Troubled law firm Slater and Gordon has admitted it is effectively broke and operating at the mercy of its lenders.

The company's latest financial accounts for the six months to the end of December, 2016 reveal its debts exceed its total assets by $126 million and its cash flow is negative to the tune of $11.4 million.

The indebted company made a net loss of $425 million dollars for the six months to the end of December, after it wrote down the value of its UK business by a further $350 million and revenue slumped by a third, mainly in the UK.

The firm said it also saw underperformance in both Australia and the UK in the settlement of personal injuries claims.

The latest result compares to a $958 million dollar loss for the same period in 2015.

Investors will get no dividend payout.

In financial accounts lodged with the share market operator, the ASX, Slater and Gordon has warned it may go under unless its lenders continue to bail it out.

"The company was in compliance with its financial covenants both at 31 December 2016 and at the date of this report, however the group's ability to continue as a going concern relies on the continued support of its lenders," the report cautioned.

The firm has a deadline of May 26 to sort out a deal with its bankers on a restructure plan, otherwise it may be forced to repay a $738 million loan within 14 days.

In a statement, the firm's managing director, Andrew Grech, said the company was working with its lenders to shore up its finances.

"It is clear that based on current performance expectations the continued support of the company's lenders is fundamental, as current levels of bank debt exceed total enterprise value," he acknowledged.

"Discussions with lenders on the recapitalisation plan are ongoing and the board has reason to believe that a successful outcome will be concluded in coming months."

Slater and Gordon's assets are worth nearly $887 million while it owes $1.01 billion.

The firm warned it did not have enough cash flow to repay a $421 million loan when it is due in May 2018. It also does not have the money to pay interest or make repayments on the loan.

No money to pay investors if class action succeeds

Slater and Gordon warned that it does not have enough assets to pay damages or a settlement if an investor class action, run by rival law firm Maurice Blackburn, succeeds.

"The above matters present a material uncertainty in relation to the group's ability to continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the half-year financial report," the company cautioned.

The law firm's auditors, Ernst & Young, have also raised their concerns about Slater and Gordon's ability to keep operating.

"These conditions, along with other matters ... indicate the existence of material uncertainties that may cast significant doubt about the consolidated entity's ability to continue as a going concern and therefore, whether the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course of business," the auditors noted in the financial accounts.

Slater and Gordon is being investigated by corporate regulator, the Australian Securities and Investments Commission, over whether it deliberately falsified or manipulated its financial records and accounts.

The company's shares slumped a further 9 per cent to $0.15 this morning.

Slater and Gordon stock has plummeted from its peak of almost $8 in April 2015, soon after it paid $1.3 billion to buy troubled UK business Quindell.

The share price crashed primarily because of massive write-downs and debts associated with the purchase of Quindell.

Investors are suing Slater and Gordon for allegedly misleading and deceiving them.

The firm is accused of losing shareholders more than $2 billion because of the share price plunge caused by the ill-fated acquisition of its UK business.