Insurance outsourcer Watchstone struck back in its High Court scrap with Slater & Gordon today after it was granted permission to file a counter-claim against the personal injury law firm.
Watchstone said it recently discovered an “illicit back channel” Slater and Gordon’s corporate finance adviser Greenhill & Co allegedly used to access confidential information about the company from PwC, then Watchstone’s group restructuring adviser, during negotiations for the sale of its professional services arm.
Read more: Slater and Gordon swings to a AU$1bn loss
Listed Australian law firm Slater and Gordon bought the professional services arm of Aim-listed Quindell, now Watchstone, for £637m in 2015.
The acquisition was a disaster, with Slater and Gordon writing down AU$814m (£450m) in the value of the business within a year.
Slater and Gordon sued Watchstone for breach of warranty and fraudulent misrepresentation in connection with the sale in June 2017.
The fallout from the deal tanked the law firm’s shares and sent it to the brink of insolvency.
Its UK arm, which is running the case, is now owned by a consortium of its senior lenders led by New York hedge fund Anchorage Capital.
The case is due to be heard in the High Court in October.
Watchstone today filed an amended defence and counterclaim after receiving permission from a judge in a hearing yesterday.
Watchstone claimed that Greenhill established a back-channel to PwC via a series of secret meetings at which it unlawfully obtained confidential information pertaining to Watchstone’s wider group.
It said Slater and Gordon factored that information into its negotiation strategy during the acquisition of Watchstone’s professional services business.
it said this gave Slater and Gordon an unfair advantage in negotiations which it exploited to buy the division at a lower price than it would otherwise have paid.
Yesterday the Commercial Court found that the counterclaim should be allowed and should be heard as part of the trial of Slater and Gordon’s claims, starting on 21 October.
The Serious Fraud Office launched an investigation into the business and accounting practices of Quindell in August 2015.
Watchstone’s share price rose 2.6 per cent today to 72p.
Slater & Gordon and PwC declined to comment.
Greenhill & Co was contacted for comment.