Moore Stephens’ landmark victory in fending off a £90m suit bankrolled by a third party has failed to put the final nail in the coffin of litigation funding being used against UK accountants.

At one point, the claim stood at more than the firm’s annual revenues, but it was thrown out of court last week. Appeal court judges ruled that the audit negligence case did not have any merit because the company was the perpetrator and not the victim of the fraud.

Roger Billins, partner at Davenport Lyons law firm, said that the outcome of the case would be welcome for advisers, but more cases funded by the controversial method could not be ruled out in the current financial climate.

‘There is little doubt that one of the side effects of the credit crunch, falling property values and possible impending recession, is that banks and others will seek to mitigate their losses by putting the blame at the door of the professionals who have advised them in transactions that have gone wrong - accountants, solicitors and valuers,’ said Billins.

The claim, branded ‘astonishing’ by Moore Stephens has been watched closely by members of the profession as the prospect of a flood of claims funded by the controversial method has worried advisers.

One litigation funder told Accountancy Age that the ruling would only serve to strengthen the market because its effect would be to edge out opportunists hedging their bets on questionable cases. Once this happened, the field would be clear for bona fide operators trying to back disputes that had genuine merit.