A public life--when law firms test the capital markets.

The idea of the law firm partnership is the antithesis of the corporate, publicly traded company--and that attracts many lawyers and marketers to the field. But all that will change some day for U.S. law firms, according to experts. After all, it's already happened in Australia, with the recent initial public offering of a law firm, and the United Kingdom is clearing the way for firms there to go public.

"This train is not going to be stopped," says Gerald A. Riskin, co-founder and partner in Edge International. "It's too lucrative for firms. The current partners will make a load of money."

An IPO, and the huge infusion of cash that it could potentially bring, will change many aspects of the ways firms operate--including a potentially profound change in the way law firms view the marketing department and the role it plays. Slater & Gordon, the Australian plaintiff 's firm that went public in May, raised $29 million when it went public, and the stock has continued to perform well. Among the uses of its new public capital, the firm listed "a more extensive advertising and marketing program to further build the Slater & Gordon brand as a driver of new client enquiries" in its prospectus to potential investors.

Flush with new equity, law firms would most likely hire more, and even more sophisticated, marketers. "A lot of Wall Street firms value growth," says Lisa R. Smith, a vice president at Hildebrandt International Inc. "And firms will put more of a premium on hiring high-level people at every level."

A Boon for Marketers

For some marketers, working for a publicly traded law firm could offer the best of all worlds--the chance to do cutting-edge marketing work in the field of law. As a publicly traded entity, attorneys may actually shake off some of their more old-fashioned notions about the value and role of the marketing department.

"It will be more about discipline and more structured decision-making," says Smith.

"It might result in [marketers] getting permission to do more," agrees Riskin. The traditionally risk-averse nature of attorneys may be trumped by the need to think like corporate denizens and satisfy shareholders and Wall Street." It could be a wonderful time for marketers," he says.

And Smith and Riskin agree that the law-firm IPO trend is contagious--a second firm in Australia, Integrated Legal Holdings Inc., has filed to go public. And in the United Kingdom, the Legal Services Bill is expected to pass later this year. By 2010, firms there could go public.

But if the question is when, not if, law firms go public in the United States, it will still be some time off. Smith predicts it could be 10-15 years. "The regulatory hurdles are significant," she says, pointing to the 50 different bar rules in 50 different states as among those challenges.

But simply adding more money to a firm's coffers won't necessarily change the lawyers' mindset, says Riskin, who questions whether a publicly traded law firm would--in most cases--be good for lawyers or investors.

The Slater & Gordon prospectus sums up one of these conflicts: "Lawyers have a primary duty to the courts and a secondary duty to their clients. These duties are paramount given the nature of the Company's business as an Incorporated Legal Practice. There could be circumstances in which the lawyers of Slater & Gordon are required to act in accordance with these duties and contrary to other corporate responsibilities and against the interests of Shareholders or the short-term profitability of the Company."

For some investors, the idea that the company's first duty is not to increase shareholder value could be problematic. And while current law firm partners would stand to benefit handsomely from an IPO, the fiscal benefits for non-partners may be less generous. "The current partners will take loads of money," says Riskin. "They would invest some of it, but not all of it."

Others at the firm would find themselves sharing profits with shareholders. That could discourage some attorneys, who may figure they would be better off at a law firm where they only have to share profits with their partners.

And the bedrock structure of law firms--the partnership--would cease to exist. "It won't be a partnership anymore," says Smith. "It would be more top-down driven." On the other hand, says Smith, the changes in day-today operations wouldn't affect many at a law firm, especially those who are not in the C-suite.

It took years for U.S. investment banks to warm to the idea of doing their own public offerings, until it has become standard practice among the Morgan Stanleys and JPMorgan Chases. As it did for investment banks, the sheer dollars that can be made on the public markets could make the prospect irresistible to U.S. law firms. Competitive pressures could also make some firms at least consider IPOs--after all, if you are at an international firm with offices in London and New York, and the firms you traditionally compete with have millions and millions of dollars to use for recruitment and expansion, going public may seem unavoidable, if you want to compete--or don't want to be swallowed whole.

Brett Davies, a foundation partner of Integrated Legal Holdings-the next Australian firm scheduled to go public--jokingly suggested that Strategies warn U.S. law firms that once it goes public, his firm is ready to come over and buy "the best and brightest" over here.

More seriously, though, he says he is surprised by the reluctance of U.S. law firms to embrace the public markets. "I have always felt that USA lawyers were very dedicated," says Davies. "However, I have been amazed at the USA clinging to the old ways of not allowing non-lawyers to own law firms."