The boss of listed law firm Gordon Dadds today warned that traditional firms could be under threat if they do not respond to the challenge posed by incoming US law firms and the growth of the accountancy firms in the legal sector.
“If you are not in a business which is fit for purpose moving forward, the things you read in the press about Deloitte and the Americans should be making you very nervous,” Adrian Biles said.
Both the Big Four accountancy firms and the US law firms in London have hired aggressively from traditional law firms in recent years as they try and grow their UK businesses.
“Deloitte Legal are really going for it, they are very serious everyone needs to be aware that if one is going to survive one has got to be in a different sort of model,” Biles said.
Gordon Dadds, which in 2017 became the second UK law firm to list, announced its results to the stock market today for the year to 31 March, with revenue up 69 per cent to £52.6m after a string of acquisitions.
The firm acquired struggling shipping law firm Ince & Co’s London and China offices on 31 December in a pre-pack administration.
It also added some of Ince’s overseas offices from 1 April.
According to today’s release, total consideration for Ince is estimated at £21m, of which £15m is turnover based and payable over the next three years.
Operating profit grew 73 per cent to £15.2m, with profit margin creeping up 70 basis points to 28.9 per cent.
The firm’s net debt was £2.9m at year end, compared to a net cash position of £8.4m at the end of 2018.
The firm said its annualised consolidated revenues were now around £100m.
Biles said today’s results demonstrates to staff and clients that the firm’s consolidation strategy is working.
“As we demonstrate that the model works they can see that they are in a business whose strategy is working, who are delivering, doing what it says on the tin. It represents, not just internally, but to the market, our clients and our peer group, that this is a very good place to be,” he said.
There are reports that top 50 law firm Mishcon de Reya is examining a public listing, which would make it just the seventh UK law firm to float.
Biles said he expected further UK law firms to come to follow the path blazed by the likes of Gateley and Gordon Dadds onto the public markets.
“It makes it much easier for them, provided the firms that have listed are successful, even if a couple of them are not successful, I think it is more likely – not less – that firms will look to the corporate markets,” he said.