Class action firm finds itself sued in major shareholder class action lawsuit
07th Nov 2016
What happens when a giant law firm known for class action lawsuits finds itself on the receiving end of a massive class action claim?
That is what is happening right now to the Australian firm Slater and Gordon Limited.
One of the largest consumer law firms in Australia, Slater and Gordon is noted as becoming one of the first publicly traded law firms in the world in 2007. That unique distinction has opened them up to a shareholder lawsuit, alleging that the firm “deceived investors and lost them more than $2 billion through various missteps”.
The firm of Maurice Blackburn Lawyers filed the class action claim on behalf of Slater and Gordon shareholders in the wake of the firm’s stock price plummeting by about 95% between April 2015 and February 2016. The claim stems from the firm’s acquisition of the professional services division of the UK insurance claims management company Quindell for AU$1.3 billion. Maurice Blackburn alleges that Slater and Gordon failed to perform proper due diligence and keep shareholders adequately informed on the deal, after raising AU$900 million in capital from shareholders to make the purchase happen.
The class action suit alleges that “Slater and Gordon made false and misleading statements, engaged in misleading and deceptive conduct, and breached its continuous disclosure obligations to shareholders, preventing them from being able to make informed investment decisions based on complete, accurate, and timely information about the Quindell acquisition and the true state of the company’s overall financial position and performance”.
But the ironies don’t stop there. Slater and Gordon has regularly taken advantage of third party litigation financing to move their lawsuits forward. And now it’s litigation financing that is helping to drive the case against them. Australian-based JustKapital Litigation Financing and London’s Woodsford Litigation Funding are helping to provide the funding to support the shareholder’s class action case.
Slater and Gordon has vowed to fight the suit. But you can’t help but wonder how a litigation giant like Slater and Gordon feels getting a taste of its own medicine, finding themselves the subject of a massive and costly class action lawsuit driven by third party litigation financing.