Listed law firms proved a profitable investment last year, with the annual Legal Futures analysis showing that four of them saw their share prices increase by at least 40%.
Other listed businesses that either own law firms or are involved in the legal market – such as litigation funders – performed well too, but not to the same extent.
Legal Futures has been tracking the progress of listed legal businesses for the last seven years. The 2021 findings come against the background of a good year for the main market – the FTSE 100 rose 14% – although the AIM 100 only rose marginally (by 2%). All but one of the legal shares are listed on AIM.
In 2020, acquisitive regional practice Knights was the only listed law firm to defy the Covid gloom and end the year with its share price higher than where it began.
But 2021 saw a very different story and for the first time Rosenblatt is leading the way. The share price of RBG Holdings – which now owns Memery Crystal to add non-contentious expertise to Rosenblatt’s litigation specialism – has had a tough time since listing in May 2018 at 105p and ended 2020 on 58p.
However, it doubled in 2021 to 116.5p, having hit an all-time high of 165.5p in July. Its half-year results showed that profits had increased nearly three-fold, fuelled by gains from its litigation work as the Memery Crystal acquisition only impacted the end of the period.
Keystone Law, a big performer in 2018 and 2019, dipped 5% in 2020 but stormed ahead again in 2021 and closed up 64% at 830p, a little below the all-time high figure of 865p reached in September when the consultant-led practice announced revenue up 38% and profits more than double in the first six months of its financial year.
Executives at the firm cashed in millions of pounds worth of shares the same month.
Gateley, the first law firm to list in the UK back in 2015, more than made up for the 26% fall it saw in 2020 with an impressive 59% increase in its share price to 231.5p, having hit an all-time high of 258p in September.
In October, directors and staff sold £11.4m worth of shares – making it £38.4m in total since the law firm listed.
DWF became the first law firm to list on the main market in March 2019 and ended that year with its share price barely changed at 123p. It closed 2020 down at 81.5p but saw a 40% bump to 114p over the past year.
Last month, DWF announced a 3% rise in revenue to £173m for the half-year to 31 October. Profit before tax was up 40% to £19m.
Knights’ share price growth plateaued by its own standards, up 4% on the year at 410p, having been as high as 465p in April.
Knights made four more acquisitions during 2021 – Surrey firm Mundays, Sheffield practice Keebles, Housing Law Services in Battle, and Teesside firm Archers – making 15 in all since listing in 2018. At the start of the year, boss David Beech cashed in £61m worth of shares.
The Ince Group had a third difficult year in a row. At one point the price was double the 44.5p it ended 2020 on, but since then the shares fell steadily to close the year on 35p, with the decision announced in the autumn to buy its own investment adviser, Arden Partners, for £10m raising some eyebrows.
After a very strong 2019, Anexo Group, which combines a credit hire business and personal injury law firm Bond Turner, dipped 25% over 2020 to 130p and only finished slightly ahead of that, at 134p, a year on.
In the spring, the two lawyers behind the company sold some of their shares to a private equity investor at 150p, netting them £46m.
MJ Hudson went public just over two years ago. The multi-disciplinary business – based on a law firm – markets itself as an asset management consultancy and its shares have fallen for a second year running, closing 2021 down 8p at 40.5p.
Redde Northgate was created in February 2020 through the merger of accident management firm Redde, which owned two alternative business structures (ABSs) – NewLaw and Principia Law – with light commercial vehicle hire business Northgate.
Its share price has soared by 86% to 436.5p, just shy of its all-time high since the merger.
Marlowe PLC is a new addition to the companies we watch and has seen its share price jump 63% over the year to 1020p. This hugely acquisitive business describes itself as the UK leader in business-critical services and software which assure safety and regulatory compliance, whilst managing risk for businesses.
This has included a major incursion into the legal market. In December 2019, it spent £6.3m – rising to a possible £10.3m over three years – to acquire Law At Work, a Glasgow-based national employment law business that originally spun out of what was then Scottish law firm Maclay Murray & Spens.
Then in 2020, it acquired Ellis Whittam, a large unregulated employment law, HR and health & safety business set up by solicitor Mark Ellis, for £61m.
In March last year, Marlowe spent £3.2m to buy specialist ABS ESPHR and in July bought Oxfordshire-based employment law firm Cater Leydon Millard for £2.25m, followed in October by splashing out up to £54m (£39m up front) on VinciWorks, a risk management and compliance company that said 20% of all solicitors used its products.
Marlowe has brought together its various employment law, HR and health & safety acquisitions under a single brand, WorkNest.
The share price of NAHL – the legal marketing company that owns National Accident Helpline as well as its ABS, National Accident Law, and stakes in two other ABSs – has long been on the decline since its 2015 peak of 404p.
However, with the long-planned strategy for the whiplash reforms finally coming to fruition when the reforms were implemented on 31 May, the company saw its share price rise by 16% to 52.8p, having been as high as 62p during the year.
Away from law firms, the world’s biggest litigation funder, Burford Capital, ended 2021 at 771p, an 8% increase on the year before, although it reached 958p during the year.
The share price of fellow funder Litigation Capital Management jumped 50% to 100p, down from a peak during the year of 134p.
The price of insolvency funder Manolete Partners – which reached an all-time high of 585p in May 2020 – has still not recovered from the anonymous attack on an investing website soon after and closed 2021 on 250p, a touch lower than a year earlier and 70p below its peak for 2021.
The share price of ULS Technology – which provides electronic conveyancing services to law firms and lenders and also owns regulation and compliance business Legal Eye – ended the year as it started, on 80p.