The company has until May 26 to complete the negotiations, it said, which is likely to see the investment of shareholders wiped out.

Earlier on Monday, the company disclosed more heavy losses amid a warning from its auditor about the "material uncertainties" over the company's financial survival.

In a filing with the stock exchange, the company disclosed that losses have now reached $1.3 billion, which exceeds the $1.1 billion of equity on its balance sheet, so that all of the shareholder funds have now been wiped out. The underlying value of each of its shares on issue is now minus 36c, since the lawyer had a negative net worth of $126 million as of December 31.

The company is negotiating a new financing package with its bankers in what is seen as a 'life-saving' deal for the company.

"The continued support of the company's lenders is fundamental," it warned in the sharemarket filing, "as current levels of bank debt exceed total enterprise value."

The slide in the group's fortunes follows a slump in revenue to $322.7 million in the December half, which is well below the $487.5 million earned a year earlier. This resulted in the loss for the December half running at $425.1 million.

The company is the subject of an ongoing investigation by the corporate watchdog ASIC, the Australian Securities Investments Commission, and has been hit by a shareholder class action which asserts the company "engaged in misleading and deceptive conduct" as well as breached continuous disclosure obligations of public companies.

And its auditors, Ernst & Young, have today also warned of "material uncertainties" relating to the group's survival, highlighting the latest loss, the negative cashflow as well as the fact that all shareholder equity has been wiped out.

The steady flow of bad news saw the shares down a heavy 20 per cent at 12.75c in late trading, after hitting a new all-time low of 12c.

One of the few analysts who still follows the company, Morningstar's Gareth James, warned that the shares "look worthless following another bad result".

"We maintain our 'extreme fair value uncertainty' rating and 1c per share fair value estimate for Slater & Gordon following another poor financial result," he told clients Monday. "At 16c per share [Friday's closing share price], we continue to believe the shares are materially overvalued and reiterate our intention to cease coverage of the company early next month."

In Monday's sharemarket filing, the company's auditor pointed to "the existence of material uncertainties that may cast significant doubt" about the group's ability to continue as a going concern.

The legal firm said it ran up $13.7 million of restructuring costs during the half, which includes consultancy fees, redundancies and the like, while financing charges hit $25.5 million.

In a briefing for analysts, Slater and Gordon, the chief executive, Andrew Gregg warned of the "negative sentiment and the material uncertainty over the company's future". Equally, the shareholder class action will be a "long and protracted affair," he said, with no timetable set for the trial.

"Staff engagement has been challenging, with pockets of attrition", he said.

Slater and Gordon has been exposed to intense scrutiny following the purchase two years ago of UK professional services outfit Quindell for $1.3 billion, a company which is the subject to a long running investigation by the UK Serious Fraud Squad. Rob Terry, who ran Quindell, has said Slater and Gordon "got a bargain". He made £30 million ($48.5 million) from the deal.

Even so, Slater and Gordon has blocked the release of a final payment of £50 million ($81 million) to the vendor of Quindell, a company which is now trading as Watchstone​ Group, due to various claims it is seeking to make.

The Australian law firm has warned that the operating environment in the UK remains uncertain amid a move by the UK government to tighten motor accident claims, which it argues will reduce the rights of victims to "access fair compensation through the legal system".

"The group's current operating environment continues to present challenges and uncertainty," the legal firm told the stock exchange Monday.

Recapitalisation options have been put forward to the group's financiers and a majority of its lenders "by value" must agree to the proposal by May 26 and it needs the ongoing support of its lenders "to continue as a going concern", it said.

It is fully drawn under its debt facilities with its lenders, and has a $20 million repayment due in August, a further $10 million due in February 2018 and $421.4 million in May 2018.

"The group will not have sufficient free cashflow to pay interest and repay the facilities in May 2018, or earlier," it said, and there is the risk it will not be able to meet minimum cash balances specified by its loan agreements.