Thousands of investors allegedly "blindsided" by Slater and Gordon are suing the legal firm in what may end up as Australia's largest shareholder class action.
More than 3000 shareholders who lost more than $250 million in Slater and Gordon's 2015 share price plunge have so far signed up to the Maurice Blackburn Lawyers class action.
The claim has been filed as an open class action to cover tens of thousands of affected shareholders, and will end up being significantly larger, Maurice Blackburn national head of class actions Andrew Watson said.
"The claim will vastly exceed the $250 million and has the potential to be one of Australia's largest shareholder class actions, if not the largest," he saidy.
A second legal firm, ACA Lawyers, also plans to launch class action proceedings against Slater and Gordon over what financial information the company disclosed to the stock market, and when.
Maurice Blackburn's action claims Slater and Gordon misrepresented to the market, and failed to disclose in a timely way, a range of information about its financial performance and prospects.
It mainly relates to the firm's disclosure of details about what Mr Watson described as its "spectacularly bad" $1.2 billion acquisition of Quindell's professional services division in the UK, announced in March 2015.
"They didn't just miss their earnings guidance predictions - they were miles off - and that suggests systemic issues across the company," Mr Watson said.
"To blindside shareholders once is really bad news; if it happens twice, it's then a farce, but to happen again and again and again - you can understand why shareholders want serious questions answered about the internal corporate governance of the company."
The shareholder leading the class action, Matt Hall, lost hundreds of thousands of dollars because of Slater and Gordon's share price plunge.
"There's been a colossal failure here," he told reporters in Melbourne.
"An Australian listed company, purporting to comply with all the rules, has seen a decrease of nearly $2 billion in its market capitalisation. It shouldn't have been a surprise."
Slater and Gordon shares plunged about 95 per cent between April 2015 and February 2016.
ACA Lawyers principal Bruce Clarke said his firm has been investigating Slater and Gordon's conduct over several years, including before its April 2015 capital raising to fund the UK acquisition.
"We are taking the time to ensure we make the strongest case possible to recover the maximum possible losses on behalf of Slater and Gordon shareholders," he said in a statement.
Slater and Gordon on Wednesday said it had yet to be served with a class action claim.
The company has said it intends to take legal action against Watchstone Group, formerly Quindell, arising from the UK acquisition.
Slater and Gordon posted a $1 billion annual loss for 2015/16, largely due to writedowns on its UK business.
The embattled law firm's shares, which hit an all-time high of $8.07 in April 2015, had lost 3.25 cents by 1515 AEDT to be trading at 38.75 cents.
