Redundancies and office closures are coming to Slater and Gordon in the UK

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Slater and Gordon’s UK business, the epicentre of the law firm’s current troubles, is about to get smaller in staff numbers as well as losing value as an asset.

The company paid $1.3 billion in March last year for the professional services division of UK business Quindell, where about 90% of cases are related to traffic accidents. This is now called Slater Gordon Solutions.

Today Slater and Gordon posted a $958.3 million loss for the six months to December, mostly because of a writedown in the value of that UK business by $814.2 million.

The reason was a poorer than expected financial performance and the potential impact of foreshadowed British Government changes to road traffic accident compensation laws.

And this, the company says, will likely mean redundancies and office closures in the UK.

According to the latest annual report, Slater and Gordon has 5350 staff, with 3950 of them in the UK. Revenue is fairly evenly split between Australia and the UK.

The company started reviewing the business when it bought it 12 months ago.

Now it’s accelerating a reorganisation, creating three specialised legal service divisions across the UK: fast track personal injury claims; serious and specialist personal injury claims; and general law services.

“The company anticipates that the proposed reorganisation will result in a reduction in the total number of UK employees over the course of the next 12 months,” Slater and Gordon said when releasing its half year results today. “This is anticipated to occur through a combination of natural attrition and redundancy.”

How much this will cost the business isn’t yet known. The company says reorganisation costs are likely to be recorded in the second half of this financial year and beyond.

“The group expects these changes, together with an accompanying reorganisation of supporting functions, to enhance its UK operation’s ability to deliver world class legal services to clients with greater efficiency, agility and profitability,” the company said.

Managing director Andrew Grech says the decline in business performance in the UK is of serious concern.

“We will therefore be taking a number of necessary and significant steps to improve the operational performance of both the UK business and the broader Slater and Gordon group,” he says.

On foreshadowed changes in compensation law in the UK, Grech expects a consultation process foreshadowed by the UK Ministry of Justice to start shortly.

He says Slater and Gordon is well positioned to be a leading provider of services to people who require legal, car hire, car repair and rehabilitation services assistance as a result of road traffic accidents.

“We have a clear plan which we have begun to implement which will place our UK business on a sounder footing and which is responsive to the evolving market environment,” Grech says.

“The changes we are making, whilst difficult, will help to ensure that our UK business is sustainable and thrives over the long term.

“We remain convinced that the emerging market environment in the UK will make scale at least as important as it has been in Australia in generating sustainable returns. We now have a brand recognised for legal services by nearly one in four Britons and an opportunity to lead the ongoing consolidation of the market.”

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