A SWATHE of City law firms are said to be considering plans to list on the stock market, ahead of sweeping changes to the way they are funded due later this year.
<a href="http://www.fentons.co.uk/" target="_blank">Personal injury specialist</a> Irwin Mitchell fired the starting gun yesterday, after it revealed it had hired investment bank Espirito Santo to advise it on its funding options.
It is thought to be considering an initial public offering (IPO), or cash from private equity.
The firm, which is around the 25th biggest legal practice in the country, is the first to openly declare its intentions to take advantage of changes to the Legal Services Act due in October.
Irwin Mitchell is believed to be looking for £50m, and could use the cash to upgrade its IT systems or hit the acquisition trail.
The new rules, dubbed “Tesco law” to open up high street-style availability of legal services, will allow external sources of equity funding – a stream that law firms are currently blocked from tapping.
“I’ve long been a proponent of this kind of thing. I believe it will force the market to change,” said Paul Maher, founding shareholder and London chairman of law firm Greenberg Traurig Maher.
“Most significant law firms will have either thought about it and dismissed it, thought and decided they want to do it reasonably soon, or looked at it and decided it needs to be in their thinking.”
Irwin Mitchell’s move could also spark other City firms to do the same. “There are a lot of conversations going on at the moment and discussions,” one banker close to the deal said.
Yet bigger law firms might not be keen on a change, as it could impact on their business outside of the UK.
Baker &?McKenzie’s London managing partner Gary Senior said: “For an international firm to do this would be very challenging. Where it might be permitted in the UK, it could have difficulties if it was practising overseas.”