The long-running saga of Slater and Gordon’s disastrous Quindell acquisition took another turn today as the firm was fined £80,000 over disclosure failings.
The Solicitors Regulation Authority announced that it had issued record penalties against an alternative business structure over rule breaches dating back to February 2015 when the two businesses were involved in talks over the £637m purchase.
Slater Gordon Solutions (known as Quindell Legal Services at the time) was found to have breached two SRA principles by disclosing unredacted confidential information and documents from 7,087 client matter files to other firms. This was done without the knowledge or consent of the clients involved.
A written rebuke was issued and Slater Gordon Solutions Legal fined £40,000.
Slater & Gordon (UK) LLP - as Slater and Gordon was known at the time - was also found to have broken solicitor rules by inspecting unredacted confidential information from those files, again without client permission. This resulted in a £20,000 fine.
Slater & Gordon (UK) LLP was also fined a further £20,000 for disclosing selected client matter files to two other firms without client consent. Slater and Gordon (UK) LLP will be asked to pay.
The firm was also ordered to pay the SRA’s £26,000 costs.
The SRA can fine conventional firms up to £2,000, but has much greater powers when dealing with alternative business structures.
It has been claimed that Slater and Gordon, then owned by an Australian listed company, spent £31.7m on due diligence ahead of the deal to buy the legal services department of Quindell.
After the deal was concluded in March 2015, the Slater and Gordon share price tumbled and its senior management were gradually moved on, before the firm was transferred into the hands of an international hedge fund. The firm recently said it had started a ‘new chapter’ for the business after clearing its debts.
The acquisition itself is the subject of a legal dispute between Quindell’s successor firm Watchstone and Slater and Gordon. The law firm alleges that a ‘fraudulent misrepresentation’ by Quindell led it to purchase the legal services division, but Watchstone has vowed to robustly defend the claim. Its defence states that Slater and Gordon was aware of Quindell’s well-publicised accounting issues and that allegations of deceit and the associated breach of warranty claims are ‘wholly without merit and should never have been advanced’.
Two accountancy firms have also been fined for failings related to the scrutiny of Quindell’s accounts prior to the acquisition.