Singapore-based law firm RHTLaw Taylor Wessing has announced it plans to publicly list a company offering a suite of professional services on the Catalist Board of the Singapore Exchange (SGX) in the first quarter of 2016, according to a recent report in Channel News Asia.  This planned listing is the second of its kind in multi-disciplinary services in Asia.  Last year, according to the same report, “Malaysia’s ZICO raised about S$14 million through listing its professional services company, ZICO Holdings” (also on the Catalist Board).

In preparing this report, Mr. Tan Chong Huat, RHT Holdings Non-Executive Director explained via email that:  “RHT Holdings was created with one simple vision – to become the leading professional services group in Asia.”  The newly listed company will be composed of four business units, RHT Compliance Solutions, RHT Corporate Advisory, RHT Capital and RHT Business Management Services.  The firm will also seek to expand internationally.

 Background on public listings of legal services companies

Warren Riddell (@wpriddell), Partner of Australia-based Beaton Capital outlined in 2012: “Since January 2012 the UK has allowed external investment in law firms through a new ownership arrangement called Alternative Business Structures (ABS).  “The UK”, as Riddell outlines, “did this to encourage innovation and increase competition into the legal profession, principally from a policy perspective to benefit the consumer or retail end of the market.  In the Asia-Pacific region, “Australia already has its own equivalent of the UK’s ABS.”  But as Riddell argues, “Australia is largely unrecognising and under-using the opportunity.”

“Currently, the major interest from investors – be it private or public equity –“, Riddell explains, “is focused on retail legal services, where the barriers to entry remain high, income is predictably strong, and the benefits from scale and systems are understood.  So with sound market fundamentals all it takes is for the investment houses to do what they do best – re-engineer processes, drive scale, manage costs and shift the focus from owners to clients.”

As the Law Times reported this month, “British small solicitors (firms) see little harm from ABS so far.”  Tony Williams, former managing partner of Clifford Chance LLP and Andersen Legal and founder of Jomati Consultants LLP told the Law Times about the impact of ABS:  “I would describe it as more of a slow burn that is leaving important straws in the wind.”

What are the prospects for success for RHT Holdings?

In seeking some independent insight into the prospects for success of RHT Holdings, I sought the opinions of two advisors to the legal profession on management:  Warren Riddell (@wpriddell), who has chronicled the rise and influence of the ABS model (as enumerated above) from Australia as a Partner in Beaton Capital.  And Australia-based John Chisholm (@ChisConsult), a management consultant to law firms, based on decades of experience at the helm of a number of Australian law firms.

As Chisholm outlined via email: “Many firms at least now have listing pros and cons high up on their agenda. For some now not quite global firms the potential advantages are significant-they can potentially raise external funding for growth to match in footprint the current global giants. Others I suspect will list simply to be able to invest locally (eg: ASEAN area) and capitalise on expected future Asian legal market growth. We will see more and more Australian based law firms list in the next few years-some of whom will use their listing to invest and grow into Asia. Some Australian law firms are currently quite far advanced in their considerations.

Some will be deep and narrow in their service offerings others will be wider in their footprint and services. Either way what can be achieved with external funding is potentially game breaking. I think what will be interesting is the professional firms that will list in the future. (Spruson & Ferguson, a long standing and highly reputable IP Patent Attorney firm very successfully listed in 2014). They will be neither law nor accounting nor consulting but potentially huge monoliths of one stop shops that with external funding can provide significant products and services to the marketplace currently not possible. There will of course be limits to the number of firms that will list and can expect to be genuinely successful. They won’t all be but the numbers lining up at the starting gate will ensure some will race and some will win.”

As Riddell explained in an email interview for this article, however:   “In reading [RHT Holdings] press release, it appears that all bar the legal business is going to be listed.  So how can the article claim RHT Holdings will potentially be the second legal business to be listed on SGX?   Under current local law they cannot list a law firm.  It appears they will be listing a range of non-legal services that are adjacent to their law business — where there is presumably cross-referral opportunity.  Yes this may be a legitimate way to raise investment equity that will find its way into increasing the quality of the delivery infrastructure of the law firm through a services agreement between the law firm and the listed entity.  But unless there is a change in the law, the investors in RHT Holdings will not have an interest in a law firm.”

 Looking forward

Tan Chong Huat, RHT Holdings Non-Executive Director has outlined: “In three short years, RHTLaw Taylor Wessing LLP and the RHT Group have become premier names in Singapore for legal and professional consulting services respectively. We now wish to tap into capital markets to accelerate growth both in Singapore and internationally.”  At the same time, the record for ABS in the UK is still in its’ infancy and the results appear yet to be determined, while opinions of industry consultants in the Asia-Pacific region are mixed as to the prospects for success.  Time will tell.

Posted by John Grimley

John Grimley edits and publishes Asia Law Portal

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