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 specialist insurance firm’s board to provide insight and “challenge our traditional thinking,” Wotton + Kearney said.
The firm declined to reveal the price Straight Bat paid for its 30% stake.
“We’ve always been ambitious for our clients and ourselves, as evidenced by our evolution from a two-partner firm to a leader in the insurance legal services market in just 20 years,” chief executive partner David Kearney wrote in a blog post announcing the deal.
“This new partnership allows us to make a significant investment in accelerating the delivery of our strategy, which involves attracting the best talent in key insurance lines, capturing new market opportunities, and investing in legal tech to benefit our clients.”
Kearney said the firm aims to deliver expertise across a greater number of insurance products from more places across the region.
Founded in 2002, Wotton + Kearney is the largest commercial insurance legal specialist in Australasia, with 57 partners and more than 300 specialist lawyers. The firm has already started its expansion, having recently opened an office in Adelaide.
Wotton + Kearney also plans to increase its investment in data-driven legal solutions and legal tech innovation. “This is critical as many insurers are looking to leverage our broad range of data to assist with 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, medium-sized Australian businesses for slightly old-fashioned reasons—income, wealth preservation and sustainable capital growth,” the fund’s website says.
Its other investments include a traffic management equipment hire company, a dairy company and a plumbing and drainage business.
The two new Wotton + Kearney directors are partners in Straight Bat. Steve Gledden has experience in private equity and management consulting, while Rob Nicholls has held executive positions in banking, finance and vehicle towing sectors.
“We see enormous upside in our partnership with Wotton + Kearney given the firm’s standing in a market, which is likely to grow as business risk becomes more varied and complex,” Gledden said in a statement.
“In our discussions with Wotton + Kearney, we were also impressed by the firm’s clear client and insurance focus. We saw that Wotton + Kearney’s clients enjoy multi-partner relationships and there is clear collaboration between teams, which is different to the siloed client relationship model that is prevalent in many other law firms.”
While some law firms in Australia have incorporated, taking outside owners remains relatively rare. Australia has a handful of share market-listed law firms with outside stockholders.
One of the reasons most firms remain owned entirely by their partners is the difficulty in splitting profits between partners and other owners and the problem of retaining senior lawyers who receive dividends instead of a share of the partnership pool.
This was one of the factors behind the cancellation of the planned share market float of Australian firm HWL Ebsworth in 2020.