The Big Four’s efforts to bolster their legal businesses could lead to a surge in the number of UK law firms listing on the stock exchange, DWF chief Sir Nigel Knowles told City A.M.
EY’s global split could see the firm become an “aggressive” legal services behemoth, as it is freed from the conflict-of-interest rules that block the Big Four from selling advice to audit clients, Knowles said.
The Big Four accounting firm’s rise as a legal services powerhouse could in turn heighten competition in the legal sector, in a shift that sees more UK law firms follow in DWF’s footsteps by launching IPOs.
“There’ll be more firms that IPO,” Knowles said, as he claimed the legal sector is set to see “more competition from the Big Four”.
The push could see law firms seek to raise capital on public markets in their efforts to capture a larger share of the world’s £650bn legal market and compete with the likes of EY, KPMG, PwC, and Deloitte.
Knowles explained that the hundreds of private law firms that currently make up the UK’s legal sector will struggle to compete with the Big Four, unless they either find a niche, or instead expand their services offerings and global reach.
As of yet, only six UK law firms, including DWF, have ever successfully completed a public float. In June, London firm Mishcon de Reya put its own IPO plans on hold for the “foreseeable future”.
Knowles warned the volatile economic and geopolitical conditions currently facing the world will mean many firms face a “difficult period,” that could see them have “a lot less work to do”.
Knowles’ comments come after DWF upped its dividend after posting a 4.2 per cent uptick in its revenues that saw it generate 39.3 per cent higher earnings per share (EPS).
The law firm chief explained that DWF’s “cost efficiency” measures, in the face of widespread salary inflation, saw the firm boost its pre-tax profits by 17.1 per cent.
The uptick follows DWF’s £27.7m acquisition of Vancouver law firm Whitelaw Twining in November, which saw the listed law firm expand its footprint in North America following a series of deals in Spain, Portugal and Hong Kong.