Hamish McNicol tracks the progress of public life for four UK-listed law firms
Acquisitions, increased publicity and hires have led to strong performances across the board for many of the UK’s listed law firms, with most reporting their first financials since going public.
Rosenblatt and Keystone Law recorded revenue growth of 19% and 35% respectively, while trading updates from Knights and Gateley – the first UK law firm to undertake an initial public offering (IPO) back in 2015 – show the firms expecting turnover to increase by no less than 50% and 18%.
Rosenblatt, which became the fourth UK law firm to list last May, said in April its revenue for the eight months to 31 December 2018 was £12.5m, up from £10.5m last year. Profit before tax, however, fell slightly to £3m from £3.2m, although EBITDA was up 18% to £4.3m.
The firm raised £43m in its float and formally established a third-party disputes funding division last November, with five cases now being considered for funding. While the cost of the IPO dented profit, chief executive Nicola Foulston told Legal Business revenue was up as a result of increased publicity.
‘The IPO enabled us to get traction in the marketplace, because obviously while Rosenblatt was known of, it wasn’t known we could fund client costs,’ she said. ‘That’s enabled us to take on two very sizeable matters that are contingent at the moment and brought in some other routine legal work, as well as some high-net-worth entrepreneurs as clients who have come through because they have seen us both IPO and act for blue-chip companies in court.’
In early May, Keystone announced its revenue for the year to 31 January 2019 – its first full set since becoming the third UK law firm to float in late 2017 – was up to £42.7m as its principal lawyer headcount rose 14%. The firm also reported a strong 57% increase in net profit before tax to £5.1m.
‘The IPO enabled us to get traction, because while Rosenblatt was known, it wasn’t known we could fund client costs.’
Nicola Foulston, Rosenblatt
Keystone’s platform works by recruiting senior lawyers – dubbed principal lawyers – who contract to Keystone, with many recruits attracted to the firm’s flexible working ethos and ability to keep 75% of fees earned.
During the financial year, principal lawyer numbers rose from 244 to 277. Accepted offers by principal lawyers similarly rose 7% to 63, with the firm receiving 249 applications over the year. A net 20 fee-earners were also recruited by 15 principal lawyers for their practices, helping push Keystone’s overall fee-earner headcount up 21% to 321.
Founder and chief executive James Knight told Legal Business: ‘We’re very pleased to see revenue finish 35% up: that was on the back of strong recruitment of new lawyers and also recruitment by our existing lawyers of their own juniors. It’s not just about that but, ultimately, it’s a strong factor.’
He added: ‘We’re an ambitious firm and one of the primary reasons to IPO is that it would help us engage with a more sophisticated client; it would be good for brand recognition and enhancement. Anecdotally, that’s been very effective and for larger clients who may have hesitated in engaging with a law firm that was not in the top 20, this may – on the account of the fact it is on the public markets – have overcome any reservations.’
Later in May, Knights – which at the time was the largest UK law firm IPO after completing its £103.5m listing in June 2018 – said in a trading update that it expects revenue for the year to 30 April 2019 to be no less than £52.4m.
That is up 51% on the previous year, reflecting the four acquisitions the firm has made since listing. Knights added that organic revenue growth was 15%, however, with profit before tax more than doubling to £9.7m.
Chief executive David Beech said: ‘We continue to deliver on our strategy, both organically and through selective acquisitions, resulting in strong, cash-generative, profitable growth.’
Finally, Gateley said it expected revenue would be no less than £102m for the year to 30 April 2019, with profit after tax expected to increase at least 10% to £13m. The firm has made four acquisitions following its landmark IPO in 2015, including Surrey-based GCL Solicitors as well as an HR consultancy, tax adviser and property consultancy.