The latest Slater & Gordon heist, the buy-out of a British law firm, has raised a few eyebrows here and in the United Kingdom. Has the power shifted to the antipodes? Kate Gibbs writes.
Britain was left shaking its head last week when cashed-up Australian law firm Slater & Gordon bought out the British personal injury firm Russell Jones & Walker (RJW) in an unprecedented $80 million cash and shares deal. Basically, here come the Aussies.
British media was sprinkled with "blimeys" and cricket references after the news broke last week. But more appealing and amusing was a post on the blog Above the Law, in a Letter from London by Alex Aldridge. The excellent piece looks at how the recent Slater & Gordon buy-out is yet another example of the Aussies sticking it to the Brits. It started with early convict rebellions and now there is this Slater & Gordon thing.
As Aldridge writes, Australians have become a bit breathless with it all, and The Australian newspaper reported that the deal had left Britain "reeling".
The Australian reported: “The British lawyers have good cause to worry. Until now, the power relationship with Australian law firms worked in the opposite direction, as big English firms merged with Australian practices that were keen to tap global markets. But if this week’s deal goes well the power will move to Melbourne."
Amid all the excitement, it is easy to get carried away. As the blog states, until now the power relationship with British law firms worked in the oppose direction. The Brits browsed, the Brits took what they liked the look of. Seventeen-eighty-eight aside, even as big British firms have merged with Australian practices in recent years, it's been as a means to tap global (read Asian) markets. But could the Slater & Gordon deal, and now the possible Freehills deal with Herbert Smith, be signs of a shift of power to the antipodes?
With the latest will-Freehills-merge considerations, having casually weighed up several UK firm potentials in recent months, Freehills has now set its sights on Herbert Smith. But far from there being a desperate dash to the ink, the Australian firm is taking things cooly.
Actually, while it's been touted a potential "merger of equals", sources told The New Lawyer the (possible) deal came about due to Freehills' browsing, what has been called its "international strategy". Again, the Aussies are "sticking it to the Brits". We've just moved from Rupert Murdoch running a topless model in Britain's The Sun newspaper, which continues, to more serious matters.
Britain, namely the Above the Law blog, blame the UK Legal Services Act (LSA). As it states, British lawyers have been talking about the deregulatory provisions of the LSA for years. But the question now is will the power really move to Melbourne-or-Sydney, or will the rule change to result in a host of stock market offerings of British law firms? Perhaps the latter is much more likely.
As the blog sagely notes: "Although Slater & Gordon isn’t floating in the U.K. at this stage, the share element of the deal means RJW’s 19 equity partners should receive more than £2m ($3.2m) each. Looking ahead, the temptation for equity partners at similar firms to cash in, Facebook-style, will surely prove too much for many."
Above the Law's argument is more about whether Slater & Gordon's success, post listing, will inspire UK law firms to cash in and jump on the stock market too - it weighs up the professional virtues of acting for a client while private investors potentially have an interest in the result of the case, for example.
But for Australia, the much more selfish question is whether Slater & Gordon's more recent heist - going to the mother land, browsing, and taking what it liked the look of - will pave the way for other Australian firms to do the same.
Kate Gibbs is the Editor of The New Lawyer.
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