’s why I’m here.”
Knights plc’s strategy is to grow both organically and by acquisition, with the aim of becoming the leading legal and professional services business outside London. It currently has offices in Birmingham, Cheltenham, Chester, Crawley, Exeter, Leeds, Leicester, Maidstone, Manchester, Nottingham, Oxford, Sheffield, Stoke, Teesside, Weybridge, Wilmslow and York.
As an ABS Knights plc is able to diversify beyond pure legal services, and has already launched a number of complementary practice areas. Sheridan explains, “We’re in town planning, we’re just starting up a debt advisory business, and we’ve got a tax business, which is a mix of both accountants and lawyers.
We are also looking at launching other professional service lines.
The regional focus is deliberate. “We understand regional markets,” Sheridan says.
“We aren’t focused on global financial markets, which is what London is all about – so we stick to what we know well.
Legal services outside London is a £3bn market. We did just over £100 million last year, so we’ve got a small part of it and there’s a lot still to go at, before we get into other professional service lines.
The company’s ambition to become the premium regional player acknowledges that Knights plc is unlikely to become the leading law firm overall in mature, well-served legal markets like Leeds or Manchester, but its strategy is two-pronged. It will focus on becoming the leader in the mid-market in those larger cities but, in other locations, “We either are or can become the number one quality professional services business.”
When choosing a location for an acquisition or new office opening, Sheridan says, “Our business works in any location where there is enough business activity that stays sticky to that location. We’ve got good businesses in the key regional financial centres but, equally, we’ve got a fantastic business in, say, Chester, which is not a regional financial centre.
We’ve got a super business in Cheltenham, we’ve got super businesses around the M25 in Maidstone, Weybridge and Crawley. There is enough business activity that stays sticky to those locations that we think there’s room for one top quality player, which is us.
Each office, Sheridan continues, is allowed to maintain local autonomy, and to focus on delivering the services that work for its local market. He says, “What goes on in, say, Oxford, which is very heavy in real estate, in IP and technology, and in education, is different to what goes on in Leeds and Manchester, which is different to what goes on in Cheltenham or Exeter.
“We are delivering professional services in all of those locations, but they are professional services that are appropriate for the markets that those offices serve.”
“Whole of Yorkshire” approach
Two of the company’s more recent acquisitions were Keebles in Sheffield and Shulmans in Leeds. Together with an office in York, and the recently announced addition of arguably the best-known law firm in that city, Langleys, these acquisitions have enabled Knights plc to embark on what Sheridan describes as a “whole of Yorkshire” approach, which creates opportunities for deeper specialisms and broader teams.
Sheridan says, “Given York and Leeds are close to each other, many of our lawyers spend time at both offices and this gives us opportunities to collaborate closely with clients and colleagues in those locations.
“Likewise, there are opportunities for somebody who might be based in York to get involved in some of the good stuff going on in South Yorkshire. There are also opportunities for people based in Sheffield to get into Leeds.”
Knights plc’s Leeds acquisition, Shulmans, was historically heavily focused on real estate. The focus since the firm was acquired in early 2020 has been on rebalancing it to strengthen its profile in corporate, employment, commercial and other non-real-estate practice areas.
“Clearly Leeds is the key market in Yorkshire,” Sheridan says. “But, again, our ambition is to become that number one mid-market player, so we’re working away at that.
“We relocated the business from where it was into a new premium office, a real flagship building called Majestic, just opposite the railway station. We’ve got 200 seats there. There are about 150 people based there at the moment so we think we can really grow that.”
Serious local economy
In Sheffield, meanwhile, Sheridan says, “Keebles was definitely the best independent legal services business in that location.
“We’ve bought the best business, we’ve got the best people in the market, and really the key for us is to unleash the potential of that business across all of South Yorkshire. South Yorkshire is a really attractive market to us.
“It’s a bit unloved by the mainstream. It’s got its industrial heritage but it has now emerged through that and with things like tech and the advanced manufacturing that it’s very focused on, there is a big and fast-growing local economy in South Yorkshire that we think deserves a top-quality player.
“Our plan with an acquisition like that is always that we want to recruit into the business as well. We already have a super business there but we want to supplement what we’ve got with the best other people that are out there in the market.
Across our locations we have opportunities both for lateral partner hires and for people in the earlier phases of their working lives.
Being listed on the stock market has given Knights plc the firepower to grow quickly. But what is it like to work for a listed business rather than a partnership?
It is a myth, Sheridan says, that because the company has to report its financial performance to the stock market twice a year, individuals and teams must be under huge pressure to hit short-term targets.
“It couldn’t be further from the truth,” he continues. “We don’t have individual or team targets, unlike traditional law firms.
As a business, collectively, clearly we have got to perform, but that’s my job. We want our lawyers to be able to focus on helping their clients, not worrying about performance targets.
“One of the other reasons we don’t have targets is that they encourage competitive, me-first behaviour. Our culture is, amongst other things, about being part of a team, collaborating and sharing work – it’s completely different to the short-termism that you can get in partnerships.
“One of the reasons we’ve been able to attract experienced talent is that the personal financial risk involved in buying into a partnership model is not attractive for some people. As a corporate business, our partners don’t have that risk.
“We are a business that is focused on long-term growth. It is as different from that short-term obsession in the partnership world as you can get.
"And I know, because I’ve personally gone from that short-term obsessed partnership mindset to building a significant business and creating capital value."
- Connect with James Sheridan on LinkedIn