LAW firm Harper Macleod has been drafted in by four founders of Scottish technology business FanDuel as they continue to pursue a $120 million claim against the company’s new owners.

Though they had built the daily fantasy sports business from a standing start, founding chief executive Nigel Eccles, marketing head Lesley Eccles, chief product officer Tom Griffiths and design head Rob Jones saw their shareholdings in FanDuel wiped out when its private equity backers sold the company to Paddy Power Betfair - now Flutter Entertainment - last year. All four had left the business by the time the deal was announced.

The four co-founders launched a legal case against the firm soon after in a bid to recover the $120m their shares were worth at the time of the sale. Based on the size of their individual shareholdings, around half that sum would be due to Mr Eccles.

Although the original claim was filed by CMS, that firm was forced to come off the record due to conflicts, with Harper Macleod partners Sandy Hastie and David Kerr taking over last August.

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It is understood that they have amended the original claim, with the case due to go before a procedural hearing on September 5.

Writing in FanDuel’s 2017 accounts, which he signed off earlier this month, the company’s current chief executive Matt King said no money had been set aside to pay for the action because it does not expect it to succeed.

“[Our] counsel has been advised that the proceedings raised will not be insisted upon in their current form but that new alternative proceedings will be commenced,” he said.

“We understand that the new counsel team for the petitioners is currently framing the alternative proceedings but to date these have not been served on the group. No action has been taken meantime to progress the original proceedings.

“While it is possible the case reaches a merits determination, the group does not consider it probable, and therefore no accrual has been recorded as of the balance sheet date.”

The original dispute arose after FanDuel’s main private equity backers Shamrock Capital Advisers and Kohlberg Kravis Roberts (KKR) exercised their majority shareholder drag-along rights to exclude all ordinary shareholders from the Paddy Power Betfair deal.

Drag-along rights are supposed to be used to force minority shareholders to participate in a sale on the same terms as majority shareholders. However, due to a number of clauses that had been added to the company’s articles of the association over the preceding few years, KKR and Shamrock were able to force the sale while claiming the $465m valuation placed on FanDuel was insufficient to pay out on any ordinary shares.

“As this consideration is not sufficient to satisfy the aggregate preference payable on the A preference shares, no part of the consideration payable in the offer will be payable on FanDuel’s ordinary shares or options to purchase FanDuel’s ordinary shares,” they said in a document outlining the terms of the deal.

The founders’ case is built around the argument that FanDuel, whose customers are all based in the US, was deliberately undervalued as part of the deal.

Though the business had struggled to make headway in a number of US states, which classed its activities as illegal gambling, a US Supreme Court ruling handed down just after the Paddy Power Betfair deal was agreed largely removed that barrier.

READ MORE: FanDuel founders to receive no cash from sale to Paddy Power Betfair 

Despite this, FanDuel’s board did not seek to have the business revalued, something the founders claimed in their original court filing was “to the detriment and prejudice of ordinary shareholders”.

“The board of FanDuel considered whether the US Supreme Court ruling and its impact upon the market value of FanDuel should cause the company to be revalued. It has chosen not to do so,” the court papers said.

“The board of FanDuel elected to use the valuation obtained prior to the US Supreme Court ruling, without seeking any current and sound valuation of the company.”

FanDuel’s fifth co-founder, Chris Stafford, who had been head of technology at the business until he left in 2016, is not party to the legal proceedings. He is currently an IT consultant with Amber 80, a Glasgow-based firm he set up at the end of 2017.

Last year Mr Eccles and Mr Jones set up technology business Flick, Ms Eccles raised $2.2m for a relationships-based app called Relish and Mr Griffiths co-founded San Francisco-based online management training firm Hone.