MIDAS SHARING TIPS: Keystone Law Lets You Make Money From Lawyers
It’s been more than 400 years since Shakespeare wrote, “Let us kill all the lawyers,” but the phrase still resonates today. Widely regarded as money-grabbing, pompous and boring, lawyers tend to rank alongside traffic wardens and tax collectors in the popularity stakes.
In 2002, James Knight, a lawyer, decided it was time to change his profession. He found Key lawa firm that approaches the law differently from the norm.
The company joined the AIM junior market in 2017 at £1.60 and the shares hit £9 in early 2022. Today, they cost £4.85, a price built up over the past 18 months amid concerns over prospects of growth. The drop has been overstated and Keystone stock should rebound.
Knight has developed a winning formula, giving solicitors much more freedom and flexibility than conventional law firms, whilst providing clients with an engaging and effective service.
In essence, each lawyer acts as a quasi-independent consultant, backed by Keystone’s financial, IT and compliance support. Individuals can work when they want, from wherever they want, free of the pressure and politics that characterize traditional companies.
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They can accept clients of their choice and focus completely on the work at hand, without worrying about competition from their colleagues or the administrative burdens that come with running a large-scale business.
Once the work is completed, attorneys receive 60 to 75 percent of the fees, with Keystone taking 25 percent.
Some lawyers work from home or from the garden shed. Some have exclusive offices. Some have a few young lawyers working for them, in what Keystone describes as “groups.”
For Knight, where and how lawyers work is less important than the quality of service they provide. Everyone is thoroughly vetted before joining the team, and while everyone is working remotely, Knight is keen to foster a Keystone culture, hosting regular meet-ups, drinks, dinners and team events.
The approach seems to work. Keystone lawyers work primarily with small and medium-sized businesses and wealthy individuals, providing advice in areas such as property leasing, acquisitions, employee contracts and litigation.
Client satisfaction is high and many clients return to their chosen attorney. And Keystone lawyers appreciate their relative autonomy.
City officials have recently expressed concerns about Keystone. Last year, demand for lawyers increased and recruiting became increasingly difficult, posing a threat to Keystone’s growth. However, this month’s interim results were encouraging. The number of lawyers included in Keystone’s book grew, billing saw a double-digit percentage increase, and profits soared.
In Keystone’s first year as a listed company, there were around 240 lawyers, turnover was £32m and profits were just under £2m. Today, the number of solicitors exceeds 500 and brokers are forecasting a turnover of £85m along with profits of almost £11m for the year to January 2024. Knight also believes in generous dividends, with 17.5p expected for this year, as well as a special bonus. payment of 12.5p, declared with the provisional results.
That brings dividends paid since the IPO to 91.8 per share, a record Knight wants to maintain, and believes he can. Keystone’s continued expansion is strongly tied to the number of lawyers and 144 people have applied to join the firm, up almost 20 percent year on year.
Business is good and is expected to stay that way, even if economic conditions remain weak.
Midas Verdict: Law offices can be difficult places to work, but Keystone offers attorneys the opportunity to simply do their job and ensure clients are happy. The business has grown rapidly over the years and should continue to do so. At £4.85, the shares should offer rewards, and Knight’s dividend policy is an added attraction.
Traded in: AIM Heart: KEYS Contact: keystonelaw.com or 020 3319 3700
