I for one welcome our new H4S lawyers and Lesco Law overlords
The last week has been one of both highs and lows for the legal services market and highlighted an ever-widening gulf in the financial means of lawyers at opposite ends of the profession.
Commercial law firm Gateley made legal history on Monday when, with much fanfare, it became the first UK law firm to float on the Alternative Investment Market (AIM) of the London Stock Exchange.
Some 31,589,937 ordinary shares, placed with institutional and other investors, began trading at 95p and rose to 110p, before closing at 98p.
At the end of its first day of trading the firm raised £30m. Those selling their shares raised £25m in gross proceeds while the company raised £5m.
Those shares represented a 30 per cent stake in the top 50 firm and gave it a market value of £100m – around five times its total earnings based on last year’s reported profits.
As SJ regular Stuart Bushell wrote just two weeks ago, not many firms tick all the boxes necessary to take the plunge into becoming a publicly listed company, and fewer still are willing to take the risks involved in such an expansion. Yet Gateley looks well placed to take advantage of the opportunity now open to it.
Contrast the fortunes of Gateley’s partners with the plight of legal aid lawyers and many would be forgiven for thinking that Newton’s third law of physics – that for every action, there is an equal and opposite reaction – might also apply to the legal profession.
While expected, the government’s announcement that it was to press ahead with its second 8.75 per cent fee cut and dual contracting model is dreadful news for the majority of legal aid solicitors, but not, at least on the face of it, the Bar.
In a move straight out of the Grayling playbook – reminiscent of the former justice secretary’s deal with barristers that suspended legal protests in March 2014 – the new Lord Chancellor decided not to proceed with cuts to the advocates’ graduated fee scheme (AGFS) as the UK needed to retain a ‘vibrant independent Bar’.
It is a classic divide and conquer strategy – a trap that the Bar should be smart enough to avoid falling into. A quick search of social media suggests that the rank-and-file barristers at the junior end of the profession recognise the latest government announcement for what it is: a stay of execution.
The real fear at the junior Bar is what will happen to them if solicitors choose to keep their advocacy in-house. A reprieve on cuts to advocacy fees is little help to a counsel who is no longer receiving instructions from their favourite law firm.
If young barristers are starved of work and limited in the amount of courtroom experience needed to climb the ranks of the Bar, where exactly will the future Queens Counsels and High Court judges come from?
Whether or not the Bar’s leaders heed the calls for direct action from its members, and join the‘revolution’ planned by solicitors, remains to be seen. Many senior barristers are certainly making the right noises, though. Perhaps they should remember the old adage: Fool me once, shame on you; fool me twice, shame on me.
Only big law will likely survive the onslaught that is to come. Who knows – maybe we will soon see a criminal defence practice following in the footsteps of Gateley by floating on the stock exchange, the fortunes of its shareholders dependent on which cases it pursues and what risks it takes.
Perhaps the dystopian nightmare envisaged in the recently released satirical cartoon, Legal Aid Team!, will soon become a reality with Gove overseeing the expansion of the villainous Grayling’s ‘mega law firm’.
With that in mind, and to paraphrase Kent Brockman, the acclaimed – albeit fictional – newshound from The Simpsons: I for one welcome our new ‘H4S lawyers’ and ‘Lesco Law’ overlords. I’d like to remind them that as a trusted legal journalist, I can be helpful in rounding up others to toil in their underground legal aid caves.
This blog post was first published in Solicitors Journal on 12 June 2015 and is reproduced with kind permission