Turnover and profits continue to rise at first listed law firm

Waldie: Listing can make firm more compelling

Turnover at pioneering listed law firm Gateley have risen by 22% so far this year, with profits up 11% – but its chief executive has said now is not the time for other firms to go public.

Income for the six months ended 31 October 2022 is expected to be not less than £76m, according to a trading update published yesterday. Profit before tax would be not less than £9.4m.

Chief executive Rod Waldie said: “In a period that included previously announced investment to strengthen our operating model and some predicted and appropriate post-pandemic increases in operating costs, our resilient business model, enhanced by an increasing range of complementary services, and our embedded ‘one-team’ culture, remain the driving forces behind another strong financial performance by the group.

“We are excited by the wide range of opportunities that are presenting themselves to the group and look forward to continuing to grow the business, both organically and via acquisition, in line with our stated strategy.”

Gateley’s share price hit an all-time high of 258p in September 2021 but it has since slipped back, closing yesterday at 174p.

Speaking at last week’s Legal Futures Innovation Conference, Mr Waldie said being listed was not the right solution for everybody, but it did make a business “more compelling, more interesting to work in and more attractive to employees”.

But he added: “It’s incredibly difficult listing a professional services business and now is not the time to be trying. There are no law firm IPOs going on in the market at the moment.”

Mishcon de Reya put its float on ice in June, while one other firm Legal Futures was aware wanted to list in the spring has also delayed its plans.

Since listing, 10 of the 13 acquisitions Gateley has made were non-legal services businesses and he described it as a law-led professional services business.

He explained that it listed for two reasons – to diversify the business so as “to differentiate ourselves in a crowded legal services market” and to incentivise people in a different way – three-quarters of staff were now shareholders or have options that would crystallise into a shareholding. This strategy continued.

The firm is divided into four platforms – property, people, business services and corporate services – and Mr Waldie said it always felt it would be “on a good trajectory” if over the years revenue was split 70/30 between the legal and non-legal businesses.

He said this was “never going to happen across the board” and platforms would hit the targets at different times. While people services had already reached the target and property services was “getting there”, things had only started developing recently at business services since the firm brought in patent attorneys.

Corporate services, which was more legal in nature, would “never get” to 70/30 and the firm would consider it a “win” if it got to 90/10. While tax services could be added to the corporate platform, he said buying a corporate adviser was highly unlikely because of the impact on referrals.

Mr Waldie said the firm stuck to professional services because professionals – whether lawyers, surveyors, accountants, architects or business psychologists – were “very similar people” who “get excited by the same things”, making it easier to manage and integrate them into a single business.

Meanwhile, the Ince Group exceeded the £4.25m it said on Wednesday it was trying to raise, hitting £4.7m. The net proceeds will be used to invest in the group’s core legal services business

Chief executive Donald Brown said: “Following this successful fundraise we will continue to progress our re-focused strategy and seize the increasing opportunities for growth and cost rationalisation within the business.

“I’m delighted with the results this strategy has already delivered in such a short time and look forward to what more can be achieved in the future.”

Ince’s share price went up by around 8% for the second day running, reaching 6.25p.

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