Keystone is third to float on London stock exchange

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Nov 16, 2017
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Keystone Law has raised £15 million with an initial public offering

Nick Ansell/PA

A law firm that has eschewed conventional bricks and mortar offices in favour of online access has this morning become the third legal practice to float on the London stock exchange.

Keystone Law announced that an initial public offering had raised £15 million at a share price of 160p. Its market capitalisation will be approximately £50 million with shares expected to start trading on November 27.

The firm was launched in 2002 under as a “networked” model. While its lawyers have access to a central London office they mostly provide advice remotely, often working from their homes. Over the last three years, the business claims to have grown consistently at around  20 per cent annually. It reported annual revenue of £25.6m in its last financial year.

The flotation means there are now four listed legal services businesses in the UK – three quoted on the London exchange and one in Sydney.

In 2015, Gateley became the first traditional law firm to float in the UK after the Legal Services Act 2007 liberalised the rules and allowed non-lawyer ownership of law practices. Gateley – which was originally valued at £100m – has fared fairly well. Its share price has risen from about 100p at listing to a peak of 196p in June. Its shares are currently valued at 167p.

Last July Gordon Dadds became the second British firm to list in London, when it was valued at nearly £19 million on the Alternative Investment Market. Its shares are currently trading at 140p.

But it is Australia’s Slater & Gordon that remains the troubled child of the new breed of publicly quoted law firms. The firm, which took over London’s Russell Jones & Walker in 2012, peaked in Sydney with a share price of A$7.85. But owing to a rocky investment history and changes to UK government policy on personal injury compensation its price has tumbled to A$0.049.

Keystone will be hoping that its history of legal profession “disruption” will woo investors. Its lawyers have no fixed remuneration, operating instead on a variable pay structure, with between 60 to 75 per cent of the fees the firm bills paid to the lawyers.

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