A Manchester-based law firm brought in to advise property finance company Lexi is being sued for over £50m in damages.
Pannone LLP is facing the charges for allowing businessman Shaid Luqman to continue running failed company Lexi Holdings.
KPMG, the administrator of Lexi, appointed in October 2006, is suing the law firm for alleging breach of contract and professional negligence.
KPMG states Pannone LLP must have known Luqman was at fault for placing assets of Lexi at significant risk and aware he was transferring properties to other companies run by him.
Lexi hired Pannone LLP between July 2001 and April 2004.
The law firm strongly denies the claims and will be filing a defence case within weeks.