Irwin Mitchell takes bank advice ahead of post-LSA float
Irwin Mitchell is to convert to an alternative business structure (ABS) when the Legal Services Act (LSA) is implemented to enable it to raise tens of millions of pounds either through floatation or external investment.
John Pickering
The firm has turned to Espirito Santo Investment Bank to advise it on opportunities for outside investment. All options are up for consideration, with the aim being to raise a war chest to fund future growth.
Managing partner John Pickering said: “Conversion to an ABS will broaden our access to capital and enhance our funding flexibility as we execute our strategic growth plan, while ensuring that we can continue to provide the very highest standards of service to our clients.”
In preparation for the conversion Irwin Mitchell is to restructure into a two-tier business, with the creation of a corporate vehicle. The firm will continue to operate as a limited liability partnership (LLP) and the new holding company is intended to become the controlling member of the LLP.
Under the terms of the LSA firms can established parent companies to allow them to operate an umbrella structure. This will enable separate business streams to be managed in silo.
Irwin Mitchell has a strong personal injury base and in recent years has invested in its affinity business to build up branded consumer focused products. This has been part of a long-term strategy to build up a series of branded goods that could be offered to the consumer market (12 November 2007).
In March last year the firm signed a deal with the Daily Telegraph that enabled it to offer legal services to the national newspaper’s readers (22 March 2010).
Irwin Mitchell has also made no secret of plans to grows its City practice, making several high-profile appointments over the last financial year. In September the firm hit SJ Berwin for a four-partner real estate team, including practice head Jon Vivian (27 September 2010).
In March the firm further bolstered the practice with the hire of Pinsent Masons partner Tom Flannagan as its employment chief (7 March 2011).
Irwin Mitchell has long been considering taking advantage of the LSA when it comes into force. The firm’s senior partner Michael Napier was a keen advocate of the act and publicly urged the former government to push it through parliament.
In 2007, he told the Financial Times: “We just want the opportunities to be made available as soon as possible, so we can decide what we want to take advantage of and what we don’t.”
Pickering echoed those sentiments today, stating: “The Legal Services Act will create exciting growth opportunities for strong, well-financed legal services businesses to accelerate their growth plans.
“Irwin Mitchell intends to be at the forefront of these changes and we have therefore taken the decision to seek external investment to further our ambitious plans for the business.”
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Readers' comments (11)
local newsagent | 20-Apr-2011 12:09 pm
I wonder what WH Smith thinks of this, has it chosen the wrong legal partner? i
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Crunchy Nut | 20-Apr-2011 12:20 pm
And will law firms be considered to be a good investment, in the current economic climate?
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Hugey | 20-Apr-2011 12:36 pm
'Funding flexibility.' LOL.
ABS is just money for old men. Prepare for the senior associates exodus.
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Anonymous | 20-Apr-2011 1:38 pm
Not the "old" men, Hugey. In fact, the two groups with looming career issues are the old (by which I mean the over 55) and the partnership- aspiring associate.
For, after many years of "tenancy" partnership (nothing in at the beginning, nothing out at the end), at last the equity sees a chance of a capital profit by sale or flotation to round off a career comfortably.
So the 55+ will be trying desperately to hold on...the aspiring will be trying desperately to get onto the ladder and the established middle will be finding increasingly innovative ways to ease out the former and incentivise the latter....
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Anonymous | 20-Apr-2011 2:12 pm
really, senior associate exits??? I thought IM had never kept quiet about its plans post LSA and that has helped it pull in some forward thinking lawyers. Paralegals can move up their structure into the partnership as can other non-lawyers. As for being thinly liquiditised, this is a firm with turnover of £157m, so there will be money in the bank.
More likely this is an exit strategy for those at the top who are looking for a way out.
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Sophia | 20-Apr-2011 2:18 pm
I applaud Irwin Mitchell for taking this step. Ignore the negative comments. Many firms are watching your move with envy as you may gain first mover advantage. As someone who's come to law later in life after a business career, I think opening up the investment base is sensible given the future legal trends.
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Anonymous | 20-Apr-2011 3:00 pm
It will be fascinating to see how this pans out. Clearly, EPs are going to realise some serious wealth. I would imagine that those who are towards the end of their careeers will work through their earn out periods and then enjoy long and happy retirements. Good luck to them. The firm saw the changes afoot, built a strategy and - with apologies to RJW - are the only national firm with real muscle in volume areas of law.
I think the challenges will come a few years down the line for their younger and aspiring future Partners who (a) missed out on the big money at floatation/similar event and (b) in future may well be remunerated in ways that are not as rewarding as the old EP model.
It will be a fascinating ride, but one not without its bumps and twists.
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Anonymous | 20-Apr-2011 3:16 pm
My comment at 1.38pm was aimed at the market post LSA generally and not at Irwin Mitchell. I don't know that Firm well and they may have the situation well sorted.
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Anonymous | 20-Apr-2011 4:03 pm
Anonymous @ 3pm - That is exactly why it would be unwise to invest in this venture. What talented lawyer with a following is going to want to become a "partner" at Irwin Mitchell Plc, when that means:
(a) earning less so the shareholders can take some; and
(b) no possibility of making a killing on any future flotation?
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Anonymous | 20-Apr-2011 4:33 pm
Anonymous @ 4:03 - and not wanting partnership because they will have to answer to the shareholders in addition to the clients.
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