Will legal eagles take flight on stock market?
Mishcon plots course to £750m float
London is awash with potential floats for 2022 but none is more hotly anticipated than Mishcon de Reya.
The law firm – best known for representing Princess diana in her divorce from Prince Charles – is sounding out investors about a £750m listing that could happen as early as next month.
If successful, Mishcon would become the most recognisable legal name to take the plunge and the seventh law firm listed in the UK.
The decision to go public has surprised many in the sector, given that Mishcon is better known for its private client list than its corporate roster. The move would give the firm greater access to capital at a time when law firms are expanding at a rate of knots.
It also means its already heavily remunerated senior partners – including executive chairman Kevin Gold and managing partner James Lisbon – will gain valuable equity stakes, making them almost as wealthy as their richest clients.
But the move is likely to be less popular with junior staff who are motivated by the promise of partnership. Some have labelled the float ‘scurrilous’, accusing the firm’s senior partners of cashing in the chips and flogging the family silver.
Tony Williams, founder of consultancy Jomati, said: ‘When you’re a private law firm it’s all very simple, you calculate the profits and divvy them out to partners. But when you become a listed company you have to produce profits for outside investors as well.
‘For partners in their mid-40s, often a time of maximum expenditure, a float will mean a pay cut and a reliance on the share price.’ The truth is, Mishcon has never been mainstream and has always trodden its own path.
Unlike blue blooded Slaughter and May, Clifford Chance and other magic circle law firms, Mishcon has a more rebellious spirit. Founded by Labour politician Victor Mishcon in 1937, its first office was above a Barclays bank in Brixton where it was renowned for its confrontational style and big personality hires. over the years it built its reputation through its fierce litigation arm and lawyers with egos as big as its clients.
But it was not until 1996 when partner Anthony Julius acted as Princess diana’s divorce lawyer that the firm’s reputation as a heavy hitter really took off. Pictures of Julius and diana outside Mishcon’s offices in Holborn regularly made the newspapers.
Julius successfully negotiated the Princess a £17m settlement in what was viewed in legal circles as a ‘marginal win’. Mishcon also represented Gina Miller’s Brexit case, which resulted in the Supreme Court’s unanimous ruling that Boris Johnson’s decision to prorogue Parliament was unlawful.
Meanwhile Sir Keir Starmer advised the firm while in Parliament but ended the relationship when he became shadow Brexit secretary in 2016, subsequently turning down the offer of a lucrative second job with the firm.
one legal source said: ‘It’s not a stuffy firm, it is well known for its family law and arts divisions.
‘I think really this is all about size. Smaller firms have to find another way to compete with the big firms these days.’
But its path to the London stock exchange has been less than smooth and questions about its reputation have been raised in recent months. Just last week Mishcon was fined a record amount for breaching money laundering rules.
It agreed to pay £232,500, plus £50,000 towards the costs of the investigation by the Solicitors Regulation Authority.
The firm’s sports arm also landed itself in hot water last July when an investigation found some of its clients were allowed to route commissions from transfer dealings through Mishcon. But it is the financial figures that fund managers in the City will be focusing on. The firm increased revenues by 6pc to £188m last year and its top partners received more than £1m each on average.
The hope is revenues can accelerate over the coming years as Mishcon has told prospective investors it wants to move away from a traditional law firm model to become a broader professional services company.
It already has a ‘brand management’ business and in September last year opened a litigation financing arm in an attempt to profit from lawsuits by taking a share of the risk.
For those with doubts, Andrew Shepherd-Barron at Peel Hunt says investors should look at other law firms which floated over the past seven years.
The most successful has been Keystone Law whose share price has soared by 425pc since floating in november 2017. Its model is a more corporate one akin to that of consultants.
Shepherd-Barron said: ‘There is a broad church of law firms listed on the market but we don’t have a big name. Mishcon can fit. It’s not any different to any other business. It needs access to external capital, wants to enhance its profile and make acquisitions to expand.’