Morning Briefing: Law firms battling it out in the stock market

by NZ Lawyer28 Jul 2014
Strong gains for law firms in the stock market
A relative newcomer to the Australian market is a shining star on the stock market. Shine Corporate has been working hard to gain market share in the law business since arriving on the scene last year. Its high-profile marketing strategies seem to be paying off, with stock values increasing 30 per cent since January according to investment site The Bull. Slater & Gordon may have a different image to Shine, but it is also a stock market success; rising 80 per cent since May 2013 and Maurice Blackburn is also performing in the ASX listings. As global M&A and compliance requirements increase, investing in listed law firms would seem to be a very astute move.
Law firms ‘are like cocktails’?
Almost every week there’s another merger in the legal profession; consolidation and innovation are the buzzwords shaping the business of law. Mergers create an opportunity for firms to evaluate their brand and with that in mind marketing consultants Intangible Business went out to its client base and invited them to compare recently merged law firm brands to well-loved cocktail combinations. SJ Berwin’s merger with Asian giant King & Wood Mallesons in 2013 was dubbed a Singapore Sling – ‘A classic drink with an Asian flavor’; the recent merger of Squire Sanders with Washington firm Patton Boggs, creating Squire Patton Boggs was likened to a Manhattan for its ‘strong US flavor’ while Slater & Gordon’s string of acquisitions inevitably saw it branded a Long Island Iced Tea. Intangible Business’ Managing Director Thayne Forbes said that the Report showed how law firm mergers are both an opportunity and a threat for the firms’ brands: “Firms might not always place branding at the top of their list in merger considerations but it should arguably be the first matter to be discussed at the negotiation table. Merged firms that do not consider their brands can suffer an identity crisis, both internally and externally. Mergers inevitably cause a stir in the legal industry, so law firms are advised to choose their new brand identity carefully and let it do the talking for them.”
Local knowledge invaluable as US firms seek lower taxes
There’s a trend among many large corporates in the US who are giving up their citizenship in favour of lower taxes. The process, called inversion, involves a US company buying a firm in a country with a lower tax regime; European countries are frequent targets. The US company then uses its new acquisition as its global base for tax purposes. Ireland’s law firms are actively seeking to get a slice of the tax-saving action; Arthur Cox, A&L Goodbody, and Matheson are three of the firms marketing themselves to American prospects according to the Irish Independent. US law firms do not generally have offices in Ireland so the local knowledge of tax and corporate legislation is invaluable in the deals, which typically involves many billions of dollars. While there were four inversion deals in Ireland in the whole of last year, there have been nine this year already.