Today (21 May) the world, or at least the world’s legal market, has changed forever. While in the UK the legislative process rumbles onwards towards a post-Clementi world, lawyers on the other side of the world at the first law firm to get an IPO away are popping the champagne corks.
Slater & Gordon is known to many Australians as ‘the class action law firm’. It has won a number of high-profile personal injury battles, including the first mass breast implant settlement, against Dow Corning, and the James Hardie asbestosis litigation, which led to claims estimated at around A$1.5bn (£625.07m).
Rob Hanley, London managing partner of Australian giant Minter Ellison, says Slater won itself a lot of kudos for the James Hardie matter in Australia.
“It led to the public sentiment swinging behind the asbestos claimants, while media pressure led to a series of board-level resignations,” said Hanley. “Aussies love to see the high-flyers get a beating.”
After today, when Slater should have raised at least A$35m (£14.58m) on the Australian Stock Exchange (ASX), its seven new directors could be reasonably considered as high-flyers themselves.
The Lawyer was lucky enough to secure a copy of the firm’s prospectus. It makes for interesting reading.
The offer price gives Slater, the world’s first publicly traded law company (and you can almost hear the collective gnashing of lawyers’ teeth at that phrase), a post-float market capitalisation of A$107.8m (£44.96m).
The offer is made up of 35 million shares at A$1 (42p) each. There is a new issue of 17.7 million shares and a A$17.3m (£7.21m) sell-down of 17.3 million shares by the firm’s seven vendor shareholders. These include managing director Andrew Grech, deputy chair Peter Gordon and principal lawyer Paul Henderson, all of whom have become millionaires thanks to the IPO.
The price earnings multiple is 11.9. This, incidentally, is very similar to the multiple (13) used last year by The Lawyer in an article on how much UK firms would raise if they were to float. It bears out market indications that publicly traded law firms would indeed be very valuable commodities.
In a letter to potential investors, Slater’s chair Anna Booth says for the past three years the 70-year-old firm had been implementing a growth strategy built on the strength of the existing business to broaden its national reach.
“Our growth to date has been funded internally by key shareholders and through debt,” adds Booth. “This offer provides an opportunity for those key shareholders to sell down part of their holding in Slater & Gordon. In addition, we’re now seeking an injection of capital to accelerate the delivery of our growth strategy.”
That strategy will centre on a plan to, as Booth puts it, “capitalise on legislative changes in the personal injury sector by pursuing an acquisition programme.”
It is not just the sound of gnashing teeth that can be heard at this one. There will be bells going off all around the UK in the minds of the more forward-thinking managing partners in firms that are already gearing up for an acquisition spree and possible float once regulations allow. (See the feature on page 18 for more on this.)
But is the deal likely to lead to one of Australia’s ‘big six’ law firms going public? Not Minter Ellison, at any rate. Hanley said earlier this year (The Lawyer, 26 February): “Minter Ellison is on the record as saying it’s not interested in listing, and that position is probably indicative of the views of the other large firms as well.”
The prospectus also revealed that Melbourne-based firm Arnold Bloch Leibler, which advised Slater on the offer, picked up around A$350,000 (£145,850) in fees for its trouble.