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Mishcon de Reya poised for stock market flotation in move which would see trainees and junior lawyers become shareholders

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Could take place later this year

Law firm Mishcon de Reya is set to float on the London Stock Exchange (LSE) after partners voted in favour of “exploring” a premium listing later this year.

If given the go-ahead, the move would see every member of staff, including trainees and junior lawyers, become a shareholder in the listed firm.

Mishcon has drafted in JP Morgan to advise on a possible IPO which, subject to market conditions, “might take place as early as the fourth quarter of 2021”, the firm said in a statement.

Kevin Gold, Mishcon’s executive chairperson, said:

“I am delighted that the leadership team is mandated to explore a public listing as we look to further develop our offering to clients. It will enable us to invest in talent, our core areas, our allied services, as well as technology and Asia. I am also proud that my partners have decided to award shares to all staff. It means every single one of our people will have a meaningful stake in our business.”

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Last year Legal Cheek reported that the firm was exploring two ways of raising capital: either by listing itself on the public stock market in the hope of attracting new investors, or selling off a stake to a private equity investor. At the time, a spokesperson for Mishcon said it was “considering all options” and that no decisions had been made.

If given the go-ahead, Mishcon would become the sixth UK firm to float, joining the likes of DWF, Knights and Gateley, among others.

News of the partner votes comes amid rumours that national law firm Irwin Mitchell is eyeing a flotation of its own. “City sources” claim the Sheffield headquartered outfit is working closely with investment bankers from Rothschild on the possible float, with aspirations of securing a £500 million valuation.

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12 Comments

anon

> If given the go-ahead, the move would see every member of staff, including trainees and junior lawyers, become a shareholder in the listed firm.

Given the existence of fractional shares, this information alone frankly means sod all.

(27)(2)

Critical Thinker

We don’t know the initial pricing of the whole shares either, so frankly the theoretical allocation of fractional holdings over whole share-denominated holdings also means sod all.

(6)(0)

Touker

This would be a terrible long-term move for almost everyone involved.

1. Retail investors who are gullible enough to put money will either experience losses or long-term stagnation; just look at where the other firms’ share prices are and how the prices move. The general model of law firms means they are never going to be growth stocks nor are they likely to pay out significant (or even regular) dividends.
2. As future profits will go to shareholders rather than equity partners, the firm will lose out on current and future talent as a ceiling will have been created.
3. There will surely be conflicts between the SRA principles and duties to/demands of shareholders.
4. Given the reputation of the current listed law firms, who would want to be lumped on with that mediocre group?

The only people who this listing would benefit will be the institutional investors and partners who can and will dump their shares at the first opportunity.

(42)(3)

Spam Lad

You don’t have to float 100% of the company right? Wouldnt it in principle be possible to float say only 25%? Or is this not done in practice?

(1)(0)

Anon

Has to be a minimum of 30% of shares in public ownership, see Mike Ashley owning 61.7% of Fraser Group.

(5)(0)

Touker

It’s 25% for Main Market and none for AIM I think. Most of the law firms are listed in AIM but even though there is no minimum, having fewer shares on the market will affect their liquidity, which is already tough enough when AIM stocks are generally less liquid than Main Market stocks. This is even worse if you consider again that the general model of law firms would not enable them to be growth stocks and probably not dividend stocks either.

(8)(0)

Curious applicant

Serious comment – I though MDR was a prestigious firm that is well-rated in their practice areas (and lead in the private client rankings)? Is this not the case?

Their PEP figures suggest that they would be well-regarded.

(or is this a classic case of LC commenters dumping on any non-US firms…)

(6)(1)

Touker

Despite what the usual LC commenters will say, MDR is a decent mid-market firm and is regarded as a good place to work based on the people I know. However, my comment relates more to the fact that law firms generally are not suitable for listing. My 4th point was also less about MDR itself and more about how their reputation would surely take a nose-dive if they inevitably become compared to the other listed law firms (Gateleys, DWF etc.). This is especially going to happen if IM also become a listed law firm.

(6)(0)

Silver Circle Trainee

MDR don’t seem happy being consider a decent mid market firm, however. They don’t want to merge like other silver circles, but unlike the other silver circles, they aren’t too pleased with their current status in the market. I don’t see the point of avoiding mergers but when listing on the stock exchange.

(1)(1)

Bantonio Banteras

Mishcons is pwopa top biglaw

(2)(3)

Shocked

Shockingly naive move, or maybe management cannot see the firm growing from here and want to take their cash and run. MDR do seem to have topped out a bit recently – they aren’t growing at the rate they were.

(3)(0)

Anonymous

Given the value of being a top-of-the-lockstep equity partner at MDR, a float would be a huge cash payout. As with other law IPOs they’d probably be locked in for a couple years (I think DWF wanted to lock in partners for 3 years post-IPO? Maybe longer?), but they’re going to coast for that time – not do all the BD, bunk off at 4 on Fridays, etc. It’s the almighty golden parachute.

20+ years ago making partner meant exactly that – you got to leave at 5 every day/4 on Friday to head to the country home, only worked on niche matters giving really lofty legal opinions, and 2.5 hour wet lunches with clients at least twice a week. Now? Even he most irrelevant high street firms have partnership agreements that require 2000+ hours a year, with half of it dedicated to aggressive BD activities. Getting a several £million payout for doing sweet FA then drifting towards retirement would be a dream come true.

(1)(0)

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