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Share dealing begins in stock market-listed law firm

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Knights to recruit 200 more fee earners but remains silent on possible training contract increases

The admission to the stock market of a regional top 100 law firm came into effect this morning.

Knights, whose flotation on the AIM submarket of the London Stock Exchange follows hot on the heels of Gordon Dadds and Keystone Law doing the same thing, has raised £50 million from the initial public offering (IPO) it announced at the start of June. It begins the day valued at £103.5 million.

The firm, which has offices in regional locations across England, has stated in its listing documents that it intends to use some of the proceeds of the IPO to recruit 200 more fee earners, on top of its existing 350. But a hefty £20 million will go to the four selling shareholders: Joanne and Mark Beech (the wife and brother of Knights boss David Beech), Knights partner Karl Bamford, and non-executive chairman Bal Johal, the managing partnetr of private equity firm MML Capital Partners.

Knights remains 45.5% owned by David Beech, with 48.2% of shares in the free market and a further small portion held by other management. In this form, it has pledged to complete at least three acquisitions by April 2020. But there is no indication that the full-service firm is preparing to up its rookie lawyer numbers. According to LawCareers.Net, Knights has six trainees currently, but on its stock market admission document the firm states that it has “approximately 43 trainees”. Knights has not responded to Legal Cheek‘s request to clarify this or issued a comment about future trainee plans.

The acquisitive firm has seen incredible levels of growth under the stewardship of Beech, and particularly since James Caan of Dragon’s Den fame became involved in the firm through his private equity company, Hamilton Bradshaw, in 2012.

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Since then, Knights has seen its revenue grow from £8 million in 2012 to £35 million in 2017. Its listing value of £103.5 million beats Gateleys’ £100 million, the first English firm to float in 2015. Only this month, Knights has increased from six to seven offices with a recent acquisition of Turner Parkinson, a Manchester-based firm, Knights thus gaining 63 additional staff overnight.

Knights is positioned as a modern, corporate-style law firm, having been an early convert to the alternative business structure; partners are not ‘partners’ in the firm but employees, and management is carried out by non-lawyers.

It has also significantly rationalised its non-fee earning staff, distancing itself from more traditional firms where: “in the opinion of the Directors, with partners or senior fee earners feeling morally obliged or comforted by having a long-term personal assistant dedicated to them and their files.” Knights says that now fee earners will take “greater ownership over their work.”

12 Comments

Anonymous

“James Caan of Dragon’s Den fame became involved in the firm through his private equity company, Hamilton Bradshaw, in 2012.” – he can’t have invested much seeing as he is not even listed in the payouts from the sale.

(5)(0)

Anonymous

That’s an interesting observation. Let’s see what comes back later in the day.

(4)(0)

Anonymous

You just have to read to find out, the answers are in the admission document:

“2012 Knights Solicitors LLP was acquired by David Beech via a management buyout supported by Hamilton Bradshaw.”

“2014 The Group financed the exit of Hamilton Bradshaw from the business by entering into a facility agreement with AIB Group (UK) plc.”

(7)(0)

Anonymous

What a dog

(0)(0)

Anonymous

Man, that’s so cool. $£$

(0)(0)

Ogre

“Knights”?

Never heard of her.

(2)(0)

Anonymous

Any news on what’s the NQ pay at Baker Botts? US rate?

(2)(0)

Morgan

Spelling

(0)(0)

Anonymous

What’s with the flotation obsession among these sub-par firms, practically of all them should be penny stocks at best

(11)(0)

Anonymous

Mid market firms are struggling these days. Insane amounts of competition, lowering profit margins, and a dwindling market share means the only way to grow is through firms acquiring other firms. This is expensive and financing by bank debt or through partner capital contributions is no longer attractive for these firms.

An IPO can give a quick injection of cash to get rid of existing bank debts, give grumpy old partners a golden parachute to keep them quiet, plus leave some left over to fund an acquisition or two. Acquiring the fee earning practices but sharing the HR/admin costs will lead to economies of scale (in theory).

It’s definitely a system that will favour the lawyers rather than investors for the next several years.

(1)(1)

Anonymous

Float or not, Knights is run like a Victorian mill – flog the staff and get away with paying them as little as possible. Employees are regarded as disposable nothings. The fairy tale produced by the firm as its stock market admission document is mostly untrue. E.g. they refer to a 10% level of staff turnover for staff who have been at the firm for longer than 12 months. Ask them what the level of staff turnover is when they take into account all those who don’t even stay12 months?? Ask them how many partners and their clients have left this year??
The naked greed of the Beeches in pocketing £20m today, with much more to come, and giving the staff NOTHING is unbelievable. That’s right – no bonus, no gift of shares, NOTHING! Morale is rock bottom and when told about the latest resignation, DB usually says he “couldn’t give a sh*t”. A psychopath thriving.

(19)(0)

Anonymous

If that is true then I expect those with valuable client relationships will be moving elsewhere. The recruitment agents will be circling!

(2)(0)

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