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.
Nicky Foulston, chief executive of Rosenblatt, 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.’
Despite this, Foulston, who joined Rosenblatt as chief executive in 2016 specifically to oversee an IPO, added the firm ‘would be establishing a third-party funder in the next couple of years’. She added: ‘It would be a separate entity with a very strong steel wall between it and the firm.’
Few will envy Rosenblatt’s task of prising its way into the disputes funding market, which is currently dominated by some key players. One of those is Burford Capital, which recorded a resounding 109% rise in income in March, to $341.2m. Last year, Burford generated more profit for the first half of 2017 than in any full year in its history and in the summer Shepherd and Wedderburn announced an eight-figure-sum portfolio-based litigation finance deal with Burford to fund current and upcoming litigation the firm is handling.
Nick Rowles-Davies, founder and chief executive of litigation financier Chancery Capital, said: ‘You might think we don’t need any more [funders], right? But the fact that a law firm has identified potential diversification and the value of using litigation funding has to be positive. As long as you address potential conflict issues, why not? It’s a crowded market, so it will be difficult, but there’s always room for good people doing a good job.’
In the financial year to 31 December 2017, Rosenblatt recorded a 3% rise in revenue to £15.9m, while EBITDA grew by 28% to £5.5m. At the time of writing, Rosenblatt’s share price stood at 132p, up from its listing price of 95p.