SJ Berwin client PAI Partners has emerged as this year's topspending buy-out house according to research that suggests private equity houses have spent more than £300m on legal fees on major European deals in 2005.

Research from data providers Freeman & Co and Thomson Financial shows bank advisory fees for European private equity deals this year swelled to $1.87bn (£1.05bn) in the first nine months of 2005.

The research also identifies PAI, Clifford Chance regular Permira and Freshfields Bruckhaus Deringer client CVC Partners as top spending buy-out houses with the three each spending more than $100m (£56m) each in bank fees.

The French-based PAI has unsurprisingly been one of Europe's most coveted clients, with SJ Berwin, Willkie Farr & Gallagher and Ashurst all closing deals for the client in recent years.

The results suggest that sponsor fees are on course to break the record year of 2004 when buy-out houses are estimated to have spent $2.3bn (£1.29bn) on M&A and debt financing fees, with banks.

While the research does not cover legal fees, private equity partners contacted by Legal Week said research suggested that major European buy-outs alone generated about $500m (£280m) for lawyers.

A spokesman for Freeman said that its own estimate was that lawyers received between "50% and 100%" of bankers' M&A fees, though banks often bolster their revenues with debt finance fees.

Ashurst private equity partner David Carter commented: "There is no rule of thumb. On some deals we have been paid more than the bank and on others less. It really depends on the transaction."

The research underlines the increasing importance of private equity clients to law firms after three years of surging buy-out activity.

European M&A: top spending buy-out houses in 2005

2005 Rank / Sponsor / Total Fees($m)

1 /PAI Partners / 128.1

2 /Permira Advisers / 120.1

3 /CVC Capital / 116.4

4 /Apax Partners / 106.2

5 /Cinven / 102.2