Professional services association the Managing Partners’ Forum (MPF) and specialist consultant Brand Finance have launched the first initiative, to assign a brand value to the world’s largest 500 professional services institutions, which includes around 200 law firms. Twenty-seven of these are from the
The rating, designed to measure the intangible value associated with a law firm’s name and client links, is expected to be completed by around April next year, when it will be made freely available and will become the first formal valuation of its kind.
The valuation is likely to take into account projected future earnings and profit margins relative to peers as well as client quality and loyalty and the strength of the management and people, although Brand Finance and MPF are still working out the exact areas that will be assessed.
The rating means firms will be able to benchmark their performance not just against other law firms on wider grounds than pure financial results, but also against other professional services firms.
The move comes ahead of a related joint venture by MPF with finance boutique Noble Group to create an index of listed professional services firms to help external investors compare changes in market values and judge the relative return on their investments.
Richard Chaplin, executive director of MPF, told Legal Week: “One of the consequences of the investment discussion is that investors will want to come up with a value of the business before they invest. This will be the first time that anyone has attempted to put a value on all the firms beyond just headcount and fees.”
BDO Stoy Hayward professional services chief Nick Carter-Pegg added: “The brand value will have to look at a number of things, many of which are subjective, like the strength of the management team and the quality of client business and people within the firm. What is fundamental is understanding the future earnings potential of that firm.”
The moves follow a period of increasingly serious tactical discussions between leading
