Why there is more to Law than just Law
Ahead of its float on AIM later this month, Knights Group Holding PLC have announced their plan to take on hundreds of new lawyers in a triple law-firm acquisition after seeing revenues rise to £35m for 2017-18. For CEO David Beech, going public was the next logical step: after raising revenue from £8m in 2012 to £34.9m last year, Knights entered the UK’s prodigious list of top 100 law firms for the first time. The news comes only weeks after niche City law firm Rosenblatt Solicitors become the fourth legal practice to float on the London stock exchange with their own IPO valuing their business at £43m.
Both Rosenblatt and Knights now join Gately, Gordon Dadds and Keystone Law on the stock exchange bandwagon, serving to prove that the tides are changing in an industry once characterised by a fear of change. According to legal sector analysts, a raft of UK firms can be expected to follow suit if the pioneers can demonstrate they can keep their businesses profitable.
But is it any surprise?
With the competitive landscape heating up for mid-size law firms and the threat of the ‘big four’ accountancy firms seeking to increase their share in the legal market, the sector has spent the last decade in a cocoon preparing for a new era – and rightly so. Today, both corporate clients and individual legal consumers are demanding more bang for their buck; they now expect the same efficiency from their lawyer as they do from their Uber driver. Further to this, legal clients today want total transparency from their law firm, they want to know where their money goes and what the firm is doing to improve efficiencies and drive down the costs for their customers.
Naturally, the legal profession has responded.
While a simple mention of AI can still make certain lawyers shake in their suits, vast technological advancement has already started to transform the sector. Firms seeking to gain a competitive edge are now beginning to capitalise on tools such as contract automation to reduce the overheads of junior staff, while new virtual practices do away with overheads altogether by removing the cost of a fixed, bricks and mortar location. Now, a profession once dominated by risk-averse partnerships with prestigious offices is evolving to become more business focused. In the next five years, we can expect more CEOs than Senior Partners to be running major legal practices in the UK.
As one of the first converters to alternative business structure regime (ABS) status after the introduction of the Legal Services Act 2007, Mr Beech has stated that Knights would target firms in the top 50-200 by revenue in the UK for further consolidation.
“There are lots of those single office firms with a revenue between £5m and £40m, that is our range, that is what we are looking to consolidate,” he explained.
“The top global 20 will remain similar, the next 50 large national firms will reduce in number and the next 150 will change massively. They will reduce in number massively and we want to be the dominant firm in that space. You will see a large reduction in the 50 and an even larger reduction in the 150 through acquisitions, mergers and failures unfortunately. You will see a huge change in the next decade driven by client demand for value and the catalyst of technology.”