Slater & Gordon’s stock price plummets by over 50% as George Osborne aims to end compensation culture

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By Thomas Connelly on

This may be why few law firms are listed on the stock market


Slater & Gordon has moved to reassure investors after George Osborne’s proposals to clamp down on personal injury claims caused the firm’s share price to plummet by over 50%.

The firm — that first floated on the Australian stock exchange back in 2007 — saw its share price spiral downwards to less than A$1 (48p) from a A$6 (£2.87) summer high, as Osborne gave his autumn statement at Westminster yesterday.


The Chancellor of the Exchequer proposed a ban on general damages for minor injuries — such as whiplash — and suggested a new small claims limit of £5,000 on all personal injury matters.

Osborne hopes that the reduction in claims will have a positive impact on the insurance sector. Trumpeting his idea in the House of Commons yesterday, Osborne claimed that insurers would be able to reduce premiums, allowing firms to pass on the savings to customers.

This is evidently of major concern to Australia-headquartered Slater & Gordon, around 75% of whose work is personal injury-related, according to legal directory Chambers & Partners. Indeed, so anxious was the firm — which offers training contracts and legal apprenticeships across its network of UK offices on a rolling basis — that it moved to reassure investors that it was business as usual.

In a statement released by the firm, it told shareholders that it didn’t foresee any financial impact in the year ending 2016. Insisting that Slater & Gordon had more strings to its bow than just personal injury, the firm said:

Whilst the government’s announcement was unexpected, the company believes that the scale and diversity of the Slater Gordon Solutions (SGS) business in the UK positions it well to deal with the potential impact of any future legislative change.

However, the firm — which is famous for its TV adverts — did harbour concerns that the government’s proposals “would impact on the rights of people injured in road traffic accidents”. The Law Society has echoed this worry, speaking of its “grave concerns” that these proposals “will completely undermine the right of ordinary citizens to receive full and proper compensation from those that have injured them through negligence”.

It’s yet another headache for S&G, which has seen its share price steadily decline since it purchased the legal services arm of law and insurance hybrid Quindell for £637 million earlier this year. The Financial Conduct Authority (FCO) launched an investigation into Quindell’s financial past earlier this summer and despite it being quickly discontinued, the Aussie firm’s share price still suffered as a result.

There seems to be real concern for S&G’s future. Earlier today, Australian news site ABC ran with the headline, “Is one of Australia’s oldest and most famous law firms — and the first in the world to list on a stock exchange — going broke?” Claiming that the firm’s problems run deep, citing debt and borrowing, the article suggests “the bankers might be pouring over the books now.”

Earlier this year, Anglo-Scottish corporate law firm Gateley took advantage of the Legal Services Act 2007 to become the first UK-based firm list on the London Stock Exchange. With Slater & Gordon having to desperately reassure shareholders that everything is OK, Gateley’s management will no doubt be watching closely to see how a listed law firm deals with a crisis.