Welcome to London ANNUAL MEMBERS MEETING GLAMM London, United Kingdom October 2017

Transcription

1 Welcome to London 2017 ANNUAL MEMBERS MEETING GLAMM London, United Kingdom October 2017

2 THE EVOLUTION OF A LAW FIRM - FACING THE LEGAL ENVIRONMENT CHALLENGE Adrian Biles, CEO, Gordon Dadds Group plc

3 INTRODUCTION The Gordon Dadds story The UK legal services market Issues facing law firms Some thoughts on the future Conclusion

4 GORDON DADDS JOURNEY SO FAR New LLP formed to take control of Gordon Dadds Acquired Davenport Lyons e.legal Technology Solutions founded Deloitte consulting team joins Wealth and Pensions Management business acquired (Hanover Group) Immigration practice acquired (Platt & Co) Commercial and property practices of Harris Cartier acquired Investment in James Stocks & Co Jeffrey Green Russell acquired ProLegal acquired from Capita Reversed into Work Group plc To be Continued.. Group Revenue 5.40m FY m FY m FY m FY 2017

5 GORDON DADDS GROUP PLC Key facts million revenue in FY to 31 March 2017 Adjusted profit before tax of 2 million 240 people Focus is on high quality London, the South East and International work Business has evolved through acquisition and organic growth Legal innovators and positive disruptors Technology hub with back office in South Wales Internal investor culture with non-subsidisation at its core Multi-disciplinary capability Unique platform for future growth, with high quality management team

6 THE EFFECT OF CROSS REFERRAL Gordon Dadds LLP fee income with average billings per partner as at March year end

7 BACK OFFICE AND TECHNOLOGY PLATFORM We have a unique and significant back office and technology platform based in South Wales - Cloud based operating system Developed over three years with over 3.2 million investment since 2013 Back office team of 40 people providing accounting, compliance, HR and Admin to the Gordon Dadds group The platform is tailor-made to support the integration of small and medium sized law firms and enables the Group to integrate acquisitions swiftly and efficiently

8 HYBRID LEGAL SOLUTIONS: THE LAW FIRM OF TOMORROW Law Firm Legal Consulting Contract Lawyers Online Services Technology Document Review Business process Hybrid legal solutions for clients Managed Legal Services Technology will drive value and encourage consolidation

9 LEGAL SERVICES ACT, 2007 Legal industry Big Bang creating the opportunity for external investment and new business structures is paving the way for large scale changes in the composition of the UK legal market Increased competition from non-law firms* e.g. Big 4 (accountancy) who are aiming to take up a large proportion of market share and shouldn t be underestimated * *Law Society, Future of Legal Services Report 2016

10 THE UK LEGAL SERVICES MARKET UK is a leading centre for the provision of international legal services and dispute resolution 10% of global legal fee revenue (report by CityUK, July 2016) The legal sector is facing multiple challenges Increased competition Consolidation - increase in M&A Legal Service Act 2007 Regulatory change Disruptive technology Shortage of capital

11 CROWDED MIDDLE DINOSAURS A PLENTY TOO MANY SMALL ME TOO S ACCOUNTANTS MASSIVELY DIFFERENT 70 FIRMS COULD DISAPPEAR AVERAGE TOP = 15m ECONOMIES OF SCALE SPECIALIST NICHE Merge, Diversify or Fail

12 THE GROWTH IN ABS CORPORATE CULTURE/ INNOVATION CATALYST Consolidation will resemble a snowball effect with increasingly dramatic size transformation.

13 ACCOUNTANCY THE NEW LAW NEW COMPETITION FOR LAW FIRMS Baker & McKenzie Yingke DLA Piper Dacheng** Norton Rose Fulbright CMS Legal Services Jones Day Clifford Chance PwC Hogan Lovells Dentons ,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 Headcount PwC Baker & McKenzie CMS Legal Services DLA Piper Dentons Norton Rose Fulbright Clifford Chance Yingke Hogan Lovells Jones Day Dacheng** Number of countries

14 MARKET HIGHLY FRAGMENTED AND RIPE FOR CONSOLIDATION Magic Circle law firms and global elite firms are beginning to dominate the top 50 law firms Quest for scale exemplified by merger of CMS, Nabarro and Olswang earlier this year Challenged middle market firms (in excess of 10 million annual revenue) facing increasing competitive pressures, lack scale, no access to sufficient capital and suffer operating inefficiencies Smaller firms ( 2-10 million revenue) over 10,000 firms in UK. Too small to offer full legal services, facing recruitment/succession issues and seeing the greatest pricing pressure from alternative providers using disruptive technology.

15 ISSUES FACING LAW FIRMS Regulation is increasing and is unfamiliar to many lawyers Partners tend to prefer to take money out of the business rather than invest to develop the business Traditional partnership model is no longer fit for purpose and inhibits recruitment of quality personnel at all levels Younger ambitious lawyers are increasingly reluctant to borrow money to inject as capital to be used to repay older partners capital

16 A NUMBER OF ADVANTAGES The Gordon Dadds model offers a number of advantages to target firms: Partners are not required to borrow to fund capital contributions and capital is built up over time out of profit share; Each partner receives as their profit share a percentage of his or her personal billings, allowing partners to achieve a significant uplift to what he or she might achieve in a traditional partnership practice; The Gordon Dadds model, with its clear division between management and back office on the one hand, and client acquisition and servicing on the other, allows partners to devote time to their respective practice areas; and Gordon Dadds Group plc s corporate structure enables partners to acquire and retain an enduring investment in the business through equity ownership.

17 THE CHANGE IS ALREADY UNDERWAY Over 500 million invested in UK legal by external investors Over 1 billion in annual revenue controlled by corporate investors 14 private equity investments Big accountancy firms entering the legal market since 2007 Act We are one of two UK corporate law firms now successfully listed in UK on the Alternative Investment Market of the London Stock Exchange both backed by large UK institutional investors

18 CONCLUSION Major structural change / consolidation Metamorphosis in provision of legal advice New entrants/new jobs Market expansion especially consumer law New competition corporate consumer law New competition corporate culture dominates

19 THANK YOU ANY QUESTIONS?