A listed business, he explained, “brings access to capital for investment, the incentive to build real equity value and long-term thinking about client relationships”. When asked why Halo Group (the holding company of Hamilton Locke) is listing, he said that the real question is why should a professional services business not list, just because the services relate to legal practice.

Moreover, he added, Australia’s broader legal services market currently sits at $23 billion: “The opportunity for a broad-based legal and allied services business to address the market with capital and a clear strategy is considerable.

“We think it makes a great deal of sense for a professional services business with a clear strategy to focus on that market with the discipline and access to capital that the listed market provides.”

Hamilton Locke

The firm is a company, not a partnership, and issues all of its employees with equity. This, Hamilton Locke said, “makes every employee an owner aligned with, and focused on, positive outcomes for our clients and the business”.

It has offices in Sydney and Melbourne, with both national and international clients. Last year, it added eight new partners – including in May, September and December – taking its partnership ranks from 15 to 22, marking a 47 per cent growth. The firm now has 69 lawyers and staff in total.

Halo Group Holdings, the firm’s holding company, also has Source, Emerson CoSec and MacMillan Trademarks under its umbrella, and delivers corporate services across legal, governance, risk and compliance, with 100 total staff across the entire group.

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Prospective listing

In conversation with Lawyers Weekly, Mr Humphrey – who won Innovator of the Year at the 2020 Partner of the Year Awards, and spoke in February on The Lawyers Weekly Show about the need to “reboot it all” – said that a listing of any kind needs to be driven by the objectives of the business.

“In order to attract the right investors to the register and to ensure support for growth, any listed business needs to be at sufficient scale and have a reasonably diversified mix of revenue and an articulated growth strategy,” he outlined.

“Listing is a logical step on our growth journey and we see it as the start and not the end of that journey.”

As managing partner of Hamilton Locke, Mr Humphrey acknowledged his own important leadership role in this process, noting that his primary focus has to be on the firm’s people.

“The whole group is built on the principle of alignment between the structure and strategy of the group and the interests and incentives of our people,” he said.

“We believe that a clear purpose, a clear vision and clear values ensure that people who join us understand the journey and join us because they are aligned with it and want to work with teams of like-minded people.”

The firm has, he continued, built the structure and incentives to align with that strategy.

“Leadership involves continuing to explain and reinforce that purpose and vision, driving that alignment and building out the management bench to manage the businesses at scale,” Mr Humphrey submitted.

Lessons from HWL Ebsworth and others

When asked if the firm and its holding company has learned from the experience of other legal businesses – most recently, HWL Ebsworth pulling its ASX debut plans, among other firms which have weighed up their options – Mr Humphrey said that Hamilton Locke was, from its inception, built to attract third-party capital.

“There are a variety of issues that makes it more challenging to take an existing law firm and list it,” he noted.

“We think professional services businesses, including law firms, can and should list, but there are certain advantages to being structured and optimized for that outcome from the start, including margin, incentive structures, long-term equity alignment, corporate decision-making structures and a clear purpose and strategy.”

Recent professional service firm listings, Mr Humphrey detailed, provide useful structural lessons around the importance of “broad-based equity ownership (e.g., Goldman, Macquarie, Moelis); owner-driver incentives (e.g., Kelly+Partners, Steadfast, Austbrokers); re-engineered cost base by offshoring and outsourcing to ensure post-IPO partners can continue to be paid to market rather than reducing their drawings; and building out diversified recurring earning streams (e.g., IPH, Steadfast, Kelly+Partners) such as through retainers”.

It is also important, he surmised, to distinguish between selldown or exit with a capital raising event.

“Our approach would be to primarily raise funds for growth, backed with appropriate long-term escrow periods for our staff,” he explained.

“In many ways, we are trying to take the best aspects of traditional partnerships (such as specialist expertise, collegiality and collaboration) and combine them with the benefits of being incorporated, including agile decision making and access to capital.

“We’ve also established our Group so that every employee has an equity interest, which makes every employee an owner, aligned with and focused on positive outcomes for our clients and the business.”

Looking ahead

For Mr Humphrey, being able to be at the helm of what he called “Australia’s fastest-growing law firm” is an honour, and undoubtedly the most exciting and challenging role he has ever held.

“It has been extremely rewarding to build a firm, alongside my co-founder Hal Lloyd, which liberates talented passionate people from bureaucracy and politics and showcases how a firm can be high performing without sacrificing culture,” he reflected.

It is gratifying, he posited, to “share the energy of our people”, who he said can see what the firm is seeking to achieve and want to be part of building something special as a team.

“If we continue to hire great people and provide a vibrant environment which removes barriers to teamwork, then people will naturally collaborate,” he concluded.

“It is exciting to see how talented people who join us build their businesses by working with like-minded people who are focused on our clients’ needs.”

Are you looking to launch your own practice but not sure where to start? Lawyers Weekly’s Boutique Law Summit returns to Sydney this month, designed for individuals who are looking to maximise their competitive edge in a post-pandemic marketplace. The event will be held on Friday, 26 March at the Four Seasons Hotel with a full agenda available to view here. To learn more about the event, click here.