An ‘angel investor’ network is being constructed that promises to match ex-City partners with lawtech start-ups, to help them gain a foothold in large law firms with advice, contacts, and seed capital.
The network, Hamilton Ramsay, was founded by venture capitalist (VC) Freddie Bellhouse, whose solicitor father, John, was a partner at White & Case’s London office for almost 16 years and its executive partner from 1998 to 2003.
Hamilton Ramsay, which hopes to sign as many as 100 partners and former partners by next year, will connect retired City lawyers with start-ups developing products that have the potential to be useful to, and bought by, commercial firms. The aim is that senior lawyers will help with finance, introductions, and content-related advice.
Freddie Bellhouse, a former private equity mergers and acquisitions associate with US law firm Kirkland & Ellis and currently a partner at London-based Fordhouse Equity, which says it invests in UK small business across a range of sectors “with no investment horizons or exit timelines”, told Legal Futures the network would be “the middle-men… facilitating the deal”.
He said he co-founded the network after he was approached by his father to find a legal tech start-up business that he could assist. “There are lots of retired, grey-haired ex-City partners twiddling their thumbs… We already have quite a few signed up and hopefully lots more will come forward… We are also signing up current lawyers as well.”
The favoured model would be that two investors would each invest £50,000 in exchange for around 10% of the equity, ideally with one or both of them fulfilling a mentoring role. He said the “competitive advantage” offered by the angels “is obviously not sitting down and coding the software”.
“The value-add comes from providing access, by shedding some light on the decision-making process – on how law firm management works – but also by having an innate feeling after a long career in law of whether that product will be valuable and sellable into big law firms in the first place.”
Mr Bellhouse pointed out that an evaluation of the product in question would be carried out at an early stage “essentially by whether they choose to invest or not”, adding: “They won’t invest in something they don’t think is worthwhile.”
He said that anecdotally after having spoken to lawtech start-up entrepreneurs, “we’ve found… the sales cycle is very long, particularly to get into big law firms.
“So we think our structure may give some competitive advantage to these guys, non-strategic money, silent VC backers, perhaps to get them into law firms as we think potentially our investors could. That’s the idea.”
He said investors were wary of the sector but predicted this would not remain the case: “It’s such a niche part of the industry, I think a lot of VC’s probably steer well clear of it… [But] the legal industry is enormously valuable. Eventually, when enough VCs sniff out the potential opportunity, there will be a point where legal tech takes off.”