Birmingham-based lawyers have helped lift a massive financial burden from the shoulders of businesses facing huge compensation payments from workers exposed to killer asbestos.

Jonathan Hofstetter and Darren Smith led a team from the Midlands office of Reed Smith to bring the test case on behalf of a corporate client facing a flood of compensation claims after its insurer declined to pay.

Their landmark victory also ensures financial security for the families of thousands of employees affected by the deadly asbestos-related cancer, mesothelioma.

The judgement in the High Court means that employees - including thousands damaged by unwitting exposure to asbestos many years ago - can claim against the employers’ historic insurers, even though there is no exact proof of when life-threatening tumours develop.

The ruling removes the confusion and doubt surrounding the issue since a Court of Appeal decision in 2006 - the Bolton decision - created an apparent get-out for some insurers faced with massive liabilities from claims going back several decades.

The ruling will come as a huge relief to companies facing claims amounting to hundreds of millions of pounds which would otherwise have had to be met from their own resources, as insurers denied liability.

And it is even better news for the thousands of employees whose firms have subsequently gone out of business, leaving them with neither insurer nor employer to claim against.

Darren Smith, a Midland-based partner with Reed Smith - which re-launches as Hill Hofstetter in the new year - said: “Based on this decision a number of employers’ liability insurers who have not provided policies for a considerable number of years, and others who are in liquidation, chose to decline cover in respect of asbestos claims where inhalation had taken place during the course of their period of insurance, and this was the subject of the latest hearing. “

Mr Hofstetter added: “Not all corporates were in the same boat. Some could simply have asked another insurer to pay.

“But in the case of our client and their co-claimant, the blips in their insurance history, through no fault of their own, would have exposed them to very large

claims, without any insurance safety net. Essentially this was a battle of insurers with very different interests, and we were caught in the middle,” he added.

The High Court has now ruled that although claims brought under public liability insurance are governed by the Bolton 2006 decision, employers’ liability claims should be treated as they have always been, and that mere exposure to asbestos is sufficient to generate a legitimate claim.

Those historic insurers whose employers’ liability policies had a similar wording to that in the Bolton case should now fund the claims they have declined since 2006, and all future claims.

Approximately 9,000 people are believed to have died of mesothelioma in the UK up to 2003, and current estimates as to the number of deaths each year vary between 4,000 and 6,000.

“It is common ground, however, that the number of deaths has yet to peak, and will not do so for a considerable number of years,” said Mr Smith.

If the historic insurers’ arguments had been upheld, up to 12 per cent of those afflicted with the disease would have been the limited cover provided by the Government Scheme, yielding much lower sums than what they would expect to obtain in a damages claim