A Public Life-When Law Firms Test the Capital Markets

Article excerpt

The idea of the law firm partnership is the antithesis of the corporate, publicly traded company--and that attracts many lawyers and marketers to the field. But all that will change some day for U.S. law firms, according to experts. After all, it's already happened in Australia, with the recent initial public offering of a law firm, and the United Kingdom is clearing the way for firms there to go public.

"This train is not going to be stopped," says Gerald A. Riskin, co-founder and partner in Edge International. "It's too lucrative for firms. The current partners will make a load of money."

An IPO, and the huge infusion of cash that it could potentially bring, will change many aspects of the ways firms operate--including a potentially profound change in the way law firms view the marketing department and the role it plays. Slater & Gordon, the Australian plaintiff 's firm that went public in May, raised $29 million when it went public, and the stock has continued to perform well. Among the uses of its new public capital, the firm listed "a more extensive advertising and marketing program to further build the Slater & Gordon brand as a driver of new client enquiries" in its prospectus to potential investors.

Flush with new equity, law firms would most likely hire more, and even more sophisticated, marketers. "A lot of Wall Street firms value growth," says Lisa R. Smith, a vice president at Hildebrandt International Inc. "And firms will put more of a premium on hiring high-level people at every level."

A Boon for Marketers

For some marketers, working for a publicly traded law firm could offer the best of all worlds--the chance to do cutting-edge marketing work in the field of law. As a publicly traded entity, attorneys may actually shake off some of their more old-fashioned notions about the value and role of the marketing department.

"It will be more about discipline and more structured decision-making," says Smith.

"It might result in [marketers] getting permission to do more," agrees Riskin. The traditionally risk-averse nature of attorneys may be trumped by the need to think like corporate denizens and satisfy shareholders and Wall Street." It could be a wonderful time for marketers," he says.

And Smith and Riskin agree that the law-firm IPO trend is contagious--a second firm in Australia, Integrated Legal Holdings Inc., has filed to go public. And in the United Kingdom, the Legal Services Bill is expected to pass later this year. By 2010, firms there could go public.

But if the question is when, not if, law firms go public in the United States, it will still be some time off. Smith predicts it could be 10-15 years. "The regulatory hurdles are significant," she says, pointing to the 50 different bar rules in 50 different states as among those challenges.

But simply adding more money to a firm's coffers won't necessarily change the lawyers' mindset, says Riskin, who questions whether a publicly traded law firm would--in most cases--be good for lawyers or investors. …