Australian-listed Slater & Gordon, the world’s first publicly traded law firm, is preparing to post what is understood to be legal sector’s biggest ever annual loss. A profit warning filed with the Australian Securities Exchange, reveals the firm's full-year net loss after tax for the year ended 30 June is expected to total A$1,017.6m.
While the extent of the damage is shocking, it is not entirely unsurprising. Slater's profit forecasts took a hit after it lost around 90% of its value over the course of 2015. At the time, Group managing director Andrew Grech indirectly pointed to the proposed Jackon reforms to no win no fee agreements and the UK government's proposal to ban general damages for minor personal injuries which have sent many UK firms into a tailspin.
In early May, Slater & Gordon revealed that following a devastating 2015 lenders had given the firm an ultimatum to present a turnaround plan or face having to repay debts by April 2017. Slaters agreed restructuring proposals with its lenders, although it was not clear how many jobs are threatened. Last month, however, Grech was promising a turnaround: "Slater & Gordon’s FY16 performance is a story of two different halves. The results for the first half were extremely disappointing and well below expectations. In the second half we have taken significant steps towards turning around the performance of the UK business. Whilst the UK performance improvement programme is still in its early stages, the second-half results indicate that our efforts are beginning to bear fruit."
Slater and Gordon had bought the legal services arm of Quindell in a £637m deal last year but the company’s share price has since nosedived and the value of claims included in the purchase has fallen significantly. Slater & Gordon has confirmed that it intends to sue the successor company to Quindell over that acquisition.