Watchstone – the UK company formerly known as Quindell – has denied any wrongdoing in the sale of its professional services division to Australian-listed law firm Slater and Gordon.

The claims outsourcing company filed its defence in London's High Court yesterday (12 October), in response to the law firm's claim served in June.

Slater & Gordon's UK subsidiary is seeking up to £637m in damages over allegations of fraud.

In its defence, Watchstone argued there were no matters that the law firm was not aware of from "their due diligence and Quindell's disclosures" during the completion of the deal.

It also revealed that prior to the sale, five months of "rigorous due diligence" was carried out by Slater and Gordon, at a cost to the law firm of $51.6m (£31.7m).

Watchstone further alleged that after the acquisition, Slater and Gordon "boasted publicly" that they had carried out their own calculations and judgements based on their own due diligence.

The defence also drew attention to the fact that Slater and Gordon gave notice of a claim against Watchstone shortly before the end of the deal's warranty period, while it was under "serious financial and external pressures that had nothing to do with Quindell/Watchstone".

Shortly after the Quindell deal was announced in March 2015, the insurance company was placed under investigation by the Serious Fraud Office (SFO) over its previous accounting practice.

Slater and Gordon – which in 2007 was the first ever law firm to go public – entered the UK market with the £53.8m takeover of personal injury firm Russell Jones & Walker. This was followed by a flurry of acquisitions, including the ill-fated Quindell deal.

The firm has since agreed a recapitalisation package with Anchorage Capital that gives the lenders ultimate control of the UK business. In September, Legal Week revealed that the firm had moved 41 of its UK partners out of its partnership prior to this.