Posted by Neil Rose, Editor, Legal Futures
If anyone wanted to see what alternative business structures (ABSs) can achieve, they need look no further than Slater & Gordon.
If you take into account the sum announced as going towards buying Simpson Millar – a deal currently on ice – S&G has committed around £150m towards its UK expansion since first announcing the acquisition of Russell Jones & Walker in January 2012. Could it have achieved this without being a listed company? I’m no financial expert, but I doubt it; raising money through share issues has been key, although debt levels are up sharply as well.
The growth on both sides of the world has been dramatic since S&G listed on the Australian Stock Exchange in 2007, when it had around 400 staff in 26 locations. Including Pannone, it will next year have 2,400 (split equally between the two countries) spread between 70 locations in Australia and 12 in the UK. Its 2006/7 revenues were £35m (at current exchange rates); its 2013/14 revenues are now projected to exceed £210m.
Most of this growth has been through acquisition – more than 20 deals in Australia since listing, mainly small ones given the nature of the market, but a couple of big ones too. S&G has been more aggressive in the UK by this measure, but it still has a long way to go on name recognition. S&G claims huge brand awareness in Australia, particularly in Victoria, its home state, but the UK is obviously a much bigger market where it has been for less than two years.
It is starting to address this through a concerted TV advertising campaign, and the press team is doing an impressive job of getting S&G lawyers in front of all sorts of TV cameras and in the newspapers. That the firm is taking on all sorts of high-profile cases, from Saville to interest-swap mis-selling, is a major help too.
The access to capital S&G has gives it the chance to push itself up the food chain and in front of the many intermediaries who have so successfully inserted themselves into the legal market over the past 15 years or so. It’s a bold move and it’s worth noting that thus far there is no evidence that the firm has been in any way compromised by being publicly listed.
But then this is a smart operation looking to replicate its success in Australia – the fact that in recent months chief operating officer Cath Evans and marketing and business development chief Kalle Amanatides have both relocated to the UK is evidence of this.
S&G is banking on being one of the handful of brands that some predict will come to dominate the consumer legal market in the coming years. There are already several jockeying for that position, whether Irwin Mitchell, which has still to really show its hand, and QualitySolicitors, or the various big brands that now have ABSs, the Co-op, AA, Saga, Stobarts, BLG Group (aka the meerkat people) and shortly Direct Line to name some of them.
I’ve written before that one of my most gobsmacking moments of the year came a couple of month ago when I heard a radio advert from Churchill (a Direct Line brand) whose sole purpose was to promote its legal advice line – I’d never come across an insurer making a virtue out of the access to legal advice they provide, as opposed to hiding it in the policy small print.
It is this kind of competition that S&G is up against, with resources, name recognition and a customer base it cannot hope to match. Though there are advantages to S&G being a ‘traditional’ solicitors’ firm (in broad terms), arguably there are disadvantages too given that there is a proportion of the population who view solicitors with suspicion and may find comfort in using a brand they trust.
But the vision is clear, the war chest has been well and truly opened, and S&G must be admired for what it is trying to do. This is perhaps the model law firm of the post-ABS era – lawyers to the core but a business from top to bottom.