Another chapter in the turbulent story of Slater and Gordon (S&G) has unfolded, with the beleaguered listed legal pioneer today (31 August) announcing the splitting off of its UK business from its Australian parent.
S&G’s UK arm will change into a new holding company, called UK HoldCo, which will be owned by the firm’s senior lenders, in a separation agreed as part of a recapitalisation programme linked to its ill-fated acquisition of the Quindell professional services business.
The move effectively splits S&G from the legacy Russell Jones & Walker, the top 100 UK law firm that the Australian business acquired in 2012 in a ground-breaking £53.8m deal.
In a statement to the Australian Stock Exchange (ASX), S&G said: ‘The company believes the separation of the UK operations provides the best option to enable both the Australian and UK operations to succeed in their own right and will enable the company to focus its management’s time and resources on the Australian business.’
The separation follows a hugely turbulent period for S&G, which has been wrestling with debts incurred largely thanks to its £637m acquisition of the Quindell business.
S&G announced in June that group managing director Andrew Grech had stepped down as part of a recapitalisation which saw the entire board replaced.
The recapitalisation agreement was reached with S&G’s main lenders, New York private equity house Anchorage Capital.
S&G also this week announced its financial results for the year ending 30 June 2017, with the firm incurring a loss of A$546.8m for the period, largely due to a write-down on the Quindell acquisition.
S&G became the first law firm to go public by listing on the ASX in 2007, and subsequently acquired personal injury specialist Russell Jones in 2012 to enter the UK market in what was touted as a hugely symbolic move under the incoming Legal Services Act regime.
S&G had made a series of acquisitions in recent years before attempting by far its largest deal with Quindell two years ago in a move that almost immediately went sour. In June this year, S&G issued a £637m claim in London’s High Court against Quindell (now called Watchstone Group), alleging the company fraudulently misrepresented itself during the purchase.
The latest episode in the S&G saga is another reminder of how little of the fanfare attached to the deregulatory ‘big bang’ of the Legal Services Act has yet to be justified, more than five years since the most radical elements of the legislation came into force.
As Legal Business noted recently, the other big hope to shake up the global legal sector – the big four accountancy firms – are likewise yet to live up to their own sales pitch.