A Public Affair: Mishcon de Reya’s Prospective IPO

A Public Affair: Mishcon de Reya’s Prospective IPO​

The Story

Mishcon de Reya has announced plans to list on the London Stock Exchange as early as the fourth quarter of 2021 (Financial Times). In a striking move aimed at fostering a sense of loyalty amongst employees, the firm has stated that “every member of staff” will receive shares in the listed business (Mishcon de Reya). According to Kevin Gold, Mishcon de Reya’s Executive Chairperson, the listing will provide the firm with the means to invest in its talent, core practices, allied services, technology, and budding expansion into Asia (Mishcon de Reya). Mishcon de Reya is reportedly seeking a £750 million valuation, which would make it the largest London-listed law firm (The Guardian).

What It Means For Businesses And Law Firms

The Legal Services Act 2007 enables law firms to convert from Limited Liability Partnerships (LLPs) to so-called ‘Alternative Business Structures’ (ABS). LLPs can only raise finance by asking for additional contributions from partners and bank loans. By contrast, an ABS can raise finance from investors outside the legal profession by pursuing an Initial Public Offerings (IPO). As is the case for companies, IPOs provide law firms with opportunities for growth, reputation boosts, and more extensive accountability mechanisms.

The capital derived from an IPO can be deployed towards paying off debts, funding mergers or acquisitions, and facilitating miscellaneous investments aimed at providing the firm with a competitive edge within the market (Practical Law). Some of the challenges facing law firms include the growth of the Big Four accounting firms’ legal services offering, and the rapid development of technology (Legal Business). Needless to say, the ongoing pandemic has added further complexities to the overall picture. Mishcon’s prospective IPO might help the firm to address such challenges, and square up to the competition by allowing it to pursue diverse opportunities for growth. The firm has already developed consultancy businesses, and is reportedly seeking to set up an e-sports agency (Financial Times).

Gateley, DWF, Keystone Law, and Knights Group have already capitalised on the opportunity provided by the Legal Services Act 2007, by pursuing IPOs in recent years. Irwin Mitchell is also reportedly exploring a potential IPO in the near future (The Guardian). It remains to be seen whether IPOs will remain a relatively rare choice within the legal market, or whether the seven London-listed law firms will be joined by other firms in future (The Law Society Gazette).

The case for investing in the legal market appears strong. Law firms have demonstrated their resilience and adaptability in the face of the ongoing pandemic, faring better than other professional services firms (The Law Society Gazette). Despite underperforming the broader market during the initial stages of the ongoing pandemic, listed law firms bounced back in the second half of 2020, even managing to outperform the broader market (The Law Society Gazette).