Legal Business

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

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.’

Legal Business

Rosenblatt battles Brexit uncertainty in post-IPO financials as it launches litigation funder

Rosenblatt battles Brexit uncertainty in post-IPO financials as it launches litigation funder

In its first financial results since the £43m IPO in May, Rosenblatt has recorded a slight uptick in revenue and profit as it simultaneously launched its own litigation funding arm.

For the first eight weeks of its listed life, Rosenblatt generated £3m in revenue, compared to £2.6m for a two month average in the last financial year. EBITDA edged up from £0.9m to £1m on the same metric while profit before tax was also marginally up: from £0.8m to £0.95m.

The moderate uptick is however boosted by the firm’s cash position, which stands at £11.8m. Rosenblatt also boasted a strong balance sheet of net assets worth £32.7m.

Rosenblatt chief executive Nicola Foulston (pictured) told Legal Business: ‘I’m particularly pleased with the performance of our disputes and employment teams, but we are less happy with corporate. This is partly due to them [the corporate team] assisting with the IPO process itself and uncertainty around Brexit. We’ve seen businesses hesitate and a lot of M&A deals are being diverged.’

When the listing was announced, Foulston also outlined the firm’s intention to set up a third-party funder within ‘the next couple of years’, but the firm announced today (18 September) that it had launched the arm called Rosenblatt Litigation Funding Ltd. With that move only taking around four months, it would seem that the decision to accelerate the plans was influenced by the proposed listing of Vannin Capital, a major player in the litigation funding market.

Vannin announced earlier this month that it planned to issue £70m of new shares in a float expected to take place in October, and appointed Allen & Overy’s former senior partner David Morley as part of the ambitious plan.

However Foulston dismissed such claims: ‘It’s nice to be quoted in the same sentence as Vannin! As a result of the IPO and the publicity we have received we have seen litigation activity increase much faster than we expected so that came with a need to provide third party funding.’

She added: ‘I was quite keen to see us move into this market as litigation funding is becoming too slow, the decisions on big cases take ages to come through. We see perfectly good cases running out of time all as a result of funding not being secured.’

Foulston stated that Rosenblatt would target smaller, mid-tier disputes, and said the funding arm had already picked up an arbitration case which had a £5m funding requirement.

Acquisitions are also on Rosenblatt’s agenda, as Foulston commented: ‘I would be disappointed if we don’t make any acquisitions in the next 12 months.’

Despite these ambitions, Rosenblatt has suffered the departure of finance director Patrick Firebrace, who today joined VWV as director of finance. Firebrace played a key role in Rosenblatt’s listing earlier this year.

Currently, the record for largest UK law firm float is held by Knights, with the Staffordshire-based firm announcing a £50m IPO in June.

Legal Business

Rosenblatt unveils third-party funding ambitions following £43m float

Rosenblatt unveils third-party funding ambitions following £43m float

London litigation specialist Rosenblatt became the fourth UK firm to list in May, simultaneously revealing plans to establish a third-party disputes funding division.

Rosenblatt raised £43m in its AIM flotation, giving the 21-partner outfit a £76m market capitalisation in what it described as a ‘significantly oversubscribed’ listing. In terms of value, it was the largest law firm initial public offering (IPO) in the UK to date. This could change with Knights’ listing slated to take place this summer.

Legal Business

Disputes round-up: Rosenblatt listing eyes third-party funding expansion as trio of firms collaborate on new litigation tech

Disputes round-up: Rosenblatt listing eyes third-party funding expansion as trio of firms collaborate on new litigation tech

London disputes specialist Rosenblatt is trying something new with its planned launch of a litigation funder, while three law firms have also highlighted their innovation wares by collaborating with a litigation start-up.

Rosenblatt this week (8 May) raised £43m in its listing on the Alternative Investment Market (AIM), giving the 21-partner firm a market capitalisation of £76m in what it described as a ‘significantly oversubscribed’ float. It was the fourth and biggest law firm initial public offering (IPO) to date.

Rosenblatt chief executive Nicola Foulston told Legal Business: ‘We have raised funds to fund our own lawyers. We are not currently operating as a third-party funder like Burford, but if someone says they have a case and they want our resources, we can take risks because we can afford to.’

Foulston added the firm ‘would be opening a third-party funder in the next couple of years’, however, and said ‘it would be a separate entity with a very strong steel wall between it and the firm’.

