PracticeAuditBREAKING NEWS: Moore Stephens claim gets go-ahead

BREAKING NEWS: Moore Stephens claim gets go-ahead

Litigation-funded claim is cut back, however, as judge rejects request for compound interest

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

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