London’s Listing Problem
Before the 2008 financial crisis, London was a genuine rival to New York for new listings. In 2005, IPOs on the LSE’s Main Market raised €19bn, beating the NYSE. Today, the picture has been turned on its head. In the first half of 2026, American markets raised over $130.3bn over 84 IPOs, whilst the LSE was only able to raise £577m over just seven IPOs.
What’s behind the change in fortunes?
Part of the answer is regulation. In the aftermath of the Enron scandal, the US passed the Sarbanes-Oxley Act, which made listing in New York riskier. Executives were now personally liable, even criminally, for their company’s accounts, and auditing costs rose too. Many companies became apprehensive about listing there, and London reaped the benefits.
However, London’s advantage did not last. UK pension funds and other institutional investors had been steadily pulling money out of British shares, a retreat that accelerated after 2008. This was partly driven by the Pensions Act 2004, which pushed many pension funds towards fixed income rather than equities, as stricter funding rules left employers liable for any shortfall in their schemes. This lack of domestic investment made UK equities cheaper and more appealing to foreign buyers and PE funds, who soon began picking off the market. Combined with the lack of a tech boom within the UK itself, this meant UK capital markets began to lag.
How does this relate to law firms?
Equity capital markets (ECM), the raising of funds through the sale of shares, is one of the main components of the capital markets practice, usually found within a law firm’s larger corporate department. It covers IPOs, when a company first sells its shares to the public, known as “going public”. On an IPO, lawyers carry out due diligence on the company, draft the prospectus, negotiate the underwriting agreement with the banks selling the shares, and ensure the listing complies with FCA rules.
The fightback
Recognising the issue, the UK government commissioned the Hill Review, published in 2021, which recommended reforms to the listing regime. It paved the way for the new UK Listing Rules in July 2024, the biggest overhaul in 40 years. Premium and standard listings were merged into one category, boards no longer need shareholder approval for major transactions, and dual-class shares are now permitted, allowing founders to keep control after listing: a direct attempt to win back tech companies from New York. A three-year stamp duty holiday on IPO shares and simpler rules for raising further capital followed. Yet the reforms come at a cost. They loosen shareholder protections, and they target the supply of companies rather than the shortage of UK investors to buy them.
The effect on law firms
For UK firms’ ECM practices, the lack of IPOs and the migration of British and European companies like Klarna to the US mean a loss of fees and of the related work that follows. Some companies have struck a balance: in February, AstraZeneca listed directly on the NYSE while remaining headquartered and tax resident in the UK. Yet the work stayed with a UK firm only because its adviser, Freshfields, was able to field a joint London and New York team. For UK-based firms, maintaining a US presence is increasingly essential, which helps explain the recent wave of UK-US law firm mergers.