Home' Slater and Gordon Annual Report : Slater and Gordon AR 2016 Contents Notes to the Financial Statements
For the Year Ended 30 June 2016
Slater and Gordon Limited
3.1 Revenue from Contracts with Customers (continued)
3.1.1 Accounting Policies (continued)
When new businesses are acquired, there is a transition period during which time the Group’s practices and procedures
are embedded into the operations of the new business. Therefore the valuation of work in progress acquired in a
business combination may be adjusted during the period of provisional accounting for the acquisition.
Provision of Legal Services – General Law Legal Services
The Group also earns revenue from provision of general legal services, incorporating project litigation. Revenue for
general legal services is recognised over time in the accounting period when services are rendered.
Fee arrangements from general legal services include fixed fee arrangements, unconditional fee for service
arrangements (“time and materials”), and variable or contingent fee arrangements (including No Win – No Fee
arrangements for services including project litigation, and some consumer and commercial litigation).
For fixed fee arrangements, revenue is recognised based on the stage of completion with reference to the actual
services provided as a proportion of the total services expected to be provided under the contract. The stage of
completion is tracked on a contract by contract basis using a milestone based approach, which was explained above.
In fee for service contracts, revenue is recognised up to the amount of fees that the Group is entitled to invoice for
services performed to date based on contracted rates.
The Group estimates fees for variable or conditional service fee arrangements using a most likely amount approach on
a contract by contract basis. Management makes a detailed assessment of the amount of revenue expected to be
received and the probability of success of each case. Variable consideration is included in revenue only to the extent
that it is highly probable that the amount will not be subject to significant reversal when the uncertainty is resolved
(generally when a matter is concluded).
Certain project litigation matters are undertaken on a partially funded basis. The Group has arrangements with third
party funders to provide a portion of the fees receivable on a matter over time as services are performed. In such
arrangements, the funded portion of fees is billed regularly over time and is not contingent on the successful outcome
of the litigation. The remaining portion of fees is variable consideration which is conditional on the successful
resolution of the litigation. The variable consideration is included in revenue as services are performed only to the
extent that it is highly probable that the amount will not be subject to significant reversal when the uncertainty is
As in the case of personal injury claims, estimates of revenues, costs or extent of progress toward completion are
revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in
profit or loss in the period in which the circumstances that give rise to the revision become known by management.
The Group has determined that no significant financing component exists in respect of the general law services
revenue streams. This has been determined on fee for service and fixed fee arrangements as the period between
when the entity transfers a promised good or service to a customer and when the customer pays for that good or
service will be one year or less. For No Win - No Fee arrangements this has been determined because a significant
amount of the consideration promised by the customer is variable subject to the occurrence or non-occurrence of a
future event that is not substantially within the control of the customer or the Group.
A receivable in relation to these services is recognised when a bill has been invoiced, as this is the point in time that the
consideration is unconditional because only the passage of time is required before the payment is due.
Provision of Other Services – Slater Gordon Solutions
Revenue from Road Traffic Accidents (“RTA”) and Employer Liability/Public Liability (“EL/PL”) files is recognised over
the life of the case based on prescribed milestones in a matter.
The legal services practice operates on the basis of No Win – No Fee conditional fee arrangements and applies the
same accounting policies as personal injury claims described above. In some cases, fees may be fixed, depending on
the stage at which a matter concludes. For some arrangements, fees are fixed as a specified percentage of damages
awarded under a claim.
No revenue has been recognised for Noise Induced Hearing Loss (“NIHL”) files that are in progress as at 30 June 2016
due to the low number of NIHL cases that have settled within SGS during the year and the inherent uncertainty over
the consideration to be achieved in each successful matter.
60 Slater and Gordon Limited
Annual Report 2016
Links Archive Slater and Gordon AR 2015 Navigation Previous Page Next Page