Watch out Burford: Listed law firm could launch its own litigation fund

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Rosenblatt becomes the fourth UK law firm to go public (Source: Getty)

City law firm Rosenblatt confirmed today that it could launch its own stand-alone fund to invest in litigation cases.

Speaking to City A.M. the firm’s chief executive Nicola Foulston said: “We are interested in looking to open a separate regulated fund to fund third party litigation.”

Rosenblatt floated today on the London Stock Exchange and said that it would use £5-7m of of the £31.8m raised for funding litigation cases.

Foulston said that if it could establish a strong track record over the next 18 months it would look to launch a separate regulated fund which could be used to back third party cases.

In litigation funding, litigants strike an agreement with a third party with no interest in the case to provide funds to pay for legal costs. The litigation funder then stands to receive a substantial tranche of any successful financial settlement.

Litgation funders such as Woodford-backed Burford Capital have delivered stellar financial results in recent years. In its latest financial results Woodford announced a 130 per cent jump in profits to $264.8m.

Read more: Woodford-backed Burford considers bond issue after investing $1.3bn in 2017

Foulston said that the Rosenblatt would be starting “at the smaller end of the market” initially, in contrast to the likes of Burford which invested $1.3bn (£960m) in 2017.

Rosenblatt has previously worked with external litigation funders such as Doorway Capital.

Read more: Exclusive: City law firm Rosenblatt appoints advisers as it looks to float

The firm said it will also allocate £5-7m for acquisitions of complementary businesses and investment in IT and artificial intelligence systems.

The majority of the money raised will go towards the acquisition of the firm with £18m going towards the repayment of loans owed by the sellers and around £2m towards the repayment of tax liabilities.

The float marks a windfall for senior partner Ian Rosenblatt who prior to admission owned 59 per cent of the business and now owns 21 per cent of the firm.

Milton Asset Management, Fidelity Investments, Blackrock and Canaccord Genuity Group have acquired 15.8 per cent, 6.6 per cent and 3.6 per cent of the law firm's shares.

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The fundraising, which was oversubscribed, raised approximately £43m before expenses, through the issue of 36,842,106 new ordinary shares and 43,250,000 existing ordinary shares at a placing price of 95p giving the firm a market capitalisation of approximately £76m.

Rosenblatt's share price spiked to a high of 111p shortly after the market opened, but were trading at 106p at the time of writing.

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Cenoks Securities acted as nominated adviser and broker, law firm DLA Piper advised the company and law firm Fieldfisher advised Cenkos.

Rosenblatt’s flotation is the largest ever by a UK law firm and just the fourth since Gateley took advantage of a change in legislation in 2015 that allowed law firms to take on external capital and non-lawyer owners for the first time.

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