One of England’s largest regional law firms is weighing up plans for an eventual stock market listing of part of its business, just as Australia prepares to welcome the world’s first flotation of an entire law firm.

On Monday Slater & Gordon, a firm of Australian litigators, will make legal history as it becomes a publicly traded company and seeks to raise over A$35 million (£14 million) on the Australian Stock Exchange.

Dickinson Dees, the Newcastle law firm, is poised to spin off its so-called volume banking advisory business in readiness for new rules that will allow it to list the company on the stock market.

The flotation of the Australian law firm is being viewed as a blueprint for what may happen to mid-sized UK law firms once the Legal Services Bill, currently going through Parliament, becomes law by the start of next year. The new laws will allow law firms to take on external investors for the first time, which includes floating on the stock market.

Dickinson Dees handles remortgaging and repossessions for banks on a national basis. That business, which had revenues over the past year of £6.5 million, is to be demerged as a limited liability company. The core business turned over £52 million.

Robin Bloom, of Dickinson Dees, said: “It is a mechanism that is suited to raising external capital or trading on the business. It could mean funding from a pension fund, private equity or a full float. We are keeping our minds open to what happens to the profession.”

Dickinson Dees has already started advertising for a chief financial officer or chief operating officer with the offer of a £120,000 salary, “substantial equity and 50 per cent bonus and benefits”.

Deloitte predicts a number of flotations of middle-sized UK firms after the Legal Services Bill comes into force. It predicts that publicly listing law firms may lead to a sea change in lawyers’ remuneration where they are paid more like merchant bankers, with lower salaries and more performance-related bonuses and shares.

Mr Bloom added: “The structure is a business imperative. It offers a management structure better suited to that type of business, allowing more executive leadership. It is also a mechanism more fully familiar to non-lawyers, and as soon as you bring them into ownership you can offer share options — those type of incentives do not fit with a limited liability format.”

Jeremy Black, a director in Deloitte’s professional practices group, said: “Flotations or raising money from private equity cuts both ways. Funds go out of the business so the attraction for working to become an equity partner is not as large but junior lawyers are paid so well they may not feel they need to reach that level. Giving them bonuses or shares may be a way of recruiting and retaining juniors.”

Floating also affords big law firms quick access to outside capital, which could be used to buy out underperforming partners, leaving more profits in the hands of remaining partners and new investors.

Few other professions have invited outside investors but last week Lord Foster and Partners, the architects, sold a minority stake to 3i, the private equity firm. Investors in listed accountancy firms Vantis and Tenon have enjoyed bumpy rides since they floated.

Bill in brief

Legal Services Bill proposals

Law firms could raise funds in exchange for equity
Law firms could float on public exchanges
Nonlawyers could become partners in law firms
Multi-disciplinary partnerships could be set up
Corporate entities, such as banks, could provide legal services

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax