Northwest law firm Keoghs is in talks to take external investment from private equity house Bowmark Capital, according to press reports.

The firm is understood to be talking to Bowmark about a deal that could see the private equity firm take a stake in Keoghs, with the Manchester Evening News reporting that an agreement could be in place by the summer.

The move comes after Keoghs appointed Deloitte to advise the firm on the possibility of taking external investment as the market opens up under the Legal Services Act. The firm is expected to apply to become an alternative business structure (ABS) under the new legislation.

A spokesperson for Keoghs said: "Like many firms in our sector, we are currently exploring opportunities to raise external funding for growth as an ABS.

"Bringing a long-term investment partner on board could potentially provide an opportunity to accelerate the firm's expansion in the claims-related legal services market, where we believe there is a long-term opportunity for consolidation.

"This remains, however, an exploratory exercise to determine whether such a move would be in the interests of our firm and our clients. In the meantime, we remain focused on delivering our growth plan."

Keoghs is an insurance-focused law firm which specialises in handling personal injury, motor and fraud claims. It has two offices in Bolton, where it is headquartered, and one in Coventry.

City-based private equity house Bowmark specialises in investments in smaller UK companies for public pension funds, insurance companies and banks. The private equity firm is currently managing and advising on funds totalling £700m.

The news comes after private equity house Duke Street acquired a majority stake in the Parabis Group, the parent company of insurance litigation law firms Plexus Law and Cogent Law, in a deal valuing Parabis at £150m-£200m.

The Legal Services Act, which came into force on 6 October last year, has opened up the legal market to outside investment, with Australia's Slater & Gordon, the world's first publicly listed law firm, acquiring UK personal injury specialist law firm Russell Jones & Walker in a £53.8m deal.