Reuters Whitepaper: 2018 State of Australian legal market

Good news everyone. Reuters have just published this year’s whitepaper on the Aussie legal market and overall this looks to be extremely positive. You can download it (for free) here:

http://insight.thomsonreuters.com.au/resources/resource/state-of-the-australian-legal-market-2018?utm_campaign=au_contnews_legalinsight_181018&utm_medium=email&utm_source=Eloqua&elqTrackId=0317f27fe27c4da5a3583b7a6c81dfc2&elq=5f41842599f0421f993717af60921321&elqaid=9390&elqat=1&elqCampaignId=2132

I have yet to analyse it in depth but after a skim read the key take always are these:

* after years of declining or flat growth FY2018 was a year of positive growth of the market overall

* much of the reason for the growth was the banking royal commissions however the authors believe this was not the only reason for growth

* the market is consolidating and conditions will become tougher for smaller firms due to high fixed costs and a move to technology/automation (which enhances economies of scale).

*the industry is globalising but local firms are still thriving

Note that all of this refers to the legal industry as a whole and not just the practise areas Shine practises in, and there seems to be less granular information in this report than in previous years.

My own commentary:

This environment is indeed very good for Shine. Especially the move towards consolidation of the industry. If the industry is consolidating then this will become a game of who has the best access to acquisition funding.

Incidentally the implosion of Slater and Gordon may have contributed to a medium term fall in Shine’s share price but in the end it may turn out to be a long term blessing. Why? Because it may contribute to discouraging other firms (globally and domestic) from public listing. Indeed it may discourage other countries from even legalising publicly owned law firms. This means that Shine may be in a unique position in it’s industry. The advantage of the stock market as a funding source may remain a unique competetive advantage that may be held onto for some time. 

One would like to see a strategy from Shine relating to technology and outsourcing. I.e. how they plan to increase and leverage economies of scale. Executives of a company like Shine is becoming should be heavily focused on this.