When we first launched our survey of law firm activity in the secondaries market in 2017, just seven firms participated, reporting $30.6 billion in advised volume in aggregate.

This year, 19 firms responded to the Secondaries Investor Law Firm Survey 2023, reporting a staggering $753.7 billion of transaction volume.

We know our survey does not paint a picture of the dollar value size of the secondaries market for various reasons, including that the aggregate total and indeed reported volumes for each firm can sometimes count multiple sides of a given transaction. It does, however, shed light on what the biggest and most influential law firms in the market are working on and the nature of their activities. It also shows that legal work as it relates to transactions advised by law firms in the market – and by extension, billable activity – is ballooning close to that milestone $1 trillion figure.

In a market that appears to be dominated by GP-led processes, three firms still said LP portfolio sales accounted for the bulk of their work by value. DLP Piper, Morgan Lewis & Bockius and Winston & Strawn all reported LP fund sales at more than 50 percent of their volume between October 2021 and November 2022, with Winston reporting the highest at 83 percent. With many expecting a flood of LP portfolio sales to hit the market this year – including former Ardian fund of funds head Vincent Gombault, as we reported this week – it’s possible that next year’s survey may be weighted in the opposite direction.

GP-leds made up the majority of work for all other law firms, with some such as Goodwin, Debevoise & Plimpton and Paul Hastings, noting that almost all their work was sponsor-initiated secondaries processes by dollar value.

One notable increase in this year’s survey is the growth in preferred equity and NAV financing activity. By deal count, law firms reported at least 180 such transactions this year. Last year, the 17 firms that participated reported 113 pref or NAV deals.

By asset class, while one firm reported advising on natural resource-related secondaries trades, private equity still accounted for most of the legal activity during the period. Private credit deals, which law firms only started reporting in our survey in 2020, were still not a common asset class for firms to advise on. For the four firms that did report debt secondaries activity, these were a sizeable minority at 15 percent of total volume (Dechert and Paul, Weiss) and 10.3 percent (Latham & Watkins). Of Proskauer Rose’s total deal volume, 6 percent was focused on private credit.

It is worth noting that the makeup of the legal secondaries market is also evolving: firms that had previously decided not to participate in our annual survey due to not having advised clients on secondaries deals have begun to respond as the nature of their work evolves to meet clients’ needs and market opportunities.

As the secondaries market continues to grow – predictions of $1 trillion and $2 trillion in annual deal volume are but seven years away, depending on whose forecast you subscribe to – expect the number and scope of law firms servicing the industry to expand.

Write to the author: adam.l@pei.group