Top-100 firm Russell Jones & Walker this week became the biggest beast in the new world of alternative business structures by announcing a £53.8m takeover by a stock-exchange listed Australian firm.
Slater & Gordon of Melbourne announced the acquisition on Monday, saying it planned to create one the UK’s biggest legal brands. The acquisition, which includes RJW’s Claims Direct claims management brand, concludes a three-year search by Slater & Gordon for a UK law firm in which to invest.
The deal includes an initial payment of £36.4m in cash. Of this, £8.8m will be deferred for up to two years subject to performance and £10.3m will go to repay the bank debt of the RJW partnership. The 19 partners at RJW receive £17.4m in Slater & Gordon shares, which they will be unable to sell for at least four years.
RJW chief executive Neil Kinsella said there were ‘no guarantees’ about whether the partners might then move on, but argued that was no different from the traditional partner model.
‘The key is we are building a brand and ensuring it can survive irrespective of the participation of people,’ he added.
All of RJW’s principals will continue to work in the new business and will become shareholders in Slater & Gordon. The new company will trade, initially at least, as ‘Russell, Jones & Walker, part of Slater & Gordon Lawyers’.
Revenue for the first full year of trading post-acquisition from RJW and Claims Direct is forecast to be £53m, with earnings before interest, tax, depreciation and amortisation of £10.9m.
The acquisition, which has to be approved by the Solicitors Regulation Authority, was announced to the Australian Stock Exchange, where Slater & Gordon is listed.
The UK is the second country in the world after Australia to permit the public listing of law firms and alternative business structures, and this is the first time firms from each jurisdiction have merged to exploit the new regulatory framework.
Slater & Gordon managing director Andrew Grech said: ‘We have the huge advantage of having a five-year head start in operating in a listed environment, and we can bring that experience to the UK through a kindred firm in RJW, which has the business structure and the people to exploit that advantage.’
Roughly one-third of the equity in the Australian company is in the hands of employees, with the rest owned by around 1,500 retail investors. Grech said the presence of external investors would not add to the pressure to generate profits at the expense of professional integrity.
RJW, established in the 1920s to gain compensation for injured steelworkers, now has around 425 staff across 10 locations. About 60% of its revenue is in personal injury litigation. It also has a strong employment law practice and a practice in family law. The main RJW offices are in London, Manchester, Sheffield and Birmingham.