The world’s first law firm IPO happened this month, when Melbourne-based personal injury firm Slater & Gordon listed on the Australian Stock Exchange. And unlike the earlier attempt by Integrated Legal Holdings, this float went off without a hitch. Indeed it went off with a pop. Shares were up 40% on their issue price by the end of the first day, and have gone up considerably since then.
So… what do they need the money for, and will other firms follow?
Of the $35M raised, $15.4M is earmarked for marketing and acquisitions , suggesting a roll-up strategy where Slater & Gordon consolidates itself as the dominant player and major brand in the personal injury niche (and possibly others).
Another obvious use of funds would be to invest in systems that allow the firm to lift its productivity and develop innovative service offerings.
As to whether others will follow, the consensus in the UK seems to be that top tier magic circle firms won’t (“we don’t need no outside capital”), but mid-tier firms doing “commodity” work like mortgage processing and debt recovery probably will.
Bruce MacEwan has a neat summary of reactions to the float, including this quote from Blake’s John Atkin:
The partnership model is very unsophisticated… You have to pay the profits every year for tax reasons, which doesn’t encourage long-term investment or thinking—but that could be possible with a different structure.
With longer-term thinking and the capital to support a longer-term strategy, change may be coming to the business of law. For mid-tier firms, in particular, this is both a threat and an opportunity. But it won’t be an opportunity forever.