Clifford Chance (CC) and its disputes partner Alex Panayides have both been fined £50,000 by the Solicitors Disciplinary Tribunal (SDT) for their involvement in the Excalibur professional negligence saga. The sanction is the first fine ever levied on one of London’s Magic Circle law firms.
Both Panayides and CC admitted to conducting High Court litigation under a conditional fee agreement which was ‘unlawful and unenforceable’, and they also admitted to producing an advisory document for a litigation funder ‘without disclosing that it had been drafted by one of the owners of the client’.
CC and Panayides also conceded that they had ‘made payments from sums held on behalf of litigation funders other than in accordance with the funding agreements pursuant to which sums were held’.
The decision comes after it was revealed last week that Panayides was to appear before the SDT after the Solicitors Regulation Authority (SRA) had started an investigation. The probe related to Panayides’ involvement in the Excalibur litigation, in which CC represented Excalibur Ventures in an unsuccessful $1.6bn Kurdistan oil deal damages claim against Gulf Keystone Petroleum and Texas Keystone in 2013.
London’s Commercial Court ruