A High Court judge has rejected a request to strike out a litigation funded claim against Moore Stephens.

But Mr Justice Langley also dramatically reduced the scope of the claim by refusing a request from claimants for compound interest.

Moore Stephens, which made revenues last year of £107m, is defending itself against a £90m negligence suit being brought by Benedict MacKenzie, the liquidators of defunct company Stone & Rolls, a former Moore Stephens audit client

'In my judgment the claim for compound interest is hopeless,' the judge said.

Compound interest makes up 45% of the claim, for $173.6m (£85m).

Lawyers for the claimants said they would instead seek simple interest, which will make up a much smaller sum.

The case is the first major use of litigation funding, the use of third party cash to pursue legal claims.

Litigation funding has raised the prospect of countless companies with grievances against former auditors, but no money, being able to sue ‘deep-pocket’ firms, taking a cut of the proceeds of any damages awarded.

Further Reading:

Creditors are in 'cloud-cuckoo land' says Judge

The Moore Stephens case: a sense of deja vu