Top 5 law firms surge in value

You would be sitting on a tidy profit if you had bought shares in listed top 50 UK law firm Gateley last year. 12 months ago, shares were trading at 120p, at the beginning of June this year Gateley hit 195p but has recently dropped back to 173p. The firm is valued at £186m which is 14.2 times the annual profit it posted recently.    

Adopting the same stock market sentiment would collectively value the UK’s top 5 law firms at £43.6 billion, up from £29 billion last year when Gateley traded at 11.4 times its annual profits.

DLA Piper announced profits of £525m at the beginning of the year which would value the legal services business at £7.45 billion, up from £4.4 billion last year. Clifford Chance recently posted annual profits of £554m valuing the law firm at £7.87 billion compared to £5.4 12 months ago. Allen and Overy is expected to move into third place in the 2017 Lawyer rankings, which are determined by revenue, they recently posted annual profits of £716m generating a value of £10.17 billion up from £6.1 billion in 2016. Linklaters recorded a £664.4m profit and by our calculation that values them at £9.43 billion a 43% increase on the £6.6 billion value last year. And finally, Freshfields Bruckhaus Deringer posted profits of £612m bringing it in at a cool £8.7 billion in value up from the £6.7 billion we calculated 12 months ago.             

All 5 would just squeeze into the FTSE 100 sitting alongside household names with similar values such as Burberry, Whitbread, ITV, Morrisons and Barratt Developments. HSBC Holdings is the highest valued UK stock exchange listed business with a market capitalisation of circa £152 billion.