Brits brace for Slater invasion
The acquisitive Australian law firm has big plans to expand in the UK, writes Peter Ker.
A stroll down London's Chancery Lane now comes with a familiar sign of home. An ordinary red-brick building has, over the past week, been fitted with the blue square logos of Australian law firm Slater & Gordon, reflecting an invasion of the British legal industry that is anything but ordinary.
Over the past fortnight similar signage has been erected on eight other buildings across Britain, as Slater & Gordon's acquisition of British firm Russell Jones & Walker starts to take shape.
Exactly one year on from the announcement of the $80 million buyout, Slater & Gordon has made more than headlines in Britain, with The Guardian describing it as Australia's "poster child for Tesco law".
The acquisition was considered so groundbreaking that it earned a place in this year's curriculum for students studying an undergraduate law degree at the British College of Law: "Find out what is notable about the way the Australian law firm Slater & Gordon is owned and consider the differences between this and the majority of law firm partnerships. What are the potential benefits?"
The answer of course lies in Slater & Gordon becoming the first law firm in the world to list on a stock exchange and use the associated financial firepower to acquire more than 25 legal practices in Australia and Britain over the past five years.
A period of expansion in Australia meant Slater & Gordon was ready to pounce when Britain started liberalising its legal industry by allowing a wider range of ownership structures than the traditional law firm model, where partners divide up the profits.
That and other rule changes allowed Slater & Gordon to swoop on Russell Jones & Walker and now Slater & Gordon is working to develop the sort of brand recognition in Britain that it enjoys in Australia.
"Nobody has ever really created a law firm brand in this country and that is the opportunity," said Neil Kinsella, who spent more than a decade as managing partner of Russell Jones & Walker and is now running the Slater & Gordon brand in Britain.
"We think there is an opportunity to really put an independent law firm brand out there because we don't see too many people being able to do that on a national basis."
The Melbourne firm is believed to spend more than 5 per cent of turnover on marketing its brand as a leading name in the personal injury, employment law and family law sectors. That approach is likely to be replicated in Britain, along with the tendency to take on high-profile class actions and group actions.
The firm that beat big tobacco is regularly on radio and television in Britain spearheading the legal case against the estate of former BBC entertainer Jimmy Savile, who has been accused of rape and abuse crimes. Another action under way is against banks that mis-sold interest rate swaps to small- and medium-size businesses in Britain.
Australian investors appear to be cherishing the ability to invest in a legal services stock, with Slater & Gordon's share price hitting $2.36 on Valentine's Day - well above the 2007 listing price of $1 and close to the all-time high of $2.50 set in 2011.
An Ord Minnett analyst, Brad Dunn, said direct-to-consumer legal services were a growth industry in developed countries and the sector was almost immune to economic downturns. He said it was hard to find fault with Slater & Gordon's British acquisition strategy.
"From a simple numbers perspective the UK is a market that is four to five times larger than Australia with no single firm holding more than 3 per cent market share, as well as many very small players," he said.
"At this stage Slater & Gordon stand out as the exception, but I wouldn't be surprised if, once all the new regulations are in place in the UK, others consider a similar move. It stands to reason that they would be thinking about it, surely."
At Slater's headquarters in Melbourne, the managing director, Andrew Grech, says the focus is on bedding down the British division, but he hints that more acquisitions there may not be far away. "We are not going to the UK to be bit players. Russell Jones & Walker would be about the fourth or fifth largest personal injuries claimant firm and we are not satisfied by that market position," he said.
"I think it's likely at sometime over the next three years we will want to make some strategic acquisitions and do what we've done in Australia, which is to fill out the geography. There are some geographic holes in the network in the UK and we may also want to fill out some competencies."
The reporter travelled to Britain under an internship at London's Financial Times newspaper sponsored by the British High Commission and British Airways.