Stock exchange: Keystone led the way for listed law firms once again
Listed legal businesses again proved a mixed bag of investments last year, with several seeing their share prices fall but Keystone Law and NAHL continuing to go up, the annual Legal Futures analysis of ‘Law PLC’ has revealed.
We have been tracking listed businesses with a strong legal services connection for several years and our findings for 2024 come against the background of the FTSE 100 index ending the year up 5.5% and the All-share index up 5.9%.
All of the significant legal stocks are on AIM, whose All-share index fell 5.5% in 2024, following an 8.9% drop the year before.
Not for the first time, Keystone Law was a stand-out performer, with its share price up 13% to 574p in 2024, although it reached 720p during the year and is still far short of its all-time high of 865p in 2021.
In September, it reported revenue growth for the six months to 31 July as up 8.3% to £47m when compared to the same period in 2023, with adjusted profit before tax rising 7.2% to £6m.
Gateley’s shares have been slipping over the past three years, down another 10% in 2024 to 139p, but there’s been no obvious reason for this as it has continued to perform well and diversify its offering by acquiring businesses offering complementary professional services.
Its latest trading update for the six months to 31 October saying revenue and underlying profit before tax both grew by around 5% and were expected to be not less than £86m and £10.5m respectively.
Knights’ share price has been becalmed over the last couple of years, ending 2024 at 105p, 6p lower than where it started. However, there has been a lot of fluctuation, with the shares reaching 156p back in May.
In July, it announced its first acquisition in over a year, a £12.5m deal for West Midlands firm Thursfields Legal, which completed in September.
A recent trading update on the first half of the current financial year predicted 5.4% revenue growth for the six months to 31 October to just shy of £80m, with underlying profit before tax set to jump 26% to £14.6m. This would be three percentage point increase in profit margin to 18.4%.
RBG Holdings – which owns London law firms Rosenblatt and Memery Crystal – has had yet another turbulent 12 months. The share price ended 2024 at just 2.85p, down from 11.25p a year earlier. It had begun 2023 on 64p, while the all-time high was 148p in June 2021.
In September, RBG’s share price nearly halved after it announced a further 7% fall in turnover and a £5.7m loss for the first half of the year, and predicted that the full-year results would be “significantly” below market expectations. The following month, its second biggest institutional investor sold most of its stake.
Just before Christmas, founder Ian Rosenblatt requisitioned a general meeting in a bid to remove chief executive John Divers and two non-executive directors. The RBG board said it did “not believe these resolutions are in the best interests of all shareholders”.
NAHL – the legal marketing company that owns National Accident Helpline as well as alternative business structure (ABS) National Accident Law – had a good year, with its share price jumping 16% to 72p.
This was despite revenue for the first six months of 2024 falling 7% to £19m, with operating profit steady at £1.8m. This was due “challenges in lead generation and lower levels of panel placement” in the personal injury business.
Anexo Group combines a credit hire business and personal injury law firm Bond Turner. It snapped a run of two years of a falling share price, ending the year at 69p, up just a penny from 12 months earlier. It did spike at 80p in late November.
Its half-year results showed a 12% drop in group revenue to £69m and 61% slump in profit to £5.9m, the latter figure being “in line with management expectations” – partly because 2023’s figures included costs paid by Volkswagen as part of the settlement of the diesel emissions group claim.
Bond Turner continues to grow rapidly as it expands its housing disrepair and group litigation practices in particular.
Redde Northgate was created in February 2020 through the merger of accident management firm Redde, which owned two alternative business structures – NewLaw and Principia Law – with light commercial vehicle hire business Northgate. It has recently been rebranded as Zigup.
Its share price has drifted downwards over the last three years, dropping 12% in 2024 to 321.5p, having been 438p in June.
Away from law firms, the world’s biggest litigation funder, Burford Capital, saw its share price ease back 15% to 1,035p, having soared 82% to 1213p in 2023.
The share price of fellow funder Litigation Capital Management stayed steady at 100.55p, 1.55p more than a year earlier, but insolvency funder Manolete Partners continued to drop, ending 2024 42% down from the start at 87p.
From an all-time high of 565p in May 2020, Covid (and the moratorium on insolvencies) hit the business hard later that year and it has continued to fall steadily.
However, Manolete said in September that it was now enjoying “the most attractive trading conditions” since the business was formed in 2009 as it announced strong financial results. The share price still fell, which may have reflected the decision not to pay a dividend.
Finally, Frenkel Topping, whose stated strategy is to build a full-service offering to personal injury and clinical negligence claimants short of actual legal advice, saw its share price drop 26% to 42.5p, even though its interim results in September reported “strategic progress and a solid performance from the majority of the group’s subsidiaries”.
Revenue was up 12% to £18m, compared to the first half of 2023, with gross profit up 13% to £6.9m.
The company returned to the acquisition trail this year with the £2.75m deal for Chester-based NWL Costs Lawyers.
It was the fourth costs firm to join the group after Frenkel spent £9m to acquire Partners in Costs (PIC) and A&M Bacon in February 2021 and then £1.5m six months later on legal aid costs firm Bidwell Henderson.
The half-year results said PIC has had “a particularly challenging period”, primarily due to “recruitment and technology implementation impacting their ability to handle increased workloads”.
It continued: “The board has taken swift action and have changed a number of key processes as a result. It is making a number of new hires and is continuing to invest in technology which is expected to improve medium-term performance.
“The board is confident that the medium-term prospects for PIC remain positive and that this is a short-term issue, but the underperformance will have an impact on the outturn and management’s expectations for the year of the group.”
The cohort of listed legal business was smaller in 2024 after four left the London Stock Exchange in 2023 for difference reasons – Ince & Co, which went into administration and was acquired by Axiom DWFM to disastrous effect, MJ Hudson, which was wound down amid problems with its accounts, and DWF and Smoove, both of which were acquired and delisted.
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