Slater & Gordon, Australia's first law firm to float on the stock exchange (last May) has been on a spending spree buying law firms. Its latest purchase, and biggest, is McClellands, a Sydney personal injury litigation firm. The price is made of cash and AUS$2million in S&G shares.
S&G has also bought another law practice where it's locked the principal in for three years. This is interesting as I watched a law firm merger in Chicago once. It was going smoothly until the incomer's senior partner died after 9 months. As one of the partners who promoted the merger said: "If he'd lived for another 9 months, we'd have had all the clients locked in. Now I don't know."
Slater & Gordon, as one of my Miami summer school students told me recently, has had a bumpy ride on the Australian Stock Exchange. Although its share price has gone up, it has dipped a few times as well.
The chart shows the progress of the share price. S&G is shown by the bright red line: beginning of August it was down to AUS$1.56 from a high in July of AUS$1.73. (S&G is compared to the S&P/ASX 200 and the M Average.) It shows that despite probably good earnings and consistent revenue streams, even law firms aren't a sure bet. Mind you, the markets thought subprime mortage bonds were a good bet. Oops!
PS. Bruce McEwen has an interview with Andrew Grech, the managing partner of S&G at Adam Smith Esq.