Partners at even the most profitable Wall Street firms might be a little green with envy at the news from Down Under. A handful of lawyers at Australia’s 140-lawyer Slater & Gordon are due to share in a financial windfall in the world’s first initial public offering by a law firm. On listing, seven principals — as partners at Slater & Gordon are known — will each own stakes worth between $2 million and $8.5 million. (Australian dollar figures have been converted into U.S. dollars.)
In total, 42 lawyers and other staff will receive shares in the new public company, which will have a market capitalization of $89.7 million.
The prospect of a Wachtell, Lipton, Rosen & Katz appearing on the New York Stock Exchange or Wilson Sonsini Goodrich & Rosati making its Nasdaq debut is still a distant one, since U.S. bar rules still prohibit law firms from tapping the public markets. But in the United Kingdom, law firm IPOs are likely to be a reality within the next few years. They promise to transform partnerships and mark another step in the corporatization of law firms. A handful of the 30 largest U.K. firms are already talking to consultants about the pros and cons of going public.
Exactly when they will be able to do so, though, is currently unclear. The Legal Services Bill, now moving through Parliament with strong support, heralds a wide-ranging shake-up in the U.K. legal market, including measures allowing outside ownership of law firms. However, the imminent change in government — Prime Minister Tony Blair is due to step down soon — means that the implementation date for the bill’s regulations will probably slip to the 2009-10 parliamentary session and perhaps even later.
Meanwhile, Australia’s trailblazers are readying themselves for a world of increased transparency and a whole new meaning to equity. At press time Slater & Gordon, a $35.8 million plaintiffs firm noted for its swashbuckling contingency fee personal injury work, was due to list on Australia’s principal stock exchange in Sydney on May 21. Another firm, Integrated Legal Holdings Limited (ILH), may soon follow, although at press time its prospectus was still being vetted by the local regulator.
Both firms are taking advantage of recent changes in Australia’s regulatory framework. Australia’s seven states and territories have been overhauling their laws to allow firms to incorporate and to lift the ban on lawyers sharing profits with outsiders. New South Wales, with Sydney as its largest city, was the first to change its laws in 2001 and has since seen more than 500 firms incorporate. Three more jurisdictions have made similar changes, and the remaining states are expected to follow suit this year.