As I was walking down Chancery Lane in London a few days ago (for those of you who don’t know, this is in the heart of legal practice in England), my eye was caught by a rather prominent name plate for the Australian Law firm, Slater and Gordon. The name was already familiar to me as one of that country’s largest law firms and the first to float on the Australian Stock Exchange.
Earlier this year, Slater and Gordon acquired Russell, Jones and Walker, an English law firm with a long tradition of acting for claimants. That acquisition became possible as a result of new reforms introduced into the UK permitting (for the first time) third-party ownership of law firms in the UK via the creation of so-called alternative business structures. It may not be their last acquisition either.
Launch Your Own Law Firm
Any company can in theory apply now to launch its own law firm. The UK Automobile Association for example has just announced that it has been granted an alternative business structure licence by the Solicitors Regulation Authority. AA Law will start trading on 1 December as a joint venture between the motoring giant and national firm Lyons Davidson. Tesco were an early and successful applicant for a licence in March of this year and even British Telecom are in on the act.
Whilst litigation itself remains a reserved activity which can still only be carried on by qualified lawyers, what is changing fast is the funding models for litigation.
What Has Any of This Got to do With D&O Insurance?
Along with reforms permitting lawyers to enter into contingency fee arrangements with their clients, it is another indication of changes in the litigation landscape here, which are more conducive to large scale and complex litigation involving large companies and their professional advisers. This is the sort of litigation in which directors can become personally embroiled.
I won’t be the first or the last to flag the semi paradox here that a large D&O limit may in some cases act both as a stimulus to speculative litigation as well as a key weapon in the defendant directors’ arsenal.
In a recent interview, Neil Kinsella now of Slater and Gordon and former managing partner of Russell, Jones and Walker said: “The firms’ name is highly recognisable in Australia. We want to build it in the same way here”. You have been warned.