Exclusive: Third of law firms consider going public in search of funds for expansion
Around a third of law firms are contemplating listing on the stock market in the next year to fund growth plans, according to new research shared exclusively with Morning Wire
The findings underpin a growing trend among law firms to explore alternative financing models beyond traditional partnerships.
Gateley was the first law firm to float in 2015, eight years after the Legal Services Act 2007 made law firm IPOs possible.
Since then a number of other firms have joined the IPO party, including DWF, which raised £95m at a valuation of £366m in its 2019 IPO.
In September partners at Mischon de Reya approved the City law firm’s plans to go public on the London Stock Exchange – it will be only the sixth traditional law partnership to make the transition to becoming a publicly listed legal services company.
But more law firms may follow the same path as they seek out new funding avenues.
A survey of 200 partners by Harbour found that 31 per cent said their firm was actively considering listing in the next 12 to 18 months.
Harbour chief investment officer Ellora MacPherson said the findings revealed an “expanding appetite amongst firms” since the pandemic.
Half of the partners surveyed said the pandemic had opened up new business opportunities – to build existing practices or create new ones altogether – for their firm.
Almost 80 per cent of partners in the nationwide survey said their firms were already in discussions, or seriously considering, whether to seek out a credit facility.
In pursuit of new capital, almost half – 44 per cent – of the law firms said they were considering going down the road of an initial public offering (IPO).
Meanwhile just 22 per cent of firms were willing to rule out credit facilities with third party funders over the next 1.5 years, suggesting many more may still consider this.
“This survey shows a real desire by firms to access external finance to support their growth ambitions,” said MacPherson.
“IPOs are one way of doing this,” she warned, “but won’t be the best fit for all firms.”