Clifford Chance offices in Washington, D.C. March 24, 2015. Photo by Diego M. Radzinschi/THE NATIONAL LAW JOURNAL. (Diego M. Radzinschi)
Clifford Chance is being investigated by the U.K.’s Solicitors Regulation Authority (SRA) over its controversial role in the long-running dispute involving client Excalibur Ventures.
Clifford Chance has already faced significant scrutiny over its involvement in the $1.6 billion case, which was brought by Excalibur, an aspiring oil and gas exploration company, against U.S. oil companies Gulf Keystone Petroleum Ltd. and Texas Keystone Inc. The case, the subject of a September 2013 feature story in The American Lawyer, became notable for the role of third-party litigation funders.
Excalibur’s claims were backed by a group of financiers, including the now disbanded BlackRobe Capital Partners, New York-based hedge fund Platinum Capital Partners and a U.K. entity called Psari Holdings, which was controlled by Greek shipping magnates Adonis and Filippos Lemos.
A 2013 judgment by a High Court in London found that the funders were liable for the defense costs of the two defendants, a ruling upheld by an appellate court late last year, a decision that increased the potential liability of litigation funders in the U.K.
Clifford Chance was criticized by that court for its role representing Excalibur after it emerged that there were family ties between the firm’s lead partner, London litigator Alex Panayides, and Lemos. Panayides’ father had been chairman of one of the Lemos family’s ship management companies, while his brother was a “longstanding and trusted employee” of a Lemos family company.
In December 2015, Clifford Chance settled a professional negligence claim by the Lemos family, who had argued that the Magic Circle firm had overstated the case’s chance of success. The family put in £13.75 million (roughly $17.7 million) in funding.
While the U.K.’s SRA regularly investigates individual lawyers, it is less common for the watchdog to probe large law firms. For example, earlier this year the SRA referred three partners from Clyde & Co to the Solicitors Disciplinary Tribunal for breaching money laundering rules. The trio were each fined £10,000 ($12,880).
News of the SRA’s investigation of Clifford Chance came as the firm posted double-digit increases in several key financial metrics for fiscal 2016-17. Clifford Chance, Clyde & Co and the SRA all declined to comment on matters related to the Excalibur case.
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