Not sure if it's against the rules to post copyrighted stuff like this here, but here it is. Not too much we don't know already. Basically just summarises AFL's woes of late.

As an aside, did notice that at the end of the AFR story there was a link to another story from March about a similar family law roll-up firm, "Richardson Family Law Group". In Pre-IPO stage. Apparently has plans to IPO with 4 family law firms with combined revenue of $17m and $5m EBITA. Sounds like AFL might run into some competition when it comes to bidding for successful family law firms - that's if they're even still pursuing the roll-up strategy.

Rear Window

AF Legal divorces itself from reality

Michael RoddanNational correspondent

Nov 22, 2022 – 5.06pm

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Shacked-up couples understandably sweated on the fortunes of their marriages when the government locked them in their own homes more than two years ago.

Australian Family Lawyers, listed on disallowed as AF Legal in 2019, wasn’t among those fretting.

AF Legal’s Grant Dearlove.

The firm’s update in April 2020 brimmed at the prospect that “self-isolation policies and loss of income will inevitably cause a strain on families”, while it salivated at the 20 per cent increase in online searches for “divorce lawyers” over the first four months of the calendar year.

Over the next 12 months, AF Legal shares rallied more than 300 per cent, and the firm embarked on a series of acquisitions with an aim to become the largest family law firm in the $1.1 billion sector.

And doesn’t the market love legal roll-ups? Just ask Slater & Gordon (what’s left of it, anyway) or Shine Justice (which recently sold a 2014 acquisition back to its founder after a string of impairments).

Given AF Legal’s shares are changing hands at 14¢, an 80 per cent discount to the value in mid-2021 (when rocket man Ron Shamgar said the “defensive” play would be going to $1.50), it doesn’t seem immune.

But it’s over the last month that things have become surreal, after AF Legal’s October 19 announcement outlining a merger with GTC Legal Group, which runs the country’s largest online legal funnel, GoToCourt.com.au.

That announcement noted that, post-transaction, former executive chairman Grant Dearlove (a former senior partner at Shine Lawyers) would remain on the AF Legal board as executive director.

So, too, would Rick Dennis, a former EY managing director and Shine Lawyers adviser, who took over Dearlove’s chairmanship duties in July after a formal board evaluation process.

Barely two weeks passed before Dearlove then flagged his resignation from the company’s board (he would remain in a “consulting role” and as its legal practice director).

That would make it hard to know how much stock Dearlove retains, having in early September disposed of 40 per cent of his stake for $444,000 in an on-market sale (which pushed him under the substantial shareholder threshold).

Coincidentally, on October 31, chief financial officer Pratyush Jagdishwala resigned suddenly without explanation. AF Legal didn’t have a replacement until it named Chris McFadden as interim CFO on November 9 (McFadden had resigned in June from ASX-listed Ashley Services Group for “personal reasons”).

Also on November 9, AF Legal warned that its annual report (published in August) mistakenly provided incorrect remuneration figures for Jagdishwala and board director Kevin Lynch.

In one instance, total remuneration for Jagdishwala was printed at $187,000, instead of the actual $290,000 he was paid. Another reported his cash salary and fees were $69,000, not the actual $93,000. Similar snafus were made with Lynch’s remuneration, which over-egged his salary by $4000 in one instance, and undercooked it by $15,000 in another.

We’re no big-city lawyers, but presumably accuracy is a consequential facet of legal practice.

Two days after the corrections were announced, AF Legal pulled from its annual general meeting a resolution that would re-adopt its 2019 long-term incentive plan. The company said this was done “following discussions with shareholders”.

Presumably that includes AF Legal’s largest shareholder, Westferry Investment Group managing director Peter Johns (also known to tweet under the moniker Microcap Jesus) who owns 10 per cent of the company.

He declined to comment when we got in touch on Thursday, as did Jagdishwala, who was apparently in contact with Johns. Our calls to Dearlove went unanswered. Go figure.

In any case, shareholders last week handed AF Legal a second strike on its remuneration report, and blocked the re-election of Lynch as director (more than 50 per cent voted against his re-election).

Nevertheless, the disquiet hasn’t stopped Dennis, as AF Legal chairman, from signing a $10,000-a-month deal with his own consultancy, Dennis Corporate Advisory, for three months to “assist in preparation for the merger with GTC” he announced a month earlier.

You’d assume that is something he’s already doing (to some extent)?

At least it’s not being billed in six-minute increments.