Rosenblatt: Largest shareholder
The board of listed legal business RBG Holdings has terminated founder Ian Rosenblatt’s consultancy agreement amid accusations that he is setting up another law firm.
A statement issued to the London Stock Exchange accused Mr Rosenblatt – who with 20.5% is the group’s largest shareholder – of breaching the agreement and restrictive covenants, as well as “offensive behaviour unbecoming of a solicitor and consultant to RBG Holdings plc”.
It is the most dramatic turn yet in an increasing fraught saga at the group, which owns London law firms Rosenblatt and Memery Crystal, and has had a turbulent couple of years as it seeks to improve performance.
Our annual review of listed legal businesses showed that last week that 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.
Last 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, Mr 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”.
Today’s statement from the board said Companies House records showed that, at some point before 10 September 2024, Mr Rosenblatt acquired a company then known as AWH Acquisition Corp Corporate Limited, which is a regulated by the Solicitors Regulation Authority (SRA).
Both he and Tania MacLeod, who was Rosenblatt’s head of dispute resolution, are listed as regulated members of the firm, with Ms MacLeod holding the compliance officer roles.
She was a director of RBG Holdings until resigning from the board on 3 October. Last month, she resigned as a director of subsidiary RBG Legal Services Ltd and last week resigned her employment too.
“The notification of [Mr Rosenblatt’s] shareholding was not filed at Companies House until 20 December 2024, but the statement was confirmed by Mr Rosenblatt, who was the sole director at the date of the late filing,” the statement said.
“On 19 December 2024, Mr Ian Rosenblatt and Ms Tania MacLeod were appointed directors of that company, which on the same day changed its name to Rosenblatt Law Limited. Ms MacLeod subsequently resigned her directorship of that company on the same day.”
The statement noted as well “significant activity as regards domain names relating to the domain www.rosenblatt-law.com, and a new registration of rosenblattlaw.co.uk, first registered on 30 December 2024”.
The board said the chronology showed Mr Rosenblatt was in control as the owner of another law firm at least three weeks before he first contacted the chair of RBG to demand a change of chief executive in late September 2024.
“The motivation behind the acquisition of a company regulated to operate as a law firm under the Rosenblatt name should be seen in the context of Mr Rosenblatt’s current situation,” the statement went on.
This was that, in September of 2024, the board informed him and Ms MacLeod that it would no longer be funding a multi-million-pound costs dispute that the firm has been involved in for many years, pre-dating the listing (the so-called ‘Global’ case). The name of the party to the case is the ‘The Winros Partnership (formerly Rosenblatt Solicitors)’.
“This led to Mr Rosenblatt first publicising his bid to oust Jon Divers as CEO three weeks later at the end of September, the detail of which was leaked to the press on 1 October,” the statement said.
“The decision to buy another business, regulated by the SRA to provide legal services, can be traced back to early September at the latest, just after Ian Rosenblatt and Tania MacLeod were informed that the group would no longer provide funding assistance to litigation in which Winros was involved (and the costs and consequences of which he and Ms MacLeod, being the only two partners in Winros, would be liable to the extent of their personal assets).”
The board pointed out that Mr Rosenblatt had agreed to extend his restrictive covenants on 31 July 2023 for five years, when he joined the board.
“During Q4 of 2024, the board had been engaged in negotiations with Ian Rosenblatt to try and finalise a three year pay structure that would align with the terms of the extended restrictive covenants.
“These negotiations stalled over what the board considered to be excessive expenses demands from Mr Rosenblatt including, inter alia, a private office suite to be fully funded, a renewed demand for the Winros/Global litigation to be funded by the company, and the board’s requirement for a relationship agreement with Mr Rosenblatt.
“In light of the evidence set out above that, well before any public demands for change or any initial negotiations around remuneration were made, Ian Rosenblatt was already the sole owner of another law firm, these negotiations would seem to have been in bad faith.”
A further charge was that during discussions last month with a lender regarding a potential refinancing, RBG became aware that the lender had met Mr Rosenblatt and Ms MacLeod a year earlier and was told that “Ian Rosenblatt had been verbally abusive to the lender”.
It went on: “Neither Ian Rosenblatt nor Tania MacLeod reported this event to the board at the time, despite both being on the board of RBGH. The board will not tolerate any officer, directors, member of staff or affiliate behaving in such a manner.”
The board said it has notified the SRA “so that they are clear that Rosenblatt Law Limited is in no way affiliated or connected as a business to RBG Legal Services Limited”.
Further, it has decided that the group “can no longer be associated with Ian Rosenblatt and has therefore terminated his consultancy agreement. The board will be exploring options for the recovery of the restrictive covenant, and also the loss of revenue anticipated over the next three years”.
It reserved its position with regard to Ms MacLeod.
The board said it would set a date for the general meeting requisitioned by Mr Rosenblatt.
The statement saw RBG’s share price dive by a third in early trading to 1.75p.
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