Several listed legal businesses surged ahead of the market during 2019, with regional law firm Knights providing investors with a particularly rich return, a Legal Futures analysis has shown.
However, an insolvency litigation funder beat all of the law firms after seeing its share price nearly triple over the 12 months.
Legal Futures has been tracking the progress of listed legal businesses for the last five years. The 2019 findings are against the background of a good year for the market in general – the FTSE 100 rose 12% and the AIM All Share almost the same – all but one of the legal shares are listed on AIM.
Knights listed in June 2018 on 145p and closed that year on 175p. But its continuing acquisition activity saw the price nearly double to 334p by the end of 2019.
It has bought five practices since going public, most recently Emms Gilmore Liberson, a commercial firm in Birmingham with a £4m turnover.
The previous year’s big legal performer, Keystone Law, continued to storm ahead. Having risen 88% during 2018, its shares went up a further 48% to close 2019 on 532p.
Gateley, the first law firm to list in the UK, has had its best year since going live at 95p in June 2015, finishing 2019 at an all-time high of 198p, up 55%. In the first two days of trading last week the price went higher still.
City firm Rosenblatt, which listed in May 2018 at 105p, reached a high of 135p a few weeks later, but its share price declined steadily for no obvious reason to close 2018 on 74p. In 2019, it went up to 123p during the year but closed at 92p, still a 24% increase from 12 months earlier.
DWF became the first law firm to list on the main market last March and despite significant activity since, its share price has barely moved – closing the year just 1p up on its opening price of 122p. Its high during the year was 129p.
MJ Hudson went public just last month. The multi-disciplinary business – based on a law firm – was admitted at 57p and finished the year 2p higher.
However, after an at-times difficult year following to its acquisition of Ince & Co, Gordon Dadds – now Ince Group – began 2019 on 172.5p but finished it a third lower on 115.8p.
Anexo Group, which combines a credit hire business and a law firm, and went public in June 2018 at 100p, had a very strong year despite the impending personal injury reforms, up 47% during 2019 to 172.5p.
Redde, the accident management firm that owns two alternative business structures (ABSs) – NewLaw and Principia Law – has been steady in recent years but saw its share price tumble after losing a major contract in the spring and has not recovered; its year-end price of 106.2p was down 38%.
The company is currently going through a merger with Northgate, a listed light commercial vehicle hire business, in a deal which promises to give Redde access to a much larger referral network.
NAHL – the legal marketing company that owns National Accident Helpline and an ABS launched during the year – ended 2019 on 100p, down 7%, and a long way from its 2015 peak of 404p.
Also likely to be affected by the uncertainty surrounding the personal injury market, the shares suffered a late hit just before Christmas with the announcement that one of its law firm joint venture ABSs had come to an end.
Away from law firms, all eyes have been on litigation funder Burford Capital, whose years as a stand-out performer for investors came to a shuddering halt after a short-selling attack in the summer.
Having been 121p at the end of 2014, it hit a high of 2040p during 2018 and closed that year at 1670p. But 2019 ended with the share at 708.5p, having slumped to 605p immediately following the attack.
LCM, which listed in later 2018 at 52p, closed 2019 on 69p, almost the same as a year earlier, after gains made in the spring dissipated in the autumn, probably as a result of contagion from Burford.
Insolvency funder Manolete Partners, however, was not similarly affected, perhaps in part because of its different market and model – it buys most of its cases from insolvency practitioners, rather than simply funding them.
Having listed in December 2018 at 175p, it closed 2019 at 467.9p, a rise of 270%.
Its interim results in November showed that Manolete invested in more cases in the first six months of its current financial year than in the whole of the previous 12 months as it took advantage of the profile going public has provided.
ULS Technology – which provides electronic conveyancing services to law firms and lenders and also owns regulation and compliance business Legal Eye – was down 8% on the year to 68p.
Corporate adviser Arden Partners predicted last month that many more law firms – both commercial and consumer – were likely to come to market as the sector outperformed the general market.