Australia’s largest class-action law firm, Slater & Gordon, could be sued by the country’s second largest class-action firm over its lacklustre performance and huge share price losses.
Shares in Slater & Gordon, a law firm listed Down Under, have dropped by nearly 90pc since April, after a series of questions about its accounting practices, earnings guidance and the performance of its British legal services division, Quindell, which is bought in March for A$1.3bn (£637m).
Rival company Maurice Blackburn has announced that it could now pursue legal action against Slater & Gordon over the issues at the company.
It has encouraged aggrieved shareholders in Slater & Gordon “to register your details with us in order to get the best legal representation possible should a shareholder class action ensue”.
The class action suit is open to people who bought shares in Slater & Gordon between April 1, 2015 and December 16 2015.
Shares in Slater & Gordon fell by 6.6pc on Wednesday after the news emerged. Embattled Aim-listed business Quindell – which has recently been rebranded as Watchstone Group – is currently subject to a Serious Fraud Office investigation.
Australian regulators are also probing the Slater & Gordon's accounting practices, following its takeover of Quindell's legal arm.
The acquisition left the firm exposed when UK Chancellor George Osborne announced in the summer Budget sweeping changes to the UK personal injury market, sending the share price tumbling.
The law firm was dealt a further blow last week after it was forced to abandon its full-year earnings guidance because of problems in the UK.
“To be walking away from the earnings guidance it reaffirmed only a few weeks ago makes it increasingly hard to believe that the company has proper systems in place or that the guidance should have been given in the first place,” said Jacob Varghese, a lawyer at Maurice Blackburn.
"Slater & Gordon shareholders have a right to be profoundly disappointed in last week's announcement and subsequent further price drop," he added.
A spokesman for Slater & Gordon said: “Slater & Gordon will continue to monitor the situation and update the market if necessary."
Maurice Blackburn is the second law firm to threaten legal action in a week. ACA Lawyers say they are looking into a opening a potential claim against the company.
Slater & Gordon said at the time of purchasing the Quindell legal services unit that it would create “the number one personal injury law group in the UK".