The fund's supervisor Link Fund Solutions could also be subject of action, according to law firms.
Karolina Kupczyk, a group litigation lawyer at Slater and Gordon, said: “We have very carefully considered the facts which have led to investors losing millions of pounds in the Woodford Funds featured in the past on Hargreaves Lansdown’s ‘best buy’ list.
“Having done so, we now believe there’s a case for Hargreaves to answer. We are also actively considering other potential defendants such as Link so that investors stand the best chance of recovering their money.”
Law firm Leigh Day said earlier this year that it had been contacted by “more than 2,500 investors” in the former Woodford fund who were seeking compensation.
Slater and Gordon has said it is likely to coordinate with other claimant firms, as seen in other group litigation actions such as against Volkswagen.
The Woodford Equity Income fund was gated in June last year and began to be wound up in October, following a rush of investor redemptions and concern about its high level of investment in illiquid holdings such as unlisted companies.
The law firms previously said they were examining whether Hargreaves Lansdown was aware of the problems at the fund while it continued to promote it as part of its ‘best buy’ list until the fund was suspended.