We now have a ‘public’ circle to add to the ‘magic’ and ‘silver’ varieties. Yet stockmarket pundits still don’t seem to know what to make of listed law firms. Perhaps they remain disconcerted by Slater and Gordon, the Australian pioneer which blazed a trail that turned out to be rutted with potholes.
Potential investors always had cause to tread carefully. Before 2015, when Gateley launched the UK’s first law firm IPO, the history of listed professional services providers was distinctly mixed. In the early 2000s, for example, there was much froth about a new breed of listed accountancy consolidator, whose number included Tenon, Numerica and Vantis. Each sought rapid expansion and each ultimately failed. Tenon and Vantis ended up in administration.
There are plenty of other caveats. Law is a people business and rainmakers are not slow to move on if their demands are not sated. No one knows how the creative destruction to be wrought by artificial intelligence will play out. Flotation brings exposure, which is not always a boon to the brand – just look at Burford.
All indisputably true, but it is surely a mistake to generalise. Those legal businesses which have come to market so far operate divergent business models. Each has to be appraised on its own merits.
Take Gateley, whose progress contrasts sharply with that of S and G. Four years on, the mid-market operator’s shares are trading at a very handy 70% above the admission price.
As for the rest, it’s early days. There have been grumbles that shares in DWF (for example) have done little since it created its own slice of legal history by listing on the main market (see feature, p16). Give the firm a chance. As one analyst commented, ‘we await longer public track records [on legal businesses] before making recommendations’.
What can be said with certainty is that flotation is not for the faint-hearted. As DWF told us, it requires many months of senior management time, consensus-building and City schmoozing.
If that consensus is not there, so be it. Our biggest commercial firms are hardly struggling to make money, as this year’s bumper results season once again demonstrates.