Report comment

This mess should cause the assorted regulators to ponder long and hard : is the 'listed law firm' model ultimately workable ? There appears to be a conflict between the expectations of shareholders and investors (who are obviously looking for profit based on a growth story) and the position of clients who get caught up in the fall-out if things do not go the right way. The quickest way to pursue growth is with mergers and acquisitions (which is what S&G did unceasingly for over 10 years). Problems arose for S&G when the profit margins after successive M&As failed to deliver organic growth of new business. When this became evident after Quindell, the investors took fright, pulled their money out and the entire set-up hit the rocks, potentially leaving thousands of clients adrift. Can "listed law firms" deliver organic growth without repetitive M&As ? The evidence to date is that all of them think that M&As represent a growth story. Have any of them produced vast swathes of new business off their own bat and exclusive of the M&As ? That is the real question which investors in these models must ask themselves. And as most investors already know, mergers and acquisitions are usually a waste of time and produce little profit