Listed law firm Slater and Gordon (S&G) is to bring a £600m action against the company formerly known as Quindell over its 2015 deal to acquire Quindell’s professional services division.
According to S&G, the acquisition, which contributed to the recent firm’s financial turmoil, would not have taken place were it not for fraudulent misrepresentation on the part of Quindell.
Quindell, now known as Watchstone Group, told the London Stock Exchange today (11 May) that S&G intends to bring proceedings forward by the end of this month.
The notice read: ‘Its letter states that [S&G] intends to make a claim for a total amount of approximately £600m on the basis that but for fraudulent misrepresentation it would not have entered into the transaction at all.
‘A groundless claim for fraudulent misrepresentation was dismissed by the independent barrister in respect of the warranty escrow process relating to the sale of the Professional Services Division in November 2016.
‘The opinion, which was formed on the basis of evidence provided by both [S&G] and Watchstone, stated that a misrepresentation claim was not a bona fide claim with a better than 50 per cent prospect of success.’
S&G purchased the professional services division of Quindell after it generated revenues of nearly £180m in just the first half of 2014. The alternative business structure (ABS) covers legal services mostly relating to personal injury but also included marketing and motor services.
The firm, which makes 80% of its UK revenue from personal injury claims, lost half its stock value in November 2015 after the UK government unexpectedly announced plans to limit the number of personal injury claims.
After running into financial trouble, S&G’s lenders appointed investigative accountants in January 2016 to look at the firm’s books. In September last year, S&G announced to the Australian Stock Exchange (ASX) its intention to bring claims against Quindell, informing the ASX that £50m of the purchase price for the acquisition would be held in escrow against warranty claims that might arise under the share purchase agreement.
tom.baker@legalease.co.uk