Slater & Gordon’s (S&G) ambition to become the country’s leading consumer law firm will mainly be fulfilled online as it looks to automate as much legal work as it can, its chief executive has explained.
It is also on the look-out for further acquisitions, but only if they bring with them a new source of work or new skills.
David Whitmore spoke to Legal Futures after earlier this week announcing a 13% fall in turnover in 2019 to £193m, but operating profit of £5m, compared to a loss of £5.6m a year earlier.
The annual accounts describe S&G as now both a people business and a technology business.
It is also acquiring personal injury (PI) firm Jigsaw Law from Examworks, the medico-legal and insurance services giant which supplies the ancillary services, such as medical reporting and rehabilitation, that S&G is dialling down handling itself to focus instead purely on legal work.
As well as PI – S&G’s heavy reliance on which is likely to reduce somewhat over time, at least in terms of motor-related claims – this meant other consumer legal services and also class actions, such as the Volkswagen emissions case which it is leading with Leigh Day.
Mr Whitmore said turnover had reduced because there were “some types of case from certain channels that we don’t want to do any more” – they were costing a great deal of money to acquire but not delivering a sufficient return.
This was why S&G was moving away from TV and focusing on digital advertising, along with partnerships with work sources.
S&G’s heavy investment in technology – £7.8m last year, after £6.7m in 2018 – will allows it to serve customers online.
“The buzzword is accessibility,” Mr Whitmore said. “If you’re a 28 year-old wanting to buy a house. you don’t want to go down to find the crusty old lawyer on the high street. You want to go online.” S&G has closed several offices around the country over the last three years.
He argued that “nobody has really got it right yet in terms of accessibility”.
This included price. “Most claimant law firms tend to concentrate on [clients with] a level of income which is way above the working average and these services are delivered in a certain way.
“Offering services in a different fashion allows us to drive down the cost and make them more accessible.”
Mr Whitmore said the main reason clients decided against instructing the firm was because they felt they could not afford it.
“In some ways we’ve got to lose terms like ‘profession’,” he said. “It’s a service.” While obviously legal knowledge was required, the standard approach of delivering it was very labour intensive and therefore expensive.
S&G’s technology strategy is based on three principles: the ability for staff to work from anywhere – which has come in particularly useful since lockdown – automating everything and creating/disrupting legal services provision.
The accounts explain: “We have adopted an ‘automate-first’ approach to solving technology problems and providing new services to the market.
“This has included the development of customer and delivery platforms that use machine learning, as well as an automated claims system within our personal injury business.”
The technology programme is designed “to challenge and improve every aspect of legal service provision”.
“With this uppermost in mind we are developing a suite of bespoke customer portals for all service areas. The first of these has been developed for the personal injury area, as well as to support our group litigation business, notably some 70,000 customers in the VW emissions case.”
This investment is why Mr Whitmore is confident that S&G can turn a profit from motor claims worth up to £5,000 that due to next April’s whiplash reforms will become small claims with no costs recovery.
He predicted a “massive contraction” in the number of PI law firms in the next two years “because they won’t be able to invest in the technology needed to reduce the cost to serve to a level where they can make a profit”.
The prospect of this means that it is a buyer’s market and though S&G is looking for acquisitions, Mr Whitmore stressed this was not a repeat of 2012, when the original Australian firm – from which the UK S&G is now entirely separate – came here and expanded through an aggressive acquisition strategy.
“We are interested in recurring pipelines of cases, whether it be through relationships like we have through Examworks or digital marketing or relationships with insurers.”
S&G will also consider practices that provide “a new or required capability”, and WIP books where the cases have a “longer gestation”, like clinical negligence. Books of fast-track work have little appeal.
But the accounts also show that S&G had 2,000 staff at the end of 2019 – 200 fewer than it started the year with.
Automation means that different skills will be needed, and Mr Whitmore acknowledged that not all staff would be able to adapt, although the intention is to give them the chance to.
On remote working, he said: “None of our people will be going into an office every day ever again and a good proportion will spend the majority of their time working remotely.”
It was critical therefore to ensure staff had the support they needed “to work productively, efficiently and responsibly from any remote location”, and that their wellbeing was prioritised.
S&G does not have the best reputation as a place to work, but last year conducted a “thorough” review of its culture and the start of a partnership with The Happiness Index.
The accounts said: “This allows us to track the sentiment and engagement of our employees, enabling changes that not only align with our culture and values but also resonate with our staff.
“These changes have included new training programmes, increased clarity of career progression, a structured induction programme for all new employees and greatly improved channels of communication.”
Mr Whitmore said: “This is a new world and we’re all going to be learning.”