Many moons ago, I wrote here about a new breed of public company -- a publicly-traded law firm -- that had managed to continue to report surging earnings and bright prospects during the thick of the financial crisis while the rest of the world spiraled down the drain. The law firm, Slater & Gordon, is publicly traded in Australia and has been a major player in pursuing cases for plaintiffs in Australian securities class actions.
Last week, however, Slater & Gordon saw its own stock price plummet after a review by the UK government proposed cracking down on “whiplash fraud” by denying compensation to people who claim to have minor whiplash injuries from car accidents. Slater & Gordon reportedly has a significant business in the personal injury/car accident area, SkyNews reports.
According to the Herald Sun, the firm's market capitalization fell from $1 billion on November 20 down to $243 million on November 27. Slater & Gordon executives have seen the value of their stock holdings decimated since the stock hit its 52-week high in April 2015, the Herald Sun reports. Managing director Andrew Grech, for example, saw the value of his holdings fall from $53 million in April to $4.7 million on November 26.
The huge loss in shareholder value last week resulted in reports that, as a public company, the Slater & Gordon law firm might even end up on the receiving end of a shareholder class action. "Rival law firms are now monitoring the chaos to decide whether there is a case for a shareholder class action against the company," the Herald Sun reported last week.
The firm's stock has rebounded somewhat since hitting a low of $0.69 on November 27, rallying back to $1.18 as of the close of today's trading. A sustained rally might help keep the plaintiffs class action lawyers at bay, but perhaps we will now learn whether there is any truth to the old lawyer joke:
Q: Why won’t sharks attack lawyers?
A: Professional courtesy.