Slater & Gordon said in an ASX announcement that it has notified Watchstone it intends to bring a claim against the group arising from the purchase of Quindell’s Professional Services Division. It said £50m ($86.5m) is set aside from the purchase price for warranty claims.
The law firm, now having the unfortunate title of recording the largest loss in the world’s legal sector yet, did not indicate whether the claim will be filed in the UK or in Australia.
Most of the value of the Quindell purchase was written off by Slater & Gordon in its latest full year fiscal report. For fiscal 2016, it posted a $1.02b loss which includes $879.5m non-cash goodwill impairment.
For the first half of 2016, the firm recorded a $958.3m loss while it posted a $59.3m net loss before tax for the second half. Non-GAAP revenue for the whole fiscal year stood at $908.2m.
The claim will be another challenge Watchstone faces. Just months after the acquisition of Quindell’s Professional Services Division, the UK’s Serious Fraud Office investigated the firm for accounting practices, forcing it to restate its 2013 accounts.
Meanwhile, Slater & Gordon which recently dumped its conveyancing business in Australia
as part of its numerous cost-cutting steps has also been reported to undergo a board shakeup
which saw only one director from three who left replaced.
Slater & Gordon, the first law firm to be listed on a stock market, has seen its stock price fall from a high of over $8 per share last year on the ASX for a market cap of $2.8b. The stock closed at $0.4 yesterday valuing the company at a relatively measly $141m.
Slater & Gordon has announced its intention to file claims against the Watchstone Group, the relic of UK company Quindell which it paid $1.3b last year to acquire its professional services division.