Slater and Gordon IPO
I have a problem with law firms like Slater and Gordon seeking to list on the Australian Stock Exchange, as reported in The Age.
Slater and Gordon specialise in asbestos law, personal injury claims and class action. They are sharks fishing for tasty morsels at the bottom of the ocean.
I’m sure there’s a place in the netherworld for such creatures, and I personally admire some of the Grisham-type skills which make them successful, but I draw the line at seeing them pursue profits for the benefit of public shareholders.
The key performance indicators will necessarily involve increasing litigation and higher payouts. That can hardly be good for society as a whole. Think insurance premiums, court-system bottlenecks, more lawyers, clerks and judges.
I’m not into this fad of so-called ethical investments, but I like to support companies that actually produce things, create wealth for people other than themselves and provide services wanted by the community.
Some people might need the likes of Slater and Gordon and others might be persuaded they need them. I just can’t get my head around the idea of maximising revenue and profit from litigation to bolster dividends and shareholder value.
These articles might be of interest:
I can’t see a real problem. The judgements shouldn’t change. I can’t imagine the courts increasing payouts just because the legal firm representing the plaintiff is a big listed company and needs the profits to keep its shareholders happy.
My daughter is a lawyer and she actually works for a large Brisbane firm that represents the insurers in these compensation claims. They’re no better than S &L and probably worse. I’d like to see her move on to representing people not companies one day. Maybe she’ll join S &G after they list - that would be good; she’d have to come back to Melbourne!
I think (no offence) that you should consider your comments more thoroughly before jumping on the “anti-legal profession band-wagon” ala Bob Carr.
You have claimed that public listing of law firms will create higher payouts. This is wrong as Mr. Dixon pointed out above the law will not change and people’s entitlement to compensation will not be increased by S & G’s greater determination to maximise profits (shareholder value).
Secondly you have said that S & G will want to increase litigation to maximise profit. This is also wrong. The areas of law you have mentioned as S & G’s specialties are areas where firms generally work on a no-win no-pay basis because of the simple fact that what injured worker will have a spare $250,000.00 to pay their own firm if he or she was to be unsuccessful (on top of the other side’s costs). Any profit driven plaintiff firm would be looking to settle as many cases as possible to guarantee payment. On the contrary to your concern I believe that all legal firms may exert pressure on employed solicitors to settle matters to ensure payment where it may not be in the clients interest. I do not think the public listing of legal firm would heighten this concern significantly.
The key performance indicators are going to be billable hours per solicitor and % of successful litigation.
Not really sure what you mean by “companies that actually produce things, create wealth for people other than themselves and provide services actually wanted by the community”…. Law firms like S & G create wealth for the partners, but dont they also create wealth for their employees, for their clients, for their suppliers, agents etc etc If we are taking the standpoint that big business is bad and exploitative, then yes agreed, however if there is some distinction between law firms and banks or supermarket chains or sporting goods stores I would object. I’d say the community wants people negligently exposed to asbestos and suffering the effects day in and day out compensated by the big corporations at fault. The fact that a service as provided by a law firm is intangible and a tomato sold by Woolworths is tangible doesn’t enter the equation in my humble opinion.
The biggest concern in my mind is the pressures that will be exerted on those employed solicitors at S & G and any other listed law firm in the future. With the profession of “lawyers” ranking in the top 5 for job dissatisfaction, alcoholism/alcohol abuse and depression [and possibly suicide but dont quote me on that one] and lawyers at the big firms being amongst those most at risk it seems like this increased profit driven company line could create an even more serious occupational hazard.
Each to their own!
gebir
Thoughtful post Dave, good comments, no rebuttal from me except I don’t like the fact our society is becoming more litigious and I choose not to invest in S&G for that reason and others.
Your final comment reflects a valid concern about the profession in general. Whether the KPIs are payout figures or billable hours this pressure will presumably be increased in a public company.
I haven’t seen much analyst comment on this but surely the ASX disclosure rules will be tested in ways they have never been before. It’s not difficult to imagine scenarios of potential conflict between disclosure requirements and confidentiality or privilege.