Legal Business Blogs

Rosenblatt seeks to flex litigation funding arm as IPO boosts revenue but hits profit

Increased publicity following Rosenblatt’s stock market float has helped lift revenue by 19%, although the IPO’s cost weighed on profit.

Rosenblatt said today (30 April) its revenue for the eight months to 31 December 2018 was £12.5m, up from £10.5m last year. Profit before tax, however, fell slightly to £3m from £3.2m, although EBITDA was up 18% to £4.3m.

The firm became the fourth UK law firm to list last May, raising £43m and simultaneously announcing its intention to establish a third-party disputes funding division. That was formally established last November, with five cases currently under consideration for funding.

While the cost of the IPO dented profit, chief executive Nicola Foulston (pictured) told Legal Business revenue was up as a result of increased publicity following the float. She also conceded life as a listed entity had proved a ‘learning curve’ for some but the business had since ‘settled down’.

‘The IPO enabled us to get quite a bit of traction in the marketplace, because obviously whilst Rosenblatt was known, it wasn’t known that we could fund client costs,’ she said. ‘That’s enabled us to on-board two very sizeable matters which are contingent at the moment, and brought in some other routine legal work as well as some high-net worth entrepreneurs as clients who have come through because they have seen us both IPO and act for blue chip companies in court.’

Foulston pointed to the firm securing a favourable judgment for infrastructure company Stobart Group in a dispute with its former director in February this year as its most high-profile win. The firm wants to be more proactive in marketing its litigation funding arm, however, particularly in jurisdictions such as the Far East, Middle East and Africa where clients are less familiar with disputes funding.

Of the five cases the firm’s litigation funding arm is considering, one has been fully committed for £2m, another is close, and three are at the evaluation stage. Foulston said they expected the latter four cases would require another £20-£30m in funding commitments.

‘The ability to finance our own cases and invest in our clients’ legal costs is progressing well, we’ve got good deal flow and some very good cases that we’re on-boarding,’ she said. ‘We are confident that we will see some return from them, you can never say with 100% certainty, but I would expect to see some decent returns from those.’

The firm has made three lateral hires since listing, and is bringing on a fourth in summer to head a new financial crime, white collar and fraud department. Foulston said laterals had not moved as quickly as hoped, with Brexit uncertainty weighing on peoples’ willingness to move jobs.

At the time of listing, Rosenblatt committed to making acquisitions within 12 to 18 months. Nearly a year later, Foulston says none have occurred because the market has not been favourable.

‘In addition to organic growth, we continue to see many M&A opportunities in the sector,’ she commented. ‘We are committed to pursuing the right opportunities, which meet our investment criteria and provide shareholders with an appropriate return on investment.’