Friday, 5 July 2013

Shine's interest shines a light on a UK market that is ready to talk

I was intrigued by a recent piece in The Lawyer about Australian interest in the UK legal marketplace. You can read the piece here. It explains that newly listed firm Shine Lawyers is looking at moving into the UK market. If it does, it would follow in the footsteps of Slater & Gordon, another heavyweight, and listed, Australian firm.

Erin Brockovich (2000) Poster
Shine has an alliance with environmental
advocate Erin Brockovich
Shine is valued at A$155m, after joining the Australian Securities Exchange in May this year. The very well regarded firm - which has a 10-year alliance with high-profile environmental advocate Erin Brockovich (yes, she of the Julia Roberts film) - made clear its ambitions for the UK in its IPO, signalling that its aim to expand globally would meet its first targets on these shores.

Antipodean enthusiasm

The firm's managing director, Simon Morrison, told The Lawyer that Shine was looking at acquiring "damages-based plaintiff litigation firms" here. "We have been looking at the market for the past few years and has done due diligence on a number of firms. But at the moment we don't have a time frame for the entry and haven’t decided on a target yet," Morrison said.

At first blush, it's tempting to wonder if Antipodean enthusiasm for the UK legal market is sensible. Certainly, there must be those who might suggest that Morrison has got it wrong, given the massive changes to civil litigation that have occurred in the wake of the Legal Aid, Sentencing and Punishment of Offenders Act (which became law last April). Moreover, as I wrote earlier this week, legislative change is not confined to LASPO: the Enterprise and Regulatory Reform Act, which recently received royal assent, is also set to introduce seismic eruptions to our legal landscape.

But actually, Morrison is onto something - and not just because of commonalities between Australian and Britain's developed legal systems. These are a great help, so too is something we can all take for granted: English as a common language. But there's another reason for Morrison, and, presumably, well-placed competitor firms in Australia, to be eyeing up the UK.

The UK market is ripe and ready

Post-LASPO, our law firms are facing a considerable challenge. The Act was introduced with the aim of curtailing what were perceived to be out-of-control litigation costs, but whatever its intent the reality has not been properly thought through. Put simply, LASPO's many changes will make it harder and harder for law firms to run cases professionally and commercially. At one end of the scale, high street firms existence may be challenged; at the other, national firms will see plummeting net profit margins, at least in the short term. The extraordinary and ongoing erosion of legal costs seems to pay no regard to the fact that maintenance of professional standards comes at a price.

In the middle, there are a great many firms who conduct and rely on claimant personal injury work, who when it boils down to it face one of two choices, or some combination of the two: to become niche, or to consolidate. The former will have to become lean and efficient if they are to survive (the real risk is that some will not maintain high professional standards) . The latter may conclude that only merging will see them still in business by the end of the present decade.


Morrison and his colleagues at Shine are wise to look to the UK. UK litigation firms, save for the already niche or the already huge, will be in the mood to talk.