Gateley chief says truce in legal sector pay war will boost firm’s expansion plans
An easing of the pay war between law firms has already begun to benefit Gateley’s balance sheet as the listed law firm’s chief executive outlined his expansion plans to Morning Wire
Gateley boss Rod Waldie said the “whole sector is benefiting” from the calming of the legal sector pay war that has seen lawyers’ salaries surge over the past two years.
The law firm chief said the slowdown in wage inflation has seen Gateley’s salary to revenue ratio return to “normal” levels.
Gateley’s spending on salaries as a proportion of its overall revenues dropped down to rates of 61.7 per cent in the six months ending on 31 October 2022 – from highs of 64.1 per cent in the first half of 2022 – as wage growth began to slow, the law firm’s financial results show.
Waldie said: “We have to match market expectations,” as he claimed the “frothy market” seen over the past two years had increased Gateley’s costs.
Gateley is one of just six UK listed law firms, having launched its initial public offering (IPO) on London’s Alternative Investment Market (AIM) in 2015.
The Gateley boss noted that the UK’s legal sector has not seen layoffs of the scale seen in the US, including those at top US firms such as Cooley and Goodwin Procter.
Waldie was however adamant that Gateley has “no intention whatsoever of doing anything to our headcount” as he argued the “interchangeability” of its staff’s skillset means the firm is able to shift lawyers around to ensure the firm is “adequately” resourced.
The cooling of the battle for talent comes as Gateley’s fee earner headcount hit highs of more than 1,000 for the first time in its history, as the AIM listed company continued its M&A expansion spree.
Waldie said Gateley will continue with its expansion plans, in its bid to further diversify its business and grow its geographical reach, as he noted the company has £23m ready to deploy on making mergers and acquisitions.
“M&A is a key part of our strategy,” Waldie said, as he argued Gateley’s efforts to expand into areas across the legal and professional services sector help to further hedge the AIM listed law firm’s business.
The legal chief noted that all of Gateley’s M&A activity so far has been self-funded, using cash and shares. Waldie however noted that being listed on the AIM gives it another “tool” to raise money for any potential large-scale acquisitions.
Waldie’s comments come after the firm today posted a 9.6 per cent uptick in its pre-tax profits, after growing its revenues by 22.2 per cent. The firm’s higher revenues came as sales from its consulting business more than doubled (up 104.5 per cent), following a series of acquisitions.
Shares in Gateley were up 1.06 per cent in trading today despite having lost 12.39 per cent of their value over the previous year.
Waldie however argued that Gateley continues to be a good investment, as he noted that in previous downturns and crises, the legal and professional services sector has delivered “year on year revenue growth”.