Troubled claims management company Claims Direct is embroiled in a dispute with a group of franchisees who claim the franchises they were sold are worthless.
The row comes as the company, which has been bitterly criticised by defendant insurance solicitors for milking the claims system, conceded last week the landmark Callery v Gray decision has sunk its current business model.
Around 30 claims assessors, non-legally qualified staff who paid Claims Direct £30,000 in order to take referrals from it, are understood to have taken Claims Direct to an arbitration.
The tussle is the latest of a series of disputes involving the controversial company, whose shares have slumped to 10 pence from a high of 350 pence following its flotation in July last year.
The franchisees are understood to be claiming that they were assured by Claims Direct that the fees they received from clients referred to them would be recoverable from losing parties
However, in Callery v Gray, Master O'Hare ruled that claims assessors' fees are not recoverable.
Meanwhile, Claims Direct's independent directors, Paul Doona and David Gravell, have called on founders Tony Sullman and Colin Poole to distance themselves from the company.
In a statement they claim "recent developments, including the Callery v Gray ruling" mean the company must change its current business model – a central plank of which is the use of non-legally qualified franchisees to handle claims.
They add: "While Messrs Sullman and Poole [are] involved in the business [we] do not believe that achieving this [is] possible."
The admission comes as a victory for the Forum of Insurance Lawyers (FOIL), which was heavily involved in the Callery vs. Grey case.