ACS:Law has chosen to cease its so-called speculative invoicing' of people it suspected of illegal filesharing.
The law firm courted controversy when it used IP addresses to locate and send letters to thousands of people it suspected of the illicit activity.
The dramatic move came at a time when a court case is ongoing in which 26 people have been accused of illegally sharing copyrighted pornography, for which MediaCAT held the licence.
MediaCAT is being represented by ACS:Law.
Andrew Crossley, head of law firm ACS:Law, said the firm had decided to stop chasing file sharers after he had received death threats, amongst other forms of abuse.
"I have ceased my work I have been subject to criminal attack. My emails have been hacked. I have had death threats and bomb threats," Crossley reportedly said in a statement to the Patents County Court.
Read to the court by barrister Tim Ludbrook, who was acting on behalf of copyright licensee MediaCAT, the statement added. "It has caused immense hassle to me and my family."
The Solicitor's Regulation Authority (SRA) is also investigating Crossley.
The SRA had been contacted by Which? after the consumer protection group took umbrage with ACS:Law's actions.
The law firm was believed to have asked recipients of its letters to pay up hundreds of pounds or risk being taken to court.
"It is good news that ACS is no longer carrying out this work let's hope the judge in this case decides that an IP address alone is not reliable evidence to prove unlawful filesharing and that an account holder is not liable for another person's unauthorised actions," said Deborah Prince, head of in-house legal at Which?
"That would make it very unlikely that any law firm would carry out similar work."
Telecoms companies also complained about ACS:Law's actions, including O2, which said it had nothing more to say on the matter.
The BPI, a representative body for music labels, also criticised the law firm's methods.
In September last year, the law firm was on the wrong end of a data breach, which is currently being investigated by the Information Commissioner's Office (ICO).
The privacy watchdog has the power to impose fines of up to 500,000, depending on the severity of a breach.
In the ASC:Law breach, personal data of peer-to-peer users suspected of sharing copyrighted pornographic films was leaked.
Talking about the ACS:Law case, Judge Birss QC reportedly described it as "absolutely extraordinary."
Even though MediaCAT wants to bring its action to a close, Judge Birss said this may not be so simple. A ruling is expected later this week.
"The latest developments look like they might add up to a real victory for people's rights," Peter Bradwell, Open Rights Group's campaigner for copyright reform, told IT PRO.
"None of this will be much comfort to those people caught up in this mess, either those whose data was leaked, or those innocent people who have had to face a lengthy and distressing legal process."
