Troubled legal firm Slater and Gordon was today served with legal proceedings in the Federal Court for a class action by disgruntled shareholders.
Maurice Blackburn, one of Slater and Gordon’s major competitors, is acting for the class action by shareholders who purchased stock during between March 2015 and February this year.
“Slater and Gordon will closely analyse and vigorously defend the claim,” the company told the ASX.
The leading Australian commercial law firm Arnold Bloch Leibler has been hired to to assist Slater and Gordon.
Slater and Gordon’s shares have been on a steep slide, losing more than $2 billion in market value due to its underperforming UK business and British government plans to limit compensation for road accidents.
The shares closed at 38.5 cents today, valuing the company at $135.6 million, less than the value of the $250 million class action. Last year the shares hit a high of $8.07, valuing the world’s first stock exchange-listed law firm at $2.8 billion.
The shareholders allege there were problems within Slater and Gordon that extended beyond its acquisition in the UK of Quindell’s Professional Services Division.
Maurice Blackburn say there were multiple occasions that Slater and Gordon didn’t disclose material information to its shareholders in a timely manner.
Shareholder class actions typically take two to three years to reach a final hearing.
“Slater and Gordon has engaged external legal advisors to act for it and will vigorously defend the claim,” says the company’s managing director, Andrew Grech.
“The class action will not affect the day to day conduct of Slater and Gordon’s client matters. Our clients can rest assured that Slater and Gordon and its lawyers will continue to work hard to offer them access to affordable, world class legal services.
“Our management team will remain focused on executing our performance improvement program across the business to improve profitability and cash flow and reduce debt, in line with previous announcements made by Slater and Gordon.”