Summary
The fund managers believe that AF Legal Group Ltd presents a compelling investment opportunity due to its strong market position and consistent revenue growth. In their opinion, the company's strategic focus on expanding its service offerings is likely to enhance profitability. They note the importance of the firm's experienced management team, which they believe is crucial for navigating market challenges. Additionally, the fund managers highlight the potential for increased client acquisition as a key driver of future growth. They express confidence in the company’s robust financial health, which they feel provides a solid foundation for sustainable development. Overall, the consensus among the fund managers is that AF Legal Group Ltd is well-positioned for long-term success, making it an attractive option for investors seeking exposure in the legal services sector.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Source: Trading View
Commentary From The Managers
Hurdle Rate
31 Aug 2025
$0.14
Summary
- Hurdle Rate observes a 27% growth in revenue for AF Legal Group during FY2025, with 11% organic growth.
- Normalisations such as legal defence fees and software implementation costs were elevated, as previously noted.
- The adoption of Aderant is projected to incur an additional $1.2m cost in FY2026, treated as an expense.
- Despite these costs, the indicative ROE using normalised profit has improved from 8% to 11%, indicating increased capital efficiency.
- There are still some run-rate earnings from Criminal Law not reflected in the accounts.
- Momentum in growth is confirmed to have continued into July and August, bolstering confidence in future growth.
Text:
Text:
Text:
Summary
-
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua, ut enim ad minim veniam.
-
Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat, sed ut perspiciatis unde omnis iste.
-
Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur, at vero eos et accusamus et iusto odio dignissimos.pedita.
Text:
Text:
Text:
Summary
-
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua, ut enim ad minim veniam.
-
Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat, sed ut perspiciatis unde omnis iste.
-
Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur, at vero eos et accusamus et iusto odio dignissimos.pedita.
Text:
Text:
Text:
Summary
-
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua, ut enim ad minim veniam.
-
Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat, sed ut perspiciatis unde omnis iste.
-
Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur, at vero eos et accusamus et iusto odio dignissimos.pedita.
Text:
Text:
Text:
Summary
-
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua, ut enim ad minim veniam.
-
Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat, sed ut perspiciatis unde omnis iste.
-
Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur, at vero eos et accusamus et iusto odio dignissimos.pedita.
Text:
Text:
Text:
Summary
-
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua, ut enim ad minim veniam.
-
Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat, sed ut perspiciatis unde omnis iste.
-
Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur, at vero eos et accusamus et iusto odio dignissimos.pedita.
Text:
Text:
Text:
Summary
-
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua, ut enim ad minim veniam.
-
Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat, sed ut perspiciatis unde omnis iste.
-
Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur, at vero eos et accusamus et iusto odio dignissimos.pedita.
Text:
Text:
Text:
Summary
-
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua, ut enim ad minim veniam.
-
Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat, sed ut perspiciatis unde omnis iste.
-
Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur, at vero eos et accusamus et iusto odio dignissimos.pedita.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Become a ThesisTracker Pro Member
-
Unlock current and most recent commentary ahead of the crowd
-
Exclusive access to new insights from the investment community
-
Regular alerts to actionable insights from financial professionals
Commentary From The Managers
Hurdle Rate
31 Aug 2025
$0.14
- Hurdle Rate observes a 27% growth in revenue for AF Legal Group during FY2025, with 11% organic growth.
- Normalisations such as legal defence fees and software implementation costs were elevated, as previously noted.
- The adoption of Aderant is projected to incur an additional $1.2m cost in FY2026, treated as an expense.
- Despite these costs, the indicative ROE using normalised profit has improved from 8% to 11%, indicating increased capital efficiency.
- There are still some run-rate earnings from Criminal Law not reflected in the accounts.
- Momentum in growth is confirmed to have continued into July and August, bolstering confidence in future growth.
Summary
Hurdle Rate
28 Feb 2025
$0.12
- AF Legal announced fair results with a 16% increase in revenue and a 10% rise in normalized net profit before tax.
- Despite positive financials, the company faced two significant setbacks:
- A claim for damages from an ex-employer of a lateral hire under previous management regarding poached clientele.
- A lawyer in the group is undergoing an investigation by their state law society.
- Hurdle Rate continues to hold because they believe the impact of a single lawyer's actions is unlikely to materially impair the group.
- Investigations by law societies are considered a relatively common occurrence in the industry, suggesting potential resilience.
Summary
Hurdle Rate
30 Nov 2024
$0.14
- Hurdle Rate updates its investment thesis on AF Legal Group Ltd following the release of first quarter FY25 results.
- AF Legal's first quarter profit before tax represents 46% of the entire FY24 profit, indicating strong profitability.
- The group achieved a significant improvement in employee satisfaction, with the 'Great Place to Work' survey score rising from 53 to 84.
- Increased employee satisfaction is expected to enhance retention and recruitment of quality staff.
