Mishcon de Reya may be one of the more high profile law firms in the world – it handled Princess Diana’s divorce, after all – but its much-anticipated public float has commenced with just the sort of publicity no newly-minted float wants – a substantial fine.
The firm, which has never exactly shunned publicity, was founded in 1937 by a future Labour politician Victor Mishcon, it has bold ambitions to transform its current structure by raising £750m, which would make the firm easily the most valuable public-listed law firm in the UK.
And as the Mishcon roadshow got underway it was hit with the second sanction for money laundering breaches and has to pay 232,500 pounds ($314,500) to the Solicitors Regulation Authority, which is the largest penalty ever imposed as part of a settlement agreement for such matters. The firm lost hard copies of background documents for two clients and advised on deals that had a “higher risk of money laundering or terrorist financing,” the SRA said in statement regarding the transgressions.
Listing This Year
The firm plans to list in the first quarter of the year and is working on its investment pitch now. However the plan to float in 2020 was fraught and failed when a number of partners objected and a number of senior legal staff left the firm. Additionally there has been the money laundering problems and a major lawsuit by a property investment company.
The firm partners earn around £1million each and firm revenues have shown impressive growth, but the degree of controversy around the float and recent issues continue to provide both an enticing view for some and a less appetizing one for others.
The firm’s average per-partner profits can be seen in the FT survey below –
Although not one of the ‘magic circle’ law firms, Mischcon have always attracted some legal stars with considerable public profile, such as Anthony Julius, who represented Princess Diana in her 1996 divorce from Prince Charles.
The current executive chair, South African lawyer Kevin Gold, has seen the firm move away from its reputation as a tough, upmarket litigation and family law shop to more big league corporate law deals such as its current work for Prada, Microsoft and Sky.
Mishcon Partner Concerns
Part of the reason for concern within the firm is the public scrutiny that the firm opens itself to once listed and the need to produce profits for outside investors as well as the partners, which would likely see a fall in partner income and a perhaps less enticing prospect for junior lawyers seeking partnership and a share in otherwise lucrative profits.
Certainly for Kevin Gold and managing partner James Libson, the profits would be consider, as the Financial Times reported –
As a listed company, Mishcon partners would take a fixed draw — likely to be lower than their previous profit shares — that would be topped up with dividends and capital gains on their company shares, the FT said.
They could also be in line for bonuses and long-term incentives. “If I’m a partner in my mid-40s I might think about my mortgage and not be thrilled about the fact that my income is coming down and the rest is dependent on the stock market,” Jomati consultant Tony Williams told the FT.
The firm sees itself moving more into the professional services model rather than as a pure law firm, already having developed a brand management and business incubator business.
Although any float for a name firm like Mishcon’s will doubtless be well supported despite the early stumbles, the fact that it is focused for its profitability upon talented lawyers who can increasingly move laterally, will create some doubts among potential investors.