Trading suspended, lawyers fleeing and a phone call to an insolvency specialist. What happened at the listed legal business RBG Holdings?
Notable City lawyer Ian Rosenblatt OBE took his eponymous law firm public in 2018 at a market value of £43m. Still, by the time the stock was suspended in late January, the group’s market cap had slumped to £1.15m, a 97 per cent drop in value.
Rosenblatt is the largest shareholder, with over 20 per cent of the issued share capital, and had a consultancy agreement with the group.
RBG was designed to act as a holding entity for a collection of legal businesses. It currently owns dispute-focused Rosenblatt and multi-disciplinary firm Memery Crystal and previously owned litigation funder LionFish Litigation Finance, which it disposed of in July 2023 and specialist sell-side boutique Convex Capital, which it sold in March 2024.
Despite its ambitions to become one of the UK’s leading legal groups, and one of only a handful of listed legal firms, RBG has struggled with rising debt, falling revenue, and the ousting of a CEO.
The board removed former chief executive Nicola Foulston in January 2023 after directors “lost confidence” in her. She was accused of racism, which she denied, and she was subsequently cleared of racial discrimination by the Employment Tribunal.
After she sued for wrongful dismissal, the group settled with Foulston in October 2023 for £500,000. Chief Operating Officer John Divers then went on to take over the leadership role.
Money problems
Last May, the group reported to its shareholders that it lost more than £11m over the 2023 financial year as revenue dipped by nearly 13 per cent to £39.2m. Debt, meanwhile, rose to £22.9m, up from £14.2m in 2021. The group had net cash in 2020 of £3.5m.
To try and help keep a lid on costs, the group merged businesses and cut headcount. Last year, it integrated its two firms into one office on Fleet Street to reduce its rental bill.
However, despite the falling revenue and rising debt, directors’ remuneration jumped from £1.3m to £3.6m for 2023.
The 2023 figures included Ian Rosenblatt, who was listed to receive £2.6m in salary, of which £600,000 remained payable as of 31 December. The report stated that he “subsequently agreed to receive this amount in shares”.
According to documents seen by City AM, this trend continued in 2024. A 2022 salary sheet listed the total remuneration for the group’s partners at over £5.2m, but the gross salary bill for 2024 rose to £14.7m – along with an additional £280,000 in bonuses and over £1.2m in commission over 2024.
The salary sheet included more than £3.2m salary to [Ian] Rosenblatt.
Ian Rosenblatt told City AM that under the terms of his package, he was entitled to a basic payment and a commission structure based on the revenue he generated.
He said that he personally generated around £80m in fees since the IPO, peaking in 2022 with £17m.
“My revenue generation for 2024 was roughly £8m. For this I received £2m in commission and basic pay, as well as an additional amount of £1.2m which related to the agreement signed in 2023 for the extension of my restrictive covenants,” he explained.
He added that these covenants expired in 2023 and he was asked to extend them by the board, led by David Wilkinson. He added, “I was offered £2m to do so for a new term of five years, and I agreed to be paid the fee for this over approximately two years.”
However, [Ian] Rosenblatt told City AM that “there was a consistent and ongoing issue with my salary and commission either being paid late or not at all by RBG Holdings.”
“I am still owed money,” he said.
Internal spats
As the company has struggled for direction, questions have emerged about Ian Rosenblatt’s involvement in the business. While RBG’s annual reports stated Rosenblatt does not have “a significant influence over the group,” this is disputed by some, with one source telling City AM that Rosenblatt was the driver of the group behind the scenes.
However, Rosenblatt hit back stating he “was not the main driver of the group”.
“I was a consultant, and the largest revenue generator and shareholder,” he noted. He went on to add that he didn’t attend any management meetings nor did he have access to briefings, and was intentionally excluded from all meetings involving fee-earners or partners.
He claims that he “found most things out anecdotally”.
Late last year, trouble kicked off between Rosenblatt and new chief John Divers, with the former openly calling for Diver’s resignation from the CEO position. Days before Christmas, shareholders were notified that the board had received a requisition notice from Rosenblatt seeking a general meeting to consider the removal of Divers.
The spat escalated when RBG issued an RNS that stunned the market, informing shareholders that the business had terminated its consultancy agreement with Rosenblatt.
In the announcement, several allegations were made against the founder, including claims he had been “verbally abusive” to a “potential funder” at a meeting over a possible refinancing arrangement in 2023.
At the time, [Ian] Rosenblatt hit back, calling the board liars and threatening legal action over “libel amongst other things”.
The fallout
After the public spat, which caused countless headlines and much chatter in legal circles, both parties reached a two-week truce. However, shareholders were informed in late January that RBG requested a ‘temporary’ suspension of trading.
The final share price of RBG was 0.89p on 27 January, a 99 per cent drop on its initial listing price.
It quickly emerged that RBG was in talks to explore the sale of the ‘Rosenblatt’ branded business, “together with certain assets”, to a legal shell that Ian Rosentblatt had owned, Rosenblatt Law Ltd.
This went ahead after [Ian] Rosenblatt issued a media release in late January showcasing the break-up of RBG Holdings, as he celebrated taking back control of the law firm at the heart of the businesses.
Commenting at the time, he said: “I founded Rosenblatt in 1989 – it has been my life’s work. Today my Firm regained its independence – the same name, the same team, and the same drive but without the previous distractions of being owned by a listed company.”
Rosenblatt Law took over its 40-person team from the group, including Tania MacLeod, and will be led by CEO Adil Taha, the same man who was managing partner of law firm Child & Child before it went into administration in 2020.
On the same day, the High Court filing system shows that RBG Holdings Plc applied for an application of intention to appoint an administrator. City AM understands that an administrator was expected to be appointed this week. However, it is understood that Interpath has refused to appoint one. City AM reached out for comment.
Meanwhile, the majority of the partners have already split from the group.
Fladgate revealed on Monday it brought on a team of 25, comprising 9 partners and 16 additional team members from Memery Crystal.
Partner Carl Rohster and his gaming team are off to Keystone Law. Memery Crystal’s senior partner Nick Davis along with Ed Baker, Robert Bines-Black and Nick Heap landed at Hayes and Boone, and some of the real estate partners are set to join Lawrence Stephens.
Some of the banking partners are still in talks with another law firm.
The legal regulator, the Solicitors Regulation Authority (SRA), is understood to have pressured the business to retain the back office staff on archiving and client files.
But despite that, those business services staff appear to have been forgotten about. A source told City AM that they heard reports of secretaries and receptionists, many of whom are long-serving, being left behind.
But what comes next? With outstanding bills and debt, and pending administration, this won’t be the last we hear about RBG Holdings.
RBG Holdings was approached, but declined to comment.