DIBB Lupton Broomhead has come to the rescue of the Knight Williams Investors Action Group (KWIAG) by offering its services on a pro bono basis to help its members recover money lost through alleged bad advice.

Dibbs is fielding a four-lawyer team, led by head of commercial litigation Neil Micklethwaite, and hopes to add to it a barrister and forensic accountant.

The firm decided to help the cash-strapped and mainly elderly investors of the collapsed company after seeing a story in The Lawyer highlighting their need for legal advice from City lawyers. Two other leading law firms have also offered their services free of charge after seeing the story.

Micklethwaite said: “The firm felt that the action group merited the free assistance of a City law firm as the regulatory system was failing to meet the very legitimate concerns and losses of elderly investors.”

Kenneth Jordan, leader of 400-member KWIAG, welcomed Dibbs' involvement. “We are delighted that a prestigious City solicitor's firm has taken up the suggestion in The Lawyer that it would be public-spirited for a firm to offer us legal advice on a pro bono basis. We are as much grateful to The Lawyer as we are to Dibb Lupton.”

Dibbs, like other City firms, does a significant amount of pro bono work which is never publicised, said managing partner Paul Rhodes, who gave free advice to investors in the Barlow Clowes and Charnley Davies collapses.

KWIAG members have lost at least £8 million, allegedly from investment advice given by Knight Williams.

Years of protracted efforts for compensation with the Securities and Investments Board and the FIMBRA arbitration scheme were circumvented by the sudden voluntary liquidation by Knight Williams last month. This made the investors' legal position even more complex.

However, the group, including many retired country solicitors, has been unable to finance legal advice.

Knight Williams's lawyers Fladgate Fielder advised on the company's liquidation move, it is understood.

Liquidators Arthur Andersen, advised by Denton Hall, will spend several months considering whether investors have a legitimate claim on the company itself, thereby becoming its creditors. “It is certainly an unusual case,” said liquidator Martin Fishman.