It’s not just another acquisition

Some in the general business media are asking what the acquisition of the UK’s Russell Jones Walker by Slater & Gordon is all about. Surely, these commentators say, this is just another everyday acquisition, the more interesting aspects of which are the valuation and investors’ early responses.

I disagree. My reasons are set out in today’s (3 February 2012) Legal Affairs in The Australian where I have written about the implications for law firms in Australia, the UK and elsewhere.

Firstly, the UK Legal Services Act now allows persons other than lawyers to own and operate law firms resulting in ASX-listed Slater & Gordon, AIM-listed Quindell Portfolio and Irwin Mitchell all being active. And in the USA Jacoby & Myers, another large personal injury firm, is suing to be allowed to raise external capital while the New York state bar has re-opened the question of non-lawyer ownership. These regulatory changes are upending decades of stability in the industry.

Second, Slater & Gordon is a 75 year-old law firm with strong  social values, it is listed and has a proven M&A and post-acquisition integration capability. These factors combine to make S&G unique; it is not just another entrepreneurial acquirer using the strong Aussie dollar to advantage.

Third, Slater & Gordon is not the subject of a Harvard Business School case study simply because it is the world’s first listed law firm. It’s no ordinary firm in many ways. It has a tightly defined product-market scope and defensible strategies for mitigating the adverse aspects of competition for talent and clients. And it has access to capital. Very few law firms can claim, let alone deliver, a strategy like this.  But many will watch, learn and follow.

The threats are real for traditional law firms in the consumer law space. As the Slater & Gordon success story (judged here in terms of consumer benefits) rolls on, others will follow. We can expect consolidation to gather pace, small firms to sell or be squeezed, much of the time driven by investment markets.

Opportunities? Australian law firms are world leaders in innovation; smart entrepreneurial firms will derive lessons from all this.

Tags — #Slater&Gordon

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