Slater and Gordon news, updates and analysis | Page 1 of 6

The long-running saga around Slater and Gordon’s (S&G) invidious Quindell acquisition settled on the eve of trial this week for a slither of the initial claim.

A tough week for the national firm was then compounded by the closure of its Leeds office and consultation over a further closure at its Watford call centre.

S&G and Watchstone Group’s dispute over the former’s ill-fated Quindell acquisition in 2015 settled with S&G receiving £11m, less than 2% of the original £637m claim the firm filed in June 2017 for breach of warranty and/or fraudulent misrepresentation for the whole amount paid. The trial was due to begin in the High Court on Monday 21 October.

The settlement was agreed with no admission of liability from either party, and resulted in the release of the £50m that had been held in escrow, which has now been split between the pair. Watchstone received the lion’s share, with £39m and interest going to the group.

S&G chief executive David Whitmore commented: ‘We are pleased this matter has drawn to a conclusion.’

The meagre sum granted to S&G will come as a disappointment to the firm but marks a significant victory for Watchstone. The turning point was when Watchstone was granted permission in September to pursue a counterclaim, alleging an ‘illicit back channel’ S&G corporate finance adviser Greenhill & Co had used to access confidential information about the company from PwC, Watchstone’s restructuring adviser.

The dispute saw S&G’s representative CMS Cameron McKenna Nabarro Olswang partner Jeremy Mash instruct Simon Salzedo QC of Brick Court Chambers while Tim Maloney and Matthew Blower of Dorsey & Witney, who were representing Watchstone, instructed Tim Lord QC, also of Brick Court Chambers.

However, the difficult week did not end there after S&G revealed it is shutting its Leeds office at the cost of 29 jobs, while a consultation with approximately 100 staff in its Watford office is ongoing. The closure of the Leeds office follows previous closures in Chester, Wrexham, Milton Keynes, Sheffield, Preston and Fareham. Should the Watford centre also close, S&G will be left with offices in Birmingham, Edinburgh, Cardiff, Cambridge, Liverpool, London and Manchester.

Regarding the closures, S&G commented: ‘We have introduced new technology and processes that allow us to work more efficiently and provide a better experience for our customers. Consequently, we are closing our Leeds office and relocating the work to other locations.’

thomas.alan@legalease.co.uk

The saga of Slater and Gordon’s (S&G) ill-fated Quindell acquisition is set to intensify with the national firm’s £637m claim headed to court in October.

The case against Watchstone, formerly Quindell, sees S&G seeking to recoup the cost of acquiring the professional services division in 2015. S&G issued its claim in June 2017 for breach of warranty and/or fraudulent misrepresentation for the whole amount paid.

Watchstone said in a statement to the London Stock Exchange yesterday (3 June) that a trial was expected to start in October. Its legal costs have risen to £8.2m, reflecting a ‘determination to robustly defend the action.’

It added: ‘Our position remains that Slater and Gordon’s allegations of deceit and the associated breach of warranty claim are wholly without merit and should never have been advanced.’

The development is the latest in an ongoing dispute between the parties. In June of last year, the Solicitors Regulation Authority hit S&G with a £80,000 financial penalty for disclosing confidential client information in relation to the buyout. KPMG was also fined £3.15m after admitting to misconduct in handling the financial statements of Quindell.

The turbulent relationship between S&G and Quindell began shortly after the acquisition, when S&G began running into financial difficulties, posting a $958m loss for the six months ending 31 December 2015. The loss was primarily due to a considerable write-down on the Quindell deal, and S&G later saw its share price plummet and an exodus of senior management.

Watchstone told the stock exchange that £50m of the sale consideration is currently retained in a joint escrow account until a settlement is reached or the claim withdrawn.

For more on Slater and Gordon’s rise and fall, read ‘The Icarus Syndrome’ (£).

thomas.alan@legalease.co.uk

In another chapter to the ongoing story of Slater and Gordon’s (S&G) troubled Quindell buyout, the firm has been hit with an £80,000 fine for disclosing confidential client information.

The Solicitors Regulation Authority (SRA) today (29 June) imposed a £40,000 financial penalty on both S&G and Quindell Legal Services, now Slater Gordon Solutions, for disclosing un-redacted confidential information and documents from 7,087 client matter files to other firms. The pair were also ordered to pay the SRA’s costs of £26,000.

According to the SRA, the breaches took place between December 2014 and February 2015, shortly before S&G’s troublesome £637m acquisition of Quindell’s professional services division.

A spokesperson for S&G said: ‘We take our obligations relating to confidentiality extremely seriously. It is important to stress the SRA concluded there was no evidence that clients’ data was released outside of firms regulated by the SRA. However, we accept the SRA’s conclusion that a breach took place in relation to the due diligence process during this complex business transaction.’

Shortly after the Quindell professional services division was bought by S&G the firm ran into financial difficulty, posting a $958m loss for the six months ending 31 December 2015. This was primarily due to a hefty write-down on the Quindell deal. S&G is pursuing a fraudulent misrepresentation claim against the seller, Watchstone Group (the renamed Quindell). Watchstone denies fraudulent misrepresentation and is defending the claim.

In an effort to put its turbulent relationship with Quindell behind it, S&G announced in May that it would roll its legal and former Quindell divisions into a single corporate entity and invest £30m in new technology. The unification brought its own troubles however, with the firm’s offices in Fareham and Sheffield being shut in order to focus on larger regional hubs.

The firm also appointed a new-look management team, with ex-managing director of Sainsbury’s Argos Financial Services, Martyn Beauchamp, taking on the newly-created role of chief customer officer. Emma Holt, previously the firm’s head of personal injury, was appointed chief risk officer.

To read more on S&G’s rise and fall, read ‘The Icarus Syndrome’.

tom.baker@legalease.co.uk