More law firms than ever are considering listing on the stock market in order to raise funds, according to a new survey of finance directors (FDs) at the UK top 100 law firms.

The research, carried out by Thomson Reuters, found that one fifth of finance directors (FDs) at the UK's 100 largest law firms would now consider an initial public offering (IPO), compared with just 4% in 2013-14.

The research also shows that the percentage of FDs who would consider private equity investment as a source of funding tripled last year to 24%, up from 8% in 2015-16.

Last week, Knights announced that it will become the fifth UK law firm to list on London's AIM market, with a float set for later this month. Gateley was the first to do so in 2015, followed by Gordon Dadds and Keystone in 2017, while Rosenblatt listed earlier this year.

Commenting on the findings, White & Case London-based capital markets partner Jonathan Parry said: "If a firm is thinking of strategic change, investing in new jurisdictions or practice areas, the capital to fund this has to come from somewhere. Partners can either fund out of their own pockets or the firm can take out debt.  The recent and well-publicised troubles of a few firms has reinforced a reluctance to rely too heavily on debt. The other obvious option is to access external equity via an IPO."

Firms like us need to watch what is happening with great interest – we can't afford to have competitors at an advantage

Jomati Consultants principal Tony Williams agreed but said that generally, law firm access to capital is not a "constraining factor". "They are able to borrow and they are able to borrow more cheaply. Whether you need to float to do it, I remain doubtful," he said.

Fieldfisher managing partner Michael Chissick (pictured), whose firm advised the banks on three of the UK law firm IPOs to date – Gateley, Keystone and Rosenblatt – said these listings are "shaking up the market".

"What is happening in the law firm IPO market is really interesting. All law firm managing partners need to be keeping an eye on this development. The law firms that have listed to date have made a lot of money and have a warchest to play with. We are watching with interest to see if a bigger player comes to the market," he added.

To date, Gateley is the only UK top 50-ranked firm to float, and Samantha Steer, director of large law strategy at Thomson Reuters, said that bigger, international law firms are less likely to list as the partnership model works well for them, because they already have the funding to invest in new technologies and expansion.

Parry added that partners at large firms still enjoy the level of control they have over the running of the business, which could be lost should external investors get involved, while Chissick also has doubts over whether the IPO option will work for international law firms.

"The IPOs so far are all smaller UK firms," he said. "I am not aware of any international ones; local bar rules make it very difficult for firms like ours with integrated offices to list, because the local bar rules prohibit third parties sharing with profits with non-lawyers. A lot of continental Europe bar rules ban non-lawyers sharing profits in the organisation, so as soon as you have an investor or fund manager sharing profits you fall foul.

"If we can solve the European bar issue then yes, we would be interested, but at the moment we can't list as a fully integrated European law firm," Chissick said. "Firms like us will need to watch what is happening with great interest – we can't afford to have competitors at an advantage."