Reports have circulated that Australia’s most recognised and successful plaintiff law firm, Slater and Gordon, plans a public float in the coming months. If successful, the float will cap off a remarkable rise for the firm, and its figurehead, former Footscray Football Club president, Peter Gordon.
Slaters has enjoyed a remarkable rise under the stewardship of Gordon, with the firm recovering from near collapse in the mid-1980s with victory in the Wittenoom asbestos case against CSR (the first successful asbestos claim and a forerunner to the James Hardie litigation).
Since then, Slaters has represented class actions against BHP (over the Ok Tedi mine), Esso (over the Longford gas explosion) and unsuccessfully against British American Tobacco. The Australian claims that the Slaters float will raise “tens of millions of dollars” to assist the firm in the scramble to consolidate Australia’s legal firms.
However, Slaters isn’t the first legal firm to flirt with public ownership. Last October, a company called Integrated Legal Holdings sought to raise $14 million to acquire three West Australian-based legal firms, as well as a legal document and management consulting company.
That float has been put on hold, being stymied last year by ASIC after the regulator received complaints from the Western Australian, NSW and Victorian legal services boards regarding potential conflicts and consumer rights. The ILH website states that a prospectus will be available in 2007.
In a sense, the complaints raised by the legal services board seem innocuous. All legal businesses, whether they are structured as a private firm or public company are required to deal with a myriad of conflict issues on a daily basis. The fact that the ultimate owners of the business are public shareholders rather than firm partners doesn’t alter the firms’ obligations to their clients and the court. Further, despite investment banks arguably encountering even more egregious conflicts (between their trading and advisory arms), most remain very successful, publicly listed businesses.
Leaving aside the regulatory issues, if ILH and Slaters are able to publicly float their shares, the decision to invest will be an interesting issue. While leading firms such as Mallesons or Freehills have a relatively stable revenue stream (earning the bulk of their revenue from a more balanced, “blue-chip” client list) plaintiff law firms such as Slaters rely on larger, but far more infrequent and unreliable class-action style awards. Such a model would provide far more volatile earnings – acceptable within a private firm, but less so in the case of a heavily scrutinised, listed entity.
If and when Slaters does manage to publicly float, Peter Gordon, the saviour of the Footscray Football Club, can place another feather in an already impressive hat. However, one suspects Slaters’ time as a public company may be as difficult as its unsuccessful tobacco litigation.