Australian and New Zealand law firm Wotton + Kearney has sold a 30% stake to local private equity firm Straight Bat to fund its expansion.
As part of the unusual deal, Straight Bat will appoint two non-executive directors to the specialty insurance company’s board to provide insight and “challenge our traditional thinking”, Wotton + Kearney said.
The company declined to disclose the price paid by Straight Bat for its 30% stake.
“We have always been ambitious for our clients and for ourselves, as evidenced by our evolution from a two-partner firm to a market leader in insurance legal services in just 20 years,” wrote the managing director. David Kearney in a blog post announcing the deal.
“This new partnership enables us to make a significant investment to accelerate the implementation of our strategy, which consists of attracting the best talents in the main lines of insurance, seizing new market opportunities and investing in legal technology. for the benefit of our customers.”
Kearney said the company aims to provide expertise on more insurance products from more locations in the region.
Founded in 2002, Wotton + Kearney is the largest commercial insurance legal specialist in Australasia, with 57 partners and over 300 specialist lawyers. The company has already begun its expansion, having recently opened an office in Adelaide.
Wotton + Kearney also plans to increase its investments in data-driven legal solutions and legal technology innovation. “This is critical as many insurers seek to leverage our wide array of data to aid in risk selection, risk mitigation and appropriate pricing,” Kearney wrote.
Straight Bat describes itself as an income-oriented private equity fund. “We invest in mature, robust, profitable, mid-sized Australian businesses for somewhat old-fashioned reasons – income, wealth preservation and sustainable capital growth,” the fund’s website says.
His other investments include a traffic management equipment rental company, a dairy business, and a plumbing and drainage business.
The two new directors of Wotton + Kearney are partners of Straight Bat. Steve Gledden has a background in private equity and management consulting, while Rob Nicholls has held senior positions in banking, finance and vehicle towing.
“We see tremendous benefits in our partnership with Wotton + Kearney given the company’s position in a market that is likely to grow as business risks become more varied and complex,” Gledden said in a statement.
“During our discussions with Wotton + Kearney, we were also impressed with the company’s clear customer focus and assurance. We have found that Wotton + Kearney’s clients benefit from multi-partner relationships and that there is clear collaboration between teams, which is different from the siled client relationship model prevalent in many other law firms.
Although some law firms in Australia have incorporated, taking on outside owners is relatively rare. Australia has a handful of publicly listed law firms with outside shareholders.
One of the reasons why most firms remain wholly partner-owned is the difficulty of allocating profits between partners and other owners and the problem of retaining experienced lawyers who receive dividends instead of a part of the partnership pool.
This was one of the factors behind the cancellation of a planned float in Australian company HWL Ebsworth’s stock market in 2020.