Slater & Gordon class action near certain

Slater and Gordon is “almost certain” to face a class action from shareholders who have seen more than 90 per cent wiped off the value of their investment in the law firm.

Rival legal outfit Maurice Blackburn says the near $1 billion loss unveiled on Monday by Slaters was further ammunition for the potential class action it first announced in December.

Maurice Blackburn has been contacted by more than 2,000 shareholders since inviting so-called mum and dad investors to join a class action over the timeliness of the release of financial information.

“Today’s announcement … strengthens the themes our class action investigation is pursuing, and although we still have some work to do, it now seems almost certain that we will file a class action on behalf of the thousands of aggrieved shareholders,” Maurice Blackburn’s national head of class actions Andrew Watson said in a statement.

A second class action is also in the offing after Sydney-based ACA Lawyers said it had secured backing from two litigation funding groups for a case of its own.

“The directors have a lot of explaining to do. It was only in November shareholders and the market were being told the company was in good shape,” ACA Lawyers principal Bruce Clarke said.

The huge loss was driven by a $876 million writedown, the vast majority of which was against the UK business it acquired last year.

Concern over the shape of those assets has been behind the 90 per cent decline in Slater and Gordon shares since April.

Investors spooked by the law firm’s need to make adjustments to its financial reports in September watched as Slaters reaffirmed and retreated from its full year guidance before promising and cancelling a cashflow update.

It then suspended trading in its shares last week while it finalised the impairment that led to the massive $958.3 million first half net loss.

“The sheer size and scale of this writedown casts enormous doubt on the adequacy of disclosures made by Slater and Gordon in relation the true value of the Quindell assets, from the time of the transactions announcement right through until today,” Mr Watson said.

Originally published as Slater & Gordon class action near certain