Mixed year for Law PLC as Keystone leads the way for listed firms

Stock exchange: Four legal businesses delisted in 2023

Listed legal businesses proved a mixed bag of investments last year, with some seeing their share prices soar but others collapse, the annual Legal Futures analysis of ‘Law PLC’ has revealed.

Increases for the likes of Keystone Law, Burford Capital and NAHL meant 2023 was a significant improvement on 2022, when only one of the listed businesses with a strong legal services connection that we track – a litigation funder – recorded an increase, and that was of just 1%.

It was also the first time that not a single listed law firm saw its share price end a year higher than 12 months earlier.

At the same time, this year saw four legal businesses leave the London Stock Exchange for difference reasons – Ince & Co, which went into administration and was acquired by Axiom DWFM to disastrous effect, DWF, MJ Hudson and Smoove.

The findings come against the background of the FTSE 100 index ending the year up 3.8% – far smaller growth than other international exchanges – and the All-share index up 7.6%.

DWF was the only legal share on the main exchange, with the rest on AIM, whose All-share index fell 8.9% in 2023.

Not for the first time, Keystone Law was the stand-out performer, with its share price up 19% to 510p in 2023, albeit still far short of its all-time high of 865p in 2021.

In September, it reported revenue growth of 15% to £42.3m for the six months to 31 July, with adjusted profit before tax up 25% to £5.7m.

Gateley’s shares have been slipping over the past two years, down another 12% in 2023 to 154.5p, but there’s been no obvious reason for this, with its latest trading update showing revenues for the six months to 31 October up 7% and profits up at least 4%, to £82m and £10m respectively.

Knights has steadied its share price after a crash in 2022 off the back of a profits warning, ending 2023 at 111p, 4p higher than where it started.

A recent trading update on the first six months of the current financial year predicted revenue to top £75m, up 6%, with underlying profit before tax of £12m, a 28% leap, and the margin increasing from 12.6% to 15.3%.

Acquisition activity has been quieter, with nothing since St James Law in Newcastle and Baines Wilson in Carlisle back in May.

RBG Holdings – which owns London law firms Rosenblatt and Memery Crystal – has had a turbulent 12 months, which started with firing its chief executive and ended with the share price cratering after revealing that turnover would be down 16% in 2023.

The share price, which began 2023 on 64p, closed it on just 11.25p. Its all-time high was 148p in June 2021.

NAHL – the legal marketing company that owns National Accident Helpline as well as alternative business structure (ABS) National Accident Law, and stakes in two other ABSs – had a good 2023, with its share price jumping 77% to 62p.

This was despite a quiet year news-wise, with its results for the first six months showing a slight increase in revenue to £21m and broadly break-even profit before tax, both in line with expectations. We also reported that it was winding down one of the joint ventures as its own ABS continues to grow.

Anexo Group combines a credit hire business and personal injury law firm Bond Turner. Its share price fell for the second year running, down 36% in 2023, to 68p. This was despite positive results for the 2022/23 financial year.

The Ince Group collapse was bad news for Anexo chair Alan Sellers, a barrister, and his wife, Samantha Bond, who heads Bond Turner, as in 2022 they became Ince’s largest shareholder.

Redde Northgate was created in February 2020 through the merger of accident management firm Redde, which owned two alternative business structures – NewLaw and Principia Law – with light commercial vehicle hire business Northgate.

Its share price has drifted downwards over the last two years, dropping 12% in 2023 to 363.5p.

Marlowe PLC describes itself as the UK leader in business-critical services and software which assure safety and regulatory compliance, whilst managing risk for businesses.

Since April 2021, it has spent £426m on 36 acquisitions, including various regulated and unregulated employment law businesses, as well as risk management and compliance company VinciWorks and law firm compliance business Compliance Office.

There were no major legal acquisitions last year, during which its share price fell 8.5% to 430p.

Away from law firms, the world’s biggest litigation funder, Burford Capital, had a big year, soaring 82% to 1213p. Its major news this year was a US ruling in its clients’ favour that could see it recover $6.2bn (£5bn) from just one case.

The share price of fellow funder Litigation Capital Management also surged, if not quite as much, from 69p to 99p – one of its investments saw a 635% return – but insolvency funder Manolete Partners continued to drop, ending 2023 39% down from the start at 155p.

However, Manolete reported strong trading in the first six months of its 2023/24 year, including an expansion of its work to recover Covid Bounce Back Loans.

Finally, Frenkel Topping, whose stated strategy is to build a full-service offering to personal injury and clinical negligence claimants short of actual legal advice, saw its share price drop 22% to 57.5p during the year.

The company has bought several different businesses in recent years, including three costs law firms, and in 2023 announced joint ventures between its independent financial advice arm and Hodge Jones & Allen, Serious Injury Law and Lime Solicitors.

Frenkel Topping’s first-half results recorded big increases in both turnover and profit.

In March 2019, DWF was the first and so far only legal business to list on the main market (at 123p) but delisted last October after being acquired by private equity house Inflexion for £342m. Inflexion paid 100p per share; the price was 65.5p on the day before the offer was made in July.

MJ Hudson was originally a law firm that bought a host of other businesses to create an asset management consultancy that also listed in 2019.

It emerged last April that the law firm was being wound down after a deal was struck to sell the rest of the business to financial services giant Apex Group for £40m.

This followed MJ Hudson’s shares being suspended in December 2022 after the company announced “significant” issues with the 2022 accounts that meant the results would be below previous guidance.

Smoove – which provides electronic conveyancing services to law firms and lenders, owns regulation and compliance business Legal Eye and also law firm Amity Law– left AIM after being acquired by PEXA.

The Australian conveyancing giant paid 54p a share, a 69% premium on its share price (31.9p) from the day in April when it first announced talks, and a 23% premium on the 44p the shares closed at the day before the deal was sealed.

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