Slater and Gordon was the first law firm to be listed on a stock exchange when it became listed on the Australian Stock Exchange in 2007. The firm currently employees over 3,800 employees in the United Kingdom alone, however, on 1 March 2016, Slater and Gordon’s share value stood at an all-time low of AUS$0.33 per share. In comparison to the firm’s highest share value which stood at AUS$7.85 per share on 2 April 2015. The share price has plummeted within a 11 month period.
There are a number of factors that have contributed to the massive reduction in the share price of Slater and Gordon.
Purchase of Quindell
In March 2015, Slater and Gordon purchased the professional services sector of Quindell, however, it announced in late February 2016 that it would be forced to write down the assets it acquired in the sum of AUS$876 million during a 6 month period expiring at the end of December 2015, this loss was primarily attributed to the assets acquired from Quindell.
Shareholders of Slater and Gordon Limited will clearly have concerns due to the stock value decreasing by 95% over a period of around 11 months. The company lost around 60% of its share value alone, between opening trading on Monday 29 February to midday 1 March 2016.
Geoff Bowd, the director of The Australian Shareholders’ Association has put forward that poor business decisions have been made by Slater and Gordon that have clearly impacted the firm’s shareholders. Mr Bowd specifically stated “it is difficult not to question the lack of proper financial management, disclosure and due diligence by the company”.
Potential Class Actions
It appears that potential class actions may be brought against Slater and Gordon from rival Australian law fir
m Maurice Blackburn Lawyers. Andrew Watson, the head of class actions at Maurice Blackburn Lawyers has stated that the substantial write downs of Slater and Gordon’s assets have cast a level of doubt into the disclosures made by Slater and Gordon about the real value of Quindell’s assets.
Andrew Watson has stated that it is “almost certain” that Maurice Blackburn Lawyers will be filing a class action against Slater and Gordon on behalf of shareholders that have lost the sums that they have invested into the firm.
In the wake of the share price plummeting, Andrew Grech, the Managing Director of Slater and Gordon has offered his resignation to the board of directors, however, the board have rejected this proposal and have highlighted that the firm needs stability
during these difficult financial times. Andrew Grech has stated that “the decline in business performance in the United Kingdom is of serious concern to all Slater and Gordon and equally to all of our investors”. The firm will now be looking at measures that they can take to improve operational performance of both business in the United Kingdom and the wider Slater and Gordon group.
Legislative Changes to Personal Injury Law
The United Kingdom Government brought in legislative changes that have made it harder to claim for injuries that have occurred due to road traffic accidents. George Osborne announced in November 2015 in his Autumn Statement that further cuts would be made to personal injury law and confirmed that he would raise the limit for personal injury claims and make it harder for Claimants to claim compensation for whiplash.
Adaption is Key
The plummeting value of the shares in Slater and Gordon highlights the need for law firms to be able to change and adapt to legislative changes. Slater and Gordon will have been affected by these changes as well as every other law firm in the United King
dom. It is how law firms respond and adapt to the ever changing legislative framework within which they operate that will determine their future and the service they provide to their clients.
At Ison Harrison, we are always changing, and always improving, in order to ensure that we provide the best possible service for our clients and to ensure the continuation of the successes of Ison Harrison.
If you have any legal commercial queries please contact a member of our Company Commercial Department on 0113 284 5000.