Legal Business

Legal Business 100: Case study – Stewarts Law

Stewarts Law, the UK’s largest litigation-only firm, had an eventful 2016/17 financial year, which resulted in its third consecutive period of double-digit growth. As a standout performer across the Legal Business 100 (LB100) as a whole, the firm had a record year with turnover rising 25% to £77.9m and profit per equity partner (PEP) climbing 19% to £1.9m, seeing it move up into the top half of the LB100 for the first time. It has become recognised as one of the fastest-growing players organically in the UK legal market, with revenue growing 123% over the last five years. PEP rose 110% over the same time period.

Year-on-year performance in 2016/17 was boosted by the resolution of some significant mandates last year, most notably the £4bn shareholder group action against The Royal Bank of Scotland (RBS) in which Stewarts’ claimant clients took a settlement offer in December 2016 in a case against RBS’ former chief executive Fred Goodwin and three other directors.

Stewarts is also currently in battle with Tesco on behalf of over 125 institutional funds, who claim they lost money as a result of Tesco overstating its profits by £263m in October 2014.

‘We keep an open mind, but we want to remain a litigation-only business, so it’s a small market for us in terms of mergers.’
John Cahill, Stewarts Law

Coming as a surprise to many after years of startling organic financial performance, Stewarts looked at a potential merger with boutique Enyo Law in early 2017 to create an £80m disputes specialist. The acquisition of Enyo was in the preliminary stages before it was called off, with Stewarts managing partner John Cahill saying at the time that the firm wanted to ‘continue down the path of organic growth and selected lateral hires’.

True to Cahill’s word, Stewarts has made a couple of select lateral hires of substantial seniority over the past year. Firstly, veteran litigator Ian Gatt QC arrived from Herbert Smith Freehills’ advocacy unit in October 2016, bringing with him over 30 years’ experience in both litigation and arbitration disputes.

In June this year, Stewarts brought in Dechert commercial litigation veteran David Hughes. Hughes, who also served as Berwin Leighton Paisner’s head of banking and finance litigation for nine years, slotted into Stewarts’ core commercial litigation practice. However, the firm did lose partner Daniel Loblowitz in July, who left to join property firm Jury O’Shea and build his own practice.

LB: Did any areas thrive or perform poorly over the last year?

John Cahill: Our commercial disputes department had a very strong year. But our newest departments that we’ve set up over the last few years, such as arbitration, tax and trust litigation, need growth and critical mass added to them. Our challenge for the next year will be to focus on building them up.

Has Brexit had any tangible impact over the last financial year?

Cahill: For us, no. In terms of the future, it’s difficult to make predictions. It’s likely that litigation will be less affected by the uncertainty of Brexit than other practices. Market uncertainty may reduce transactional volumes for a period of time, which will be a problem for firms doing that kind of work. If it’s going to bring a harder financial climate, the counter-cyclical nature of litigation may mean we find more work with our clients. It has to be a priority for the government that London remains an international centre for resolving disputes. It’s a major export, so it’s important this is not threatened.

Following the scrapped proposed merger with Enyo, is the firm looking forward to any other mergers?

Cahill: You’ve only got to turn on your computer or read the legal press to see that potential mergers are always being talked about. We keep an open mind, but we want to remain a litigation-only business, so it’s a small market for us in terms of mergers. We’re in no rush to go down that road.

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