Company that grew out of personal injury practice gets funding from Canadian Business Growth Fund
A Calgary-based company that promises to partner with law firms across Canada and the US to grow and support their business operations has taken on its own partner.
Litco Legal Support Organization (LSO) is the sister company to Litco Law, a personal injury law firm, which currently has between 150 and 160 employees across four offices in Alberta. According to Fred Litwiniuk, Litco LSO’s chief growth officer, the company has received a “meaningful minority investment” from the Canadian Business Growth Fund (CBGF), a Toronto-based private equity firm.
“They’re the ideal partner for us from the standpoint of who they are, their culture, what they represent, and what their purpose and mission is: They exist to help Canadian businesses get access to the growth funding that they need,” says Litwiniuk. “I think that they are investing in us because they believe in our business and our vision and our team.”
Litwiniuk says CBGF won’t play any part in Litco’s daily decision-making and that Litco has no obligations to the fund outside of the standard financial reporting required by any investor. CBGF didn’t even impose any stipulations about how the investment is to be used.
He says it is flexible growth capital that can be used for anything from tech and marketing to hiring or general business improvements – with no definitive use.
Bringing private equity into a company actively trying to bring on legal firms as business partners does pose a bit of a risk, but it is one Litwiniuk says will pay off.
“I think private equity is one of those terms that is not really well understood generally, and it can have some negative connotations. … But for the partners that we’re looking for, I think that they’re going to be excited about the fact that we have a private equity partner because one of the things that private equity does is evaluate the fitness of a business. … It’s a vote of confidence to have external capital partners.”
Currently, Litco is providing business and back-office support to three law firms: Evans & Davis (a US-based estate and business planning firm), Valent Legal (a personal injury firm in Halifax) and Litco Law (the firm started by Litwiniuk’s parents under the name of Litwiniuk & Company and now run by Fred and his brother Todd). Litwiniuk says Litco LSO can bring on two or three more partners this year and keep growing from there.
Its business model targets firms with a “great local presence” and a desire for growth. Typically, these are firms with between 10 and 50 employees, although Litwiniuk says Litco can also work with larger organizations. Litco aims to strike a management partnership deal with the law firm, leaving the lawyers to own the firm and contracting the back-office services from Litco. He says any of the firm’s existing support personnel are acquired as part of the partnership transaction.
Litco's services include (but are not limited to) marketing, administrative functions, finance and accounting, software development and licences, and IT support. Litwiniuk says Litco can assist with succession planning and recruiting young lawyers to join the business.
And while individual firms may have more pressing needs for some of the support services over others, they can’t strike a deal for standalone service support. Working with Litco means Litco LSO is responsible for delivering the full suite of back-end operations and operating in what Litwiniuk describes as the “Litco way” — which he says is “to do no harm.”
Litwiniuk says the company doesn’t impose changes on firms, but instead looks for those already progressing through transformation. These firms often seek support because developing new capabilities internally is resource-intensive and can distract from core priorities like client service, practice growth, and legal work.
Litwiniuk is well aware that private-equity-backed managed services firms have earned a mixed (at best) reputation in other fields, including in the veterinarian, optometric, dental, and medical worlds. However, he says Litco isn’t at risk of gaining a similar reputation, and the company was built with customer service in mind.
“If we design a model where the clients are not at the forefront, where client service isn’t the most important thing, then we’re going to suffer.”
He believes Litco can succeed as a partner that brings value to firms and helps them grow because he and his brother, who is also a Litco LSO cofounder, understand the demands of running a practice and have seen the mistakes lawyers can make when trying to operate a business.
He also points out that the family law firm operated on a contingency basis, which meant that efficiency was an emphasis. "No other practice can suck cash the way that a contingency-fee practice does because oftentimes you’re waiting years for recovery.”
In the family law firm, Litwiniuk’s father was the lawyer who handled the legal affairs, and his mother was the accountant who ran the back office and managed the business. He says he saw how his parents divided responsibilities and specialized in their own areas, especially since he and his brother grew up in the family business and did “every job you can think of from cleaning the toilets to ultimately becoming trial lawyers.”
Now, as they put that first-hand experience into practice with the LSO, Litwiniuk says he hopes to spare other lawyers the typical sacrifices that come with the job.
“When I was growing up, we always said that we didn’t run the business – the business ran us. The firm ran us, and it dictated our vacations and our family time together, and whether or not we would have dinner together, which was less often than it would otherwise be because [running a firm] is a hugely consuming endeavour,” he says.
“But if there’s a better way, and there’s a way to get some of those benefits and have the help that comes with people who have done it before, and reduce some of that stress, that’s a big part of what’s important to us. … We aim to make that easier for lawyers so they can get back to focusing on what they love, or hopefully not burn out or leave early, or, God forbid, something worse.”