Foulston also argued the firm’s chief executive model, notably with a lack of senior partner, would be a key strategic boost going forward: ‘I am completely stunned that the sector is still dominated by those [senior partners], who are of course exceptional lawyers, but it makes them think they are capable of doing the job I do.’

‘The main benefit of our model is motivating and attracting talent. It moves the model away from a core base of equity partners who make decisions impacting their earnings, instead I make those decisions and the partners are rewarded. Everyone benefits from it.’

Foulston joined Rosenblatt as chief executive in 2016, specifically to oversee the firm’s journey to an IPO. She previously acted as chief executive of motor sport company Brands Hatch, joining in 1990 and managing the business’ 1996 listing on the London Stock Exchange. In 1999, Foulston was in charge as Brands Hatch was sold for $195m to US marketing giant Interpublic.

The firm is backed by respectable recent revenue growth. In the last financial year to 31 December 2017, Roseblatt recorded a 3% rise in revenue to £15.9m, while EBITDA grew by 28% to £5.5m.

Foulston says that while the firm is open to branching out into other areas, it remains focused on litigation work. The firm recently acted for Richard Desmond’s Northern & Shell in the high-profile £127m sale of its newspaper business to Trinity Mirror, marking the end of Desmond’s 43-year-long publishing career.

Rosenblatt’s share price rose to 111p just after the market opened, but stood at 105p early Thursday (10 May).

The firm’s listing follow Gateley’s pioneering 2015 float, which raised £30m, and the listings of Gordon Dadds and Keystone Law, who last year raised £20m and £15m respectively.

In other disputes news, Mishcon de Reya, Baker McKenzie and Taylor Wessing have teamed up with LitiGate, a Tel Aviv-based legal tech start-up.

LitiGate, founded by ex-litigator Nimrod Aharon and AI practitioner Guy Uziel, uses machine learning algorithms to review arguments and suggest counter arguments and fall-backs. The technology is able to rely on a database of previous case law to recommend the optimum argument.

The start-up was one of five companies selected this week to feature in Mishcon’s incubation programme, MDR LAB. Nick West, Mishcon’s chief technology officer who oversees the programme, said the firm would ‘eagerly anticipate getting to know them, to understand what their technology can do and to help them perfect their product’.

All three firms will be providing their resources to further boost LitiGate’s development. Taylor Wessing partner Laurence Lieberman commented: ‘We are constantly looking for innovative solutions that will maximise efficiency to ensure the best outcomes for our clients, and reduce the overall cost of litigation.’

Mishcon’s MDR LAB, which ran for the first time last year, invites legal start-ups to work with the firm’s lawyers over a 10-week period during the summer.

Legal Business

Rosenblatt takes ‘exciting step’ in UK’s fourth law firm listing

Rosenblatt takes ‘exciting step’ in UK’s fourth law firm listing

Rosenblatt Solicitors will float on the Alternative Investment Market (AIM) to support its growth ambitions and help it attract and retain talent.

The independent City firm, established in 1989, will become the fourth UK law firm to go public next month, following Gateley in 2015, and Gordon Dadds and Keystone Law last year.

Rosenblatt chief executive Nicola Foulston said the funding would support growth in its core of dispute resolution and allow it to take advantage of ‘disruption in the UK legal marketplace’. She added: ‘Our decision to seek a listing on AIM is an exciting step in the development of Rosenblatt… Dispute resolution is a growing market with London set to remain the biggest international centre for this work.’

The listing would also allow the firm to better align its remuneration with the overall performance of the firm, Foulston said. ‘By being able to offer a broader range of equity participation, it will help us to attract and retain talent at all levels.’

Rosenblatt recently acted for Richard Desmond’s Northern & Shell in the high-profile £127m sale of its newspaper business to Trinity Mirror, marking the end of Desmond’s 43-year-long publishing career. The firm had previously acted for his media group on other deals including the purchase and sale of Channel 5, the sale of Portland TV and the purchase of The Health Lottery.

The listing of law firms has gathered relative pace in the last eight months, with Gordon Dadds and Keystone Law only listing in August and December last year, respectively. Gateley chief executive Michael Ward, whose own firm raised £30m in its landmark 2015 listing, recently told Legal Business he believes further listing activity is to come, describing a potential ‘acceleration’ in the market.