Last Wednesday (24 May) saw the biggest shake-up of the UK legal market for decades move a step closer. And the legislative process is moving unusually quickly: Lord Falconer commented that it was “just seven months” since the publication of the ‘Future of Legal Services’ white paper.
Now the joint committee of the Houses of Parliament has until 25 July to report. The chair, Lord Hunt, admitted that the timetable was challenging.
Well, challenging it may be, but it took less than 48 hours for a firm to come out publicly and admit that it was already considering selling off a stake. Hats off to Taylor Wessing for getting in first.
The Legal Services Bill is aimed primarily at improving the lot of the great British public. But for the UK’s top law firms, the biggest change will come via the Department for Constitutional Affairs’ ‘alternative business structures’. The likelihood is that this will lead to new ways of raising capital. And the speed with which Taylor Wessing got off the mark suggests there’s a phenomenal degree of interest among senior partners in doing a deal of some sort.
Currently a group of Taylor Wessing partners is looking into the issues raised by selling off a portion of the firm to a private equity house. You can bet that if they’re doing it, other groups at other firms across the country are having similar conversations.
Selling out to private equity is not the only option, of course. An AIM flotation is a distinct possibility, with former Panmure Gordon investment banker Julian Hirst claiming that at least one firm was “definitely looking at an IPO”.
So who? The likely candidate for the UK’s first law firm float is likely to feature a solid national firm with a turnover of at least £50m.
It may be one that has taken a step towards a more corporate structure and converted to limited-liability partnership (LLP) status. It will certainly be one with strong management and a charismatic managing partner. A dictatorship, not a democracy.
According to last year’s figures, there were 43 firms in the UK with revenues of £50m or more. Of those, 14 have converted to LLP status. And of those, only a handful fit the leadership bill.
Taylor Wessing is making the running, but Halliwells is The Lawyer’s current favourite to strike the first deal for external investment in the UK. Look for longer odds on Beachcroft, with Irwin Mitchell an outside (and non-LLP) bet.
Get down to Ladbrokes sharpish.