Back in 2018 we explored which firms were listing on the stock market, the challenges of this and what the future may hold for them. In this blog we provide an update on where those firms are now and what results they have seen since listing. All of the firms have acquired other businesses with the funds raised from their IPO’s. A number of them have made forays into acquiring non-law firm businesses. This seems to set the scene for 2020 and beyond, as law firms generally look to diversify their offering beyond traditional legal services. It’s perhaps no surprise that firms who have broken the mould and listed, have taken bold steps to diversify their offering.
Legal firms listing on the stock market: Where are they now?
Since becoming a listed law firm, DWF made their first acquisition buying Polish practice K&L Gates Jamka at an estimated net value of £3m. DWF have also acquired telecommunications giant BT's legal arm six years after its creation as an alternative business structure. According to Companies House, DWF Connected Services Holding Limited holds 75% or more of the shares in BT Law Limited. The acquisition comes three months after DWF won a five-year contract to become BT's 'strategic legal partner'.
As part of their Asia-Pacific strategy DWF acquired McDonald Johnson Lawyers in Australia. McDonald Johnson Lawyers have over 100 years of practice and specialise in insurance, real estate, commercial, civil litigation and corporate law. Mark Hickey, Chairman of DWF Asia region commented on the acquisition: “This will result in DWF having one of the largest and most experienced real estate and commercial legal teams in Newcastle and the Hunter Valley. It will also strengthen our ability to act for leading manufacturing, mining, and port-related businesses in the region.”.
Fellow listed law firm, Knights Plc have seen their revenue and profits increase by 51% in their first year on the stock exchange; the company saw revenue rise to £52.7 million for the year to April 30th, which was up 51% on the previous year.
Since listing Knights have made 5 acquisitions. First to be brought under the Knights banner were Spearing Waite LLP, an independent practice based in Leicester with 59 fee earners. Followed by a further three acquisitions, including Turner Parkinson a Manchester-based corporate law firm, Cummins- employment specialists in Leicester and BrookStreet Des Roches LLP – Oxford law firm with a leading Real Estate practice. Their fifth and most recent acquisition has been with Emms Gilmore Liberson, seeing them enter the Birmingham legal market with 28 fee earners.
After listing on the stock market, Gordon Dadds have invested in five acquisitions and more recently bought the major UK shipping law firm Ince & Co in a £27m deal, so they now trade as Ince Group Ltd. In July, the group’s share price rose with help of Ince revenues, boosting the firm’s turnover for the year by 69%. When the firm listed in 2017, turnover was £25m. Arrangements with Ince’s overseas office’s, annual revenue for year-end was around £100m.
Rosenblatt Group have also announced a rise in profits since listing on the stock market. Despite a challenging economic environment, the firm’s revenue increased by 11.7%, profit tax rose by 12.2% and profit after tax increased by 9.6%. The listed firm is now called RBG Holdings plc and proposes an interim dividend of 2p per share, which is down from 2.8p in April. Since listing on the stock market, Rosenblatt have acquired Manchester-based Corporate Finance business Convex Capital. Rosenblatt have said the acquisition will help generate regular flow of fee-based work for their corporate division. The acquisition of Convex is another interesting move the business has made. A year ago, they set up a litigation funding subsidiary, spotting the opportunity that this type of fund presents.
S&G have transformed over the last few years from being the first firm in the world to list with Australian firm floating in 2007 and acquiring U.K firm Russell Jones & Walker in 2012. Turbulent years followed with profit losses reported in the legal press. S&G UK eventually uncoupled from Australian owners and taken over by a consortium led by Anchorage Capital, thus being the first law firm to be listed and the first firm owned by a hedge fund. Since then a huge effort has seen a remarkable turnaround. S&G has taken tough decisions restructuring, consolidating (with redundancies and office closures) and focussing on introducing new legal technology. Finally reporting profit for the preceding year.
Slater & Gordon have been in a long running dispute with acquired firm Watchstone (formerly Quindell). S&G acquired Watchstone’s professional services division back in 2015, but subsequently put in a £637m claim against Watchstone, for breach of warranty and/or fraudulent misrepresentation. The case was due to go to be heard in October but was settled on the steps of the court drawing the ‘listing’ chapter to a close. That said David Whitmore CEO – doesn’t rule out an IPO of the UK business in the future.
Everyone is watching the general, albeit recent, success of the recent IPO’s and the war chest it gives the listed law firm to go to market, and the ability grow their business as more than a pure legal service provider. They are able to quickly invest, expand and protect themselves from the challenges of the changing face of the legal sector and the impact of potential political changes over the next few years. Several firms will be aligning their balance sheets ready for listing and it is likely that we will see others follow suit! Who will take the plunge in 2020?
It’s an exciting time to work in the legal sector, as we see it change and develop it will present more diverse opportunities for lawyers and those working in the industry.
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