Around 18 months ago, Andrew Grech, the managing director of Slater & Gordon (S&G), gave a presentation to a seminar run by accountants Baker Tilly. He began by showing a slick corporate video outlining the history and achievements of S&G. Two things struck me from this.
First was a cut-away of S&G’s headquarters, at the top of which was a huge ‘Slater & Gordon’ sign, the kind of self-promotion UK firms simply don’t indulge in (at the moment). But this reflects the fact that S&G appears to have achieved what no UK firm has done and actually established a brand that consumers recognise.
Second was the thought that the closest UK equivalent was Russell Jones & Walker (RJW) – both firms started life (RJW in the 1920s and S&G in the 1930s) acting for trade unions, and, while personal injury remains their core business, both have since grown significantly and diversified into other areas of mainstream legal practice. It was a comparison acknowledged by the senior RJW partner sitting next to me.
So while the news that RJW is to be acquired by S&G was undoubtedly a ‘blimey’ moment, it does not come as a total shock as on its face this looks a good fit. There’s obviously more to the deal than a common history, but it’s a good starting point.
And, taking a step back, it is not the most radical development we will see in the post-alternative business structures world. This is, at the end of the day, one law firm buying another and no doubt that allayed any fears among RJW partners.
Then again, S&G is no ordinary law firm, famously becoming the first law firm in the world to go public back in May 2007. Indeed, those UK law firms considering a stock market flotation will no doubt take note of the bold moves that increased access to funds can facilitate.
S&G can boast of some impressive statistics since 2007: turnover nearly tripled to A$182m (£123m), staff numbers increased from 418 to 1,102 and office locations up from 26 to 61. A good deal of this is a result of an acquisition spree that has seen S&G swallow up no fewer than 20 practices; both RJW’s Neil Kinsella and Mr Grech were coy about the potential for acquisitions over here when I spoke to them yesterday, but it’s fair to say that buying size and weight fits S&G’s MO. Just two months ago it bought a conveyancing practice from which to establish a “beachhead” to grab a significant share of that market in Australia.
I’ve been keeping an eye on S&G, albeit from afar, and it would seem that the concerns some people had around a law firm going public have not been realised, particularly around conflicts of interest. The firm’s prospectus made it clear that its duties were, in order, to the court, its clients and then its shareholders – although on Twitter yesterday the Law Society (through its Legal Market account) noted that this has yet to be tested in court.
For RJW, the partners get the firm’s overdraft paid off and will receive both cash and shares, as well as the financial wherewithal to expand and reach the goal of becoming one of the two or three major legal brands that Mr Kinsella believes will exist in five years or so. As he told last April’s Legal Futures conference, “ABS is just a means to an end, a way of facilitating capital that is required to get transformative change underway”.
So let the transformative change of RJW begin – it has been clear for a long time that the firm was itching to do something big and it now has the capital backing to realise its ambitions. RJW’s obvious rivals at the top end of the consumer market, such as Irwin Mitchell and QualitySolicitors, will no doubt be watching very closely as it does so.