Listed legal business fires CEO after losing confidence in her

Foulston: Joined group in 2016

The chief executive of RBG Holdings – the listed group that owns law firms Rosenblatt and Memery Crystal – has been fired after its board said it “lost confidence” in her.

Nicola Foulston’s employment contract has been terminated with immediate effect “as a result of cultural concerns and the execution of the group’s strategy”, a stock exchange announcement said this morning.

A non-lawyer who was a long-standing client of Rosenblatt before joining it in 2016, Ms Foulston led the firm onto AIM two years later. She has a 12% stake in the business, making her the third largest shareholder.

Our annual analysis of the performance of listed legal businesses showed that RBG was the best performer in 2021 but its share price dived 45% last year from 116.5p to 64p. It was badly hit last month after a £4m write-off from of its litigation funding arm.

The share price this morning was down 9% to 60p in the wake of the announcement.

The RBG board is being restructured, with Tania MacLeod, head of dispute resolution at Rosenblatt, and Nick Davis, senior partner of Memery Crystal, set to join as executive directors.

Jon Divers, current group chief operating officer, will be appointed acting chief executive and also join the board. All the appointments are subject to due diligence checks.

The announcement said the 2022 results were expected to be in line with consensus market expectations, which were revenues of just under £50m, adjusted EBITDA of £11m and adjusted profit before tax of £6.9m. In 2021, RBG reported a profit of £10m on revenue of £47m.

“The group’s balance sheet remains strong and the group continues to trade within its facility agreements,” it said.

“Overall, the group continues to benefit from its diversified portfolio of legal and professional services businesses, reducing overall volatility of earnings.” This meant the litigation practice offset slower demand for corporate work in the second half of 2022.

Under Ms Foulson, RBG acquired Memery Crystal in 2021 for £30m and Convex Capital, a specialist sell-side corporate finance boutique, two years earlier for £22m.

Investors were told that Convex performed well last year despite the economic conditions, although its pipeline of deals has been slower to convert as a result, with a number of transactions now expected to complete in the first half of 2023.

In the wake of the problems with its litigation funding arm LionFish, the group said it wanted to reduce its “ongoing exposure to third-party litigation funding commitments” so that it could “refocus” on its main professional services business.

It said today: “The board has therefore been in discussions with a number of interested parties with regard to LionFish. A number of potential offers have been evaluated and whilst there can be no certainty of outcome, the board is much encouraged by the level of interest.”

Marianne Ismail, a non-executive director, said this would “free up capital and management resource to focus on the significant opportunities we see to grow our core businesses. We are looking forward to the next 12 months with renewed optimism”.

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