Keystone: The team on the day trading started in 2017 (James Knight fourth from right)
Keystone Law is to pay a special dividend to shareholders this year in light of “the strength of our balance sheet and our confidence in the future”.
The 15p per share dividend, on top of the final ordinary dividend for the year ended 31 January 2025 of 14p, will mean that the leading fee-share firm has returned over £45m to shareholders since it listed in 2017.
This is equivalent to just over 145p per share, which is 96% of the adjusted earnings generated by the business in that period.
Its annual results, published today, showed revenue growth of 11% to £98m – with revenue per principal up 4% to £220,000 – and adjusted profit before tax up 13% to £13m.
It hired 50 new principals in the year, a net gain of 23 to 455 principals in total, with a small increase in the number of lawyers in ‘pods’ – support groups built by individual principals – to 108.
Together with Keystone’s central office lawyers, the total number of fee earners has grown from 549 to 576.
Keystone said it had 283 applicants to join the firm over the year, a 5% increase on the previous year. More than a quarter of new joiners came from the UK offices of large US firms or top 25 UK practices.
The announcement said the board expected results for the current year to be in in line with market expectations of £103m in revenue and profits similar to those just announced.
Chief executive James Knight said: “I have been extremely pleased with Keystone’s performance over the last financial year. Our quality focused recruitment strategy continues to pay dividends, making Keystone the premier platform law firm and the stand-out choice for the high-calibre talent we wish to attract and retain.”
Our review of listed legal businesses showed that Keystone Law was a stand-out performer in 2024, with its share price up 13% to 574p in 2024, although it reached 720p during the year and was still far short of its all-time high of 865p in 2021.
It continued to slide this year, to 482p last month, but has since begun to climb again and was up 3% in early trading today to 529p.
Mr Knight said the drop in recent months reflected nothing more than the trend of the wider market.
“There’s no other agenda,” he said, although he noted that the collapse of two other listed firms, Ince & Co and more recently Rosenblatt, may have caused “a loss of confidence in the legal market by the wider investment population”.
But Keystone has “a very good, loyal investor base who understand the wider market”. It debuted back in 2017 at 160p.
There are ever more fee-share law firms but Mr Knight said he welcomed them with “open arms”.
He explained: “It is our contention that the mid-market law firm model is moving from the conventional partnership, which is not entirely fit for purpose any more, towards this very modern platform model.
“We are very happy for this movement – as long as we remain the stand-out leader… then that is a very good position for us to be in.”
He predicted that the types of fee-share/platform firms would diversify as well, operating in both geographical and practice area niches.
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