Lawyers give better value for money than any other advisers that help companies to float on the Alternative Investment Market, according to a survey which was published last week by accountancy firm Neville Russell.
But the survey also found that in many cases the company used its nominated adviser's lawyer, on the nominated adviser's recommendation, on the grounds that it would save money.
While many argue that the interests of a company and its nominated adviser (the equivalent of a stockbroker on the Stock Exchange) coincide, using a law firm on both sides of a transaction could be seen to generate a conflict of interest for the law firm.
Two-thirds of the 51 companies taking part in the survey said lawyers were well worth the money they charged, even though they thought lawyers' fees were “expensive” or “very expensive”.
A further 14 per cent said their lawyers gave good value, adding far more than expected to the flotation process – a better rating than was received by nominated advisers, accountants and public relations advisers, the other professional services companies use when floating on the AIM.
Neville Russell partner Philip Chamberlain said: “The good service from lawyers may have contributed to the dissatisfaction they felt when they were charged similarly high fees for a poor service from other advisers.”
The results are similar to those of a survey which was commissioned by Osborne Clarke last year of 50 AIM companies and 50 Stock Market companies.