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Terrible news for all the employees of the business, but regrettably this has been an accident waiting to happen for some time.

Anybody who followed the Quindell saga couldn't have failed to be surprised at the fact S & G bought the professional services division, let alone the price which they paid.
Once again there has been a failure by many to understand the difference between profit, which can be easily manipulated, and cash, which is only seen after the work has been completed, billed and most importantly, actually collected.
The goodwill write downs in the accounts show how illusory "intangibles" can be. Shareholders must be incensed that less than 12 months after paying A$ 1.3 billion the management have decided that over A$ 800 of the assets they bought have no value.

If you look at the Parabis/Plexus Law fire sale last year there are many similarities. A business built in a short space of time comprising various firms, bought for large payments from their owners, which couldn't be consolidated. Major issues regarding computer software integration followed by an inability to control the outflow of cash, and failure to turn files purchased into realistic profitable business. The result was a sale of the business back to the owners leaving the banks and many creditors out of pocket, due to an inability to convert balance sheet value of " intangibles" into any realistic value on a sale.
Slater and Gordon UK comprised various profitable businesses prior to the decision to buy the PSD from Quindell. Russell Jones Walker, Fentons, Bishop Flint, Pannone, Walker Smith Way, and others. With a bit of luck, they may well be able to spin off their respective businesses back into private ownership, probably paying far less than the cash consideration which their previous owners received from S & G. ( that is provided the S & G management haven't ruined their business systems while in it's ownership )
That would leave the legacy Quindell business to deal with, which won't be easy. The problem is that nobody has been able to make any money out of the Quindell legal business. It has always eaten cash at an alarming rate, and even if a PI business had the resources to take on the files, why would they do so: neither the Quindell, nor the S&G management have been able to make any profit. Quindell puffed up their business, but following the restatement of their accounts last year. It was clear that there was no actual profit.
All this has been achieved largely by the ability of professional practices, and law firms in particular to manipulate/ massage their WIP. While in practice I found the decision as to the amount of WIP to include in the annual accounts was very much a case of sticking your finger in the air and feeling the wind! The accountants may argue that there is a science to it, but it is very much an art. As mentioned above this wasn't helped by the Accounting Standards Board bringing forward the time at which revenue should be recognised.
The revenue are not really concerned about the WIP figure provided that it is not too low, because they are getting their tax on work which has not yet been turned into cash for the business. From a law firms point of view an increase in WIP is a great way of bolstering up a troubled balance sheet. It would be fairly easy for law firm management to pull the wool over the eyes of a junior audit manager, so as to increase WIP which may not actually be there. The banks are happy because they see an asset on the balance sheet, and can justify the lending.
Clearly in order to keep this working you have to keep on acquiring new business and it is not until the ship hits the rocks that the banks realise that the value of the intangibles, the goodwill, now has no value.
Businesses like S and G don't believe in owning assets such as property, because that would be an inefficient use of their capital! So the buildings out of which they operate are all on, probably fairly onerous, leases negotiated by the previous owners who see a nice income stream by renting the buildings back to the buyers. The fixed assets will comprise some furniture, computers, software licenses (which may or may not be assignable at a cost) stationery and little else.
I have little knowledge of the PI business model, but from reading the comments on the Gazette the consensus appears to be that, even without the chancellors proposed increase in the SCT and attack on soft tissue claims, it is difficult to make any meaningful profit.
It is difficult to see how S & G will change around this business, while at the same time giving the banks a realistic business plan. They have staff morale, redundancies, computer integration issues to deal with as well as defendant insurance companies claiming fraud on all claims and delaying settlement.
If I was a betting man, which I am not, I would say that the business will continue to be cash negative; by the end of March the banks will have decided that they will keep going only as long as they have to in order to sell those parts of the business which can be sold: thereafter the legacy Quindell business and it's employees and clients will be left for the SRA.

A very sad story for all concerned. Possibly in due course we may find why out the S &G board decided to purchase.