With such an increase in time spent at home over the past year as a result of the pandemic, it seems not all Australians are enjoying each other’s company as evidenced by the rise in filings from family law specialists AF Legal (ASX: AFL). So busy has the firm been, it’s now added large offices in WA and NSW in the past few months while also benefiting from Government funding for the Family Court system.
Since the start of 2021, file openings for the firm have been up 35% compared to last year’s corresponding period, just as the pandemic was starting.
This led AF Legal to last month confirm a new office would be opened in Perth, while they have also just completed their acquisition of rival firm Watts McCray to significantly increase their reach in New South Wales.
“We are pleased to welcome Watts McCray to the team and we look forward to working together to provide a broader depth of services to Australians and foreigners seeking Family Law Advice,” said AF Legal Chairman, Grant Dearlove.
“AFL is now not only the first National specialist Family Law firm in Australia, we are the largest by scale giving us a competitive advantage to grow our market share”.
Watts McCray was acquired for $0.375m payable upfront in AFL shares and $1.125m in deferred share confederation payable over 3 years. As part of the deal, AF Legal has extinguished the $1.5m debt tied to the firm with all acquisition costs funded by existing cash on a debt-free basis.
Generating more than $6m annually, Watts McCray services more than 1,000 clients annually and is particularly prominent in the ‘affluent’ segment of the legal market that is active in family disputes.
New South Wales is the largest region by revenue for family law so with the addition of Watts McCray, AF Legal now has 3 offices in the region which were targeted as part of their national expansion plans. It brings their total national footprint to 16 offices around the country.
Further boosting the firm’s prospects is the latest Federal Budget announcement which included an additional $100m in funding over the next 4 years to support the Family Court system, specifically seeking to reduce delays which will improve the safety of parties involved. The funding is expected to reduce the backlog of cases which are not settled within a year, from 40% to 10%. Such a reduction in delays would potentially enable AF Legal to settle more cases annually.
For the Half-Year ended 31 December 2020, AF Legal reported a 32% increase in revenue to $4.2m and 95% increase in profit after tax to $0.25m.