Slater and Gordon to ‘vigorously defend’ itself against $250m class action

Slater and Gordon says the claims against it are unfounded as it’s officially served with a $250m-plus class action.

Maurice Blackburn Lawyers national head of class actions Andrew Watson (left) and lead plaintiff Matt Hall speak to journalists about a class action filed in Melbourne, Wednesday, Oct. 12, 2016. (AAP Image/Megan Neil)

Slater and Gordon has said it will “vigorously defend” itself against a $250 million-plus class action filed on behalf of 3,000 aggrieved shareholders by rival law firm Maurice Blackburn.

The response comes after Slater & Gordon (SGH) was officially served a statement of claim today in relation to a disastrous UK expansion and a severe guidance downgrade last year that together wiped over $2 billion from its valuation.

Maurice Blackburn will represent investors who purchased shares in Slater & Gordon from March 30, 2015 until February 24, 2016, with its proceedings just one of two class actions Slater & Gordon is likely to face in relation to the botched $1.3 billion purchase of the professional services operation of UK-based Quindell and sharp downgrade in guidance in late-2015.

The defendant responded today, saying claims of misleading and deceptive conduct in relation to its guidance and the Quindell acquisition were unfounded.

Its defence will be led by Arnold Bloch Liebler rather than its own team, with expectations the case will run for “two or three years”.

“Slater and Gordon has engaged external legal advisers to act for it and will vigorously defend the claim,” the law firm’s managing director Andrew Grech said.

“The class action will not affect the day to day conduct of Slater and Gordon’s client matters.

“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.”

The Maurice Blackburn-led claim promises to be among the largest class actions ever pursued in Australia, with the rival law firm alleging Slater and Gordon made false and misleading statements, engaged in deceptive conduct and potentially breached continuous disclosure statements.

Such activity, it is claimed, prevented shareholders from making informed investment decisions.

The Maurice Blackburn case is expected to be swiftly followed by a similar suit led by ACA Lawyers, which said yesterday it had found “potential misconduct” that dates back as far as the group’s annual results in 2014.

Slater and Gordon shares traded flat at 38.5c by 3.15pm (AEDT), showing a market cap of just $136m, more than $100m below the size of the class action.

Its shares traded as high as $8.07 around the time of the Quindell acquisition in April 2015.