Pioneering listed law firm and staff reap rewards

Stock exchange: SIgnificant growth from Gateley

The country’s first listed law firm will continue to diversify its offering, it said today as it unveiled a strong set of half-year results that showed how partners and staff are benefiting too.

Gateley saw revenue for the six months to 31 October 2019 increase by 11.8% to £52m – mainly from organic growth – with profit before tax up 10% to £5.5m.

Net debt of £2.1m is the lowest since admission to AIM. An interim dividend of 2.9p, up 12% on last year, has been announced.

The firm has made two further non-legal services acquisitions in the past six months – land referencing consultancy Persona Associates in July and human capital consultancy T-three Group in December – and said it expected non-legal revenues to generate not less than £14m in the year to 30 April 2020. In the last full year, Gateley turned over £104m.

It has also invested in legal staff, with 673 fee-earners at the period end, up 22%, while as of today the firm now has more than 1,000 staff in total for the first time.

Chief executive Michael Ward said he was “confident” that the two latest acquisitions “have widened our go-to-market options and strengthened two previous non-legal acquisitions, those of Gateley Hamer and Kiddy and Partners.

“I expect both new businesses to enhance the delivery capabilities of all our previous acquisitions and importantly our legal service lines by offering choice and opportunity to clients through the creation of two very unique business offerings.”

He added: “Opportunities for growth continue to present themselves and the board strongly believes that the potential remains to broaden our proposition for our clients and investors.”

Gateley is approaching the fifth anniversary of its listing in June, having hit an all-time high share price of 211p yesterday. Our annual analysis of listed legal businesses last week showed that 2019 was its best year as a public company yet, while a broker last month predicted that many more law firms – both corporate and consumer – were likely to come to market.

Mr Ward said: “During our time on AIM, clients, investors and staff have all benefitted from our strong performance that has seen us grow turnover and profits by over 70%, double our share price and provide even further diversification away from being just a purely legal services business.”

As announced last year, Mr Ward is handing over the reins to Rod Waldie in April.

Last October, almost all of Gateley’s share-owning partners locked themselves in for a further five years under an agreement that restricts how much of their holding they can sell, while its second stock appreciation rights scheme vested resulting in nearly a million additional new shares (net of tax liabilities) being awarded to partner-level staff.

The latter has been replaced by a long-term incentive plan, “creating greater alignment to the profit performance of the group and greater clarity over the impact of dilution going forward”.

The first SAYE scheme also vested in October, delivering a 70% return on staff investments and 800,000 shares across all staff levels.

Gateley’s initial middle management company share option plan matured in December 2019; this scheme is aimed at beginning the shareholding journey of our junior lawyers, professionals and management level support staff and provided “meaningful returns”.

Meanwhile, a half-year trading update from the newest listed law firm, MJ Hudson, which describes itself as an international asset management consultancy, said the past six months saw underlying revenue up 21% to £10.4m; two-thirds of the growth was organic.

Chief executive Matthew Hudson said: “From a client perspective, we continue to add to our list of material and multi-divisional clients and have made strides in integrating our recent acquisition in the ESG [environmental, social and governance] space, MJ Hudson Spring.

“At the same time, growth in underlying revenue across the group is developing in line with our plans.

“Given that the period under review included both an election and our own IPO, we are encouraged by this performance and we continue to see opportunities for organic and inorganic growth in the second half of the year and beyond.”

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