Slater & Gordon is acquiring London-based Russell Jones & Walker for $80m. It is the first significant development from the UK Legal Services Act and could represent the start of a major trend.
It has created a big splash on both sides of the world. For one thing, this normally happens the other way round - Ashurst tying up with Blake Dawson, Norton Rose with Deacons, Allen & Overy poaching a chunk out of Clayton Utz. For another, it has only been able to happen at all because of the UK Legal Services Act, which allows British firms to go to the market for capital.
And it's a lot of capital. Slaters - the first law firm in the world to float - will pay $25.5m up front, and hand over another $15.2m to pay off some of RJW's bank debts. It will offer another $12.9m cash if partners at RJW hit their performance targets, and will also issue $25.7m in new shares for RJW staff and partners.
Slater & Gordon gets a 144 lawyer presence in London overnight and an extra $73.8 a year in turnover. The 19 equity partners at RJW become millionaires, and have easy access to enough ready cash to embark on a big marketing push. So it makes sense for them. But there's still the question of whether RJW will be able to retain the services of its key partners once they have cashed in their chips. Third party shareholders will expect a return on their investment, so inevitably there'll be less for the partners (and a smaller carrot for senior associates).
And there's the more immediate downside of the stilted video the firms inevitably produced to explain the deal.
Slaters said that it looked at over 30 UK firms before deciding on RJW. Both the Aussie and the UK markets will watch how this develops with great interest, and other firms may follow suit.
Tip Off ROF
It has created a big splash on both sides of the world. For one thing, this normally happens the other way round - Ashurst tying up with Blake Dawson, Norton Rose with Deacons, Allen & Overy poaching a chunk out of Clayton Utz. For another, it has only been able to happen at all because of the UK Legal Services Act, which allows British firms to go to the market for capital.
And it's a lot of capital. Slaters - the first law firm in the world to float - will pay $25.5m up front, and hand over another $15.2m to pay off some of RJW's bank debts. It will offer another $12.9m cash if partners at RJW hit their performance targets, and will also issue $25.7m in new shares for RJW staff and partners.
Slater & Gordon gets a 144 lawyer presence in London overnight and an extra $73.8 a year in turnover. The 19 equity partners at RJW become millionaires, and have easy access to enough ready cash to embark on a big marketing push. So it makes sense for them. But there's still the question of whether RJW will be able to retain the services of its key partners once they have cashed in their chips. Third party shareholders will expect a return on their investment, so inevitably there'll be less for the partners (and a smaller carrot for senior associates).
And there's the more immediate downside of the stilted video the firms inevitably produced to explain the deal.
Slaters said that it looked at over 30 UK firms before deciding on RJW. Both the Aussie and the UK markets will watch how this develops with great interest, and other firms may follow suit.