The first exchange-listed law firm

I’ve been writing about the prospect of a publicly traded law firm, including here, and in this exchange with Mitt Regan and Bruce MacEwen.

One response I have gotten over the years to this speculation is that it will never happen, so why bother to think about it?

Well, guess what happened, in Australia? As discussed in the Sydney Morning Herald:

Slater & Gordon Ltd . . . became the first law firm in the world to list on a stock exchange on Monday. Already the firm's principals along with initial investors have booked a princely premium with the stock closing at $1.40, after gaining 40 cents on the initial public offer (IPO) price. The market endorsement come despite the firm's prospectus warning investors they are third on the list of its priorities, behind primary duties to the court and its clients* * *

Slater & Gordon have already swallowed five smaller practices - worth between $1 million and $4 million - over the last two years as it expand interstate from its Victorian base. * * *

With 21 branches across five states and the ACT, Slater & Gordon was founded in Victoria in the 1930s mainly to pursue workers compensation cases. The firm raised a total of $35 million in its IPO. Of that $15.4 million will go toward an acquisition program and marketing and advertising.

The firm’s managing director, Andrew Grech, was quoted as explaining: "We think there is a compelling case for us to be successful in consolidating the personal injuries market to begin with."

According to the article, “the firm wants to double or triple its client base of 20,000 although no timeframe has been set.”

I’ll have more to say about this as I learn more.

P.S. Yes, I know, this can't happen in the US, yet, because law firms here can't have non-lawyer owners.  But it can happen in the UK, where I'm sure law firms are looking closely at this development.  And if it works over there and in Australia, at least some lawyers over here will be wondering whether it would work here too -- if the rules allowed it. And rules can be changed.

PPS: Steven Mark, the Australian Commissioner of Legal Services, emails that

[t]he Slater and Gordon float is the first "legal practice" (in the traditional sense) to list. S & G is a national class action and personal injuries law firm. It has a well known 'brand' which is probably the reason that it could successfully float.. . .

He adds that two other firms are attempting to float public offerings, and that “the rest of the big national firms are now looking closely at S & G , though the requirements of continuous disclosure and transparency makes them uneasy.”

Comments

[Robert Schwartz]

I still want to know why lawyers should want to be public when all of their clients are going private?

[isph]

This isn't directly related, but if an international UK firm (like Linklaters or A&O) is clementi-ized, what would happen to the lawyers here? Would it be a problem if US lawyers were to work for an international public law firm?

At first glance, it seemed like the ethics rules would have to be scrutinized before a UK firm with partners here could go public.

[Robert Schwartz]

Internal Revenue Code § 448 and § 461 (cross referenced in 448), would forbid any publicly traded US law firm from using the cash method of accounting. Given the poor quality of law firm receivables, accrual accounting is a recipe for a disaster.