That's exactly it, you have started with the a-priori assumption...

That's exactly it, you have started with the a-priori assumption that the market is right in it's valuation of the company today and you have built a case justifying the markets' opinion. That's a good starting point to critically assess any investment which is why I appreciate your detailed comments.
Given where the shareprice is everyone who owns the stock as you say hates it. That is a necessary but not sufficient precondition for a contrarian play.
Its not good to sass on people who paid a higher price, obviously with hindsight they wish they could have waited. It's never possible to pick the bottom exactly, some may have paid too much.
That's all irrelevant in any case, the question to be answered is SHJ suitable for purchase or sale at this price - feelings shouldn't come into it.
The scenario you have painted sounds to me like a worst case scenario, that the company is poor quality and the cases bordering on allegedly fraudulent. Once the WIP stops growing large impairments will be necessary as the cases complete.
My initial assessment was that a fairly disasterous outcome is reflected in the price and therefore, for my small parcel of 17,000 shares at 0.545 there is very little risk. Furthermore all I need is for things to get slightly less worse to do quite well, it's a classic asymmetric risk.
I appreciate the legal beagle comments also and I agree you would think that SHJ don't choose cases they won't win. That should after all be their business. However this is not something that I can KNOW beyond reasonable doubt, I am an engineer not a lawyer.
70 lawyers reviewed the cases at Quindell if I recall but I didn't so I sat it out.
Never any shame in doing that.
Therefore my position in this remains a minor speculation rather than an investment grade/size/contrarian play of the year.
Good Luck To All