- Working capital improvements noted, with family law debtor days decreasing from 32 days to 21 days.
- Criminal law matters are typically paid upfront, contributing to financial stability.
- Armstrong Criminal Law is expected to contribute to revenue starting in November, with a more significant impact anticipated in the second half of FY25.
- Hurdle Rate expresses satisfaction with the group's progress and outlook.
Summary
Hurdle Rate
31 July 2024
$0.13
- Hurdle Rate updates its investment thesis on AF Legal Group Ltd.
- AF Legal promoted 15 employees in legal roles, enhancing operational capacity.
- Smithstock has become a 5.5% shareholder in AF Legal, indicating confidence in the group.
- Smithstock, run by Tom Smith, has a track record of 7.5% p.a. net of fees since July 2019.
- Tom views AF Legal as a ‘jockey bet’, suggesting a unique investment perspective.
- With ACWE's contribution, there is potential for operational improvements moving forward.
- AF Legal is currently valued at 0.5x revenue, with a projected 5% profit margin.
- Expected margins could potentially double with ACWE's involvement.
- Hurdle Rate anticipates organic growth and hold-return exceeding 20% p.a..
- Potential for a rerating as the market recognizes improvements.
Summary
Hurdle Rate
31 May 2024
$0.14
- Hurdle Rate provides an update on their investment thesis in AF Legal Group Ltd.
- Q3 FY2024 update from AF Legal was relatively temperate.
- Cost base remains stable compared to prior quarters.
- Elevated statutory leave taken by employees impacted overall resource utilization.
- Quarter resulted in a loss, viewed as part of ordinary business operations.
- Exit costs related to prior management are expected to cease going forward.
- Confidence in forward results due to early April settlement of the ACWE acquisition.
- Hurdle Rate increased the trust’s position due to share price weakness.
Summary
DMX Asset Management
31 Mar 2024
$0.17
- DMX Asset Management participated in the rights issue of AFL Legal (ASX:AFL).
- The rights issue priced AFL at a $15m market cap, with pro-forma NPAT of ~$1.5m.
- AFL has a current $25m revenue base.
- The company has a national platform to enhance its family law and contested wills business.
- There is an opportunity to improve AFL’s scale and operating margins by leveraging a relatively fixed overhead cost base.
- Potential margin expansion from ~7% NPAT margins to 10%, still below other ASX listed legal firms.
- With $30m of fee revenue, this could generate $3m+ of NPAT.
- DMX Asset Management sees plenty of upside from here, contingent upon strong execution and integration.
Summary
Hurdle Rate
31 Mar 2024
$0.17
- Hurdle Rate updates its investment thesis on AF Legal Group Ltd (ASX:AFL) following the acquisition of Armstrong Contested Wills & Estates (ACWE) from GTC Legal.
- The acquisition is seen as a strategic fit, complementing AF Legal's existing family law business.
- ACWE deals with legal matters involving family dynamics, similar to family law but often requiring lengthy court processes.
- Legal disputes in ACWE are typically billed at the end, leading to higher working capital demands compared to family law cases settled via mediation.
- The acquisition includes current lockup of the ACWE business, aligning with the purchase price, minimizing goodwill.
- ACWE has shown growth, with revenue increasing from $2m to $3.1m over the past three years.
- Hurdle Rate is pleased with the capital allocation as they did not pay for the business itself, receiving double the trust’s full entitlement through shortfall shares.
Summary
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Frequently Asked Questions
Who has invested in AF Legal Group Ltd (ASX:AFL)?
Fund managers including DMX Asset Management and Hurdle Rate have invested in AF Legal Group Ltd (ASX:AFL).
Why have investment managers invested in AF Legal Group Ltd (ASX:AFL)?
Fund managers invest in AF Legal Group Ltd due to its strong growth potential and strategic acquisitions. With a current revenue base of $25 million and a market cap of $15 million, AF Legal is positioned for margin expansion from 7% to 10%, which could significantly enhance profitability. The recent acquisition of Armstrong Contested Wills & Estates complements its family law business, promising increased operational efficiency and revenue growth. Despite some setbacks, such as legal investigations, fund managers believe these are manageable and do not materially impair the company's prospects. Positive employee satisfaction metrics and improved working capital further bolster confidence in AF Legal's future performance, making it an attractive investment opportunity.
What happened to AF Legal Group Ltd (ASX:AFL)?
In August 2025, fund manager Hurdle Rate highlighted AF Legal Group Ltd's promising turnaround, noting a 27% revenue growth (11% organic) for FY2025, despite elevated legal defense fees and software costs. The ongoing adoption of Aderant is projected to incur an additional $1.2 million in FY2026 as an expense. Notably, the indicative return on equity (ROE) has risen from 8% to 11%, indicating improved capital efficiency. With continued momentum into July and August, confidence in further growth remains strong.