shine lawyers SHG strategic positioning, page-19

Thanks for the graphs Tim. I have similar thoughts regarding revenue being a leading indicator as well.

"- there's a move towards work that pays out sooner
This is good and bad.... types of work that systemically pay as the work is done is good. However for other types of cases if there is pressure to end cases prematurely (just to collect revenue with consequence of giveing inferior service to the customer) this is bad long term. Ideally we should not be doing the latter, but perhaps both of these things are happening."

I agree that pressure to settle cases for better cash flow at the expense of the clients may be a risk. However given the people in charge ( morrison and roche, essentially) own around half the company and haven't sold any ( substantial ) shares as far as I know I'm trusting that they are thinking about their own holdings and looking to increase long term value for at least the next 5-10 years. So in that sense their interests suit the average medium-long term shareholder as well. If the sp was 1.80+ then I might be concerned they are milking the cashflows in a hope to pump up the sp to give themselves a chance to reduce their position and make some money in the short term. But given the sp is still below the IPO price of 1$ I think they won't be selling anytime soon or thinking of short term gains -though of course company directors have been known to do this.


"- there's a move towards work that pays out sooner......."

Yes I agree this is a great thing. The fact that we are moving towards a third - party funder for the class action and emerging practice area should really smooth out these cashflows and reduce carrying costs and risk. This is the main reason mentioned by simon in the earnings call for his increasing to GOCF ratios to 65% +. Instead of getting a lump sum type payout at the end shine should get regular payments from the litigation funder even before a trial is finished.

Another point is that there has been a rapid increase in the number of class actions (particularly shareholder class actions) and also a rapid increase in the number of third party litigation funders in australia. Having more funders in the market is a great thing for shine as the competition for cases ( which was not that intense among funders until recently, with IMF and the like dominating the market) should enable them to shop around for the best funding deals and contract terms. Reading some articles today it would also seem there is a push on for better regulation of these funders ( some have been know to take > 50% of a settlement, which obviously doesn't leave much of the pie for lawyers) and also some discussion on the possibility of law firms charging contingency fees in class actions - all of which are positive for shine.