College of Law bought by Montagu Private Equity

The College of Law, currently a charity, has decided to sell its legal education and training business to Montagu Private Equity and set up a separate charity, the Legal Education Foundation.

The sale price has not been released, but is understood to be more than £200m. A spokeswoman for the college said proceeds of the sale would fund the foundation, which would be one of the largest independent educational charities in the UK.

She said its aim would be to promote the advancement of legal education for future generations through bursaries, scholarships and grants. Montagu has agreed to establish a separate £2m scholarship fund for College of Law students and add to it two per cent of the share capital of the college's holding company.

Richard Moorhead, professor of law at Cardiff University, said the purchase of the college by private equity raised some 'interesting worries'.

He went on: 'Private equity firms tend to purchase businesses and sell them off within a relatively short timeline.

'They could look to make back their money and more within three to five years. What that means for how the college provides its services we don't know. How will the venture capitalists make their money quickly enough to sell it on and who would they sell it to?'

Moorhead said the creation of the Legal Education Foundation was 'potentially very significant', particularly for diversity.

He said the money could be spent on a range of initiatives, such as work experience and mentoring schemes, as well as scholarships.

Des Hudson, chief executive of the Law Society, said investment specifically aimed at further enhancing high standards in legal education and training should be welcomed.

'Investment from private equity into the way solicitors and barristers are educated has the potential to raise that bar higher and improve value for money for our members, if training new lawyers remains the focus of the College of Law under its new ownership and that focus is not diluted into other ventures,' he said.

A spokeswoman for the college said regulatory consents, including from the Charity Commission, were needed before the deal could go through, but the aim was to complete the sale by the end of the year.

Publishing group Pearson and private equity firms Providence and Palamon Capital Partners were all mentioned as possible buyers of the College of Law, before Montagu was named by The Sunday Times in February (see solicitorsjournal.com, 28 February 2012).

Montagu has appointed Sir Tim Wilson, a former vice chancellor of the University of Hertfordshire, as a non-executive director of the newly created board of the college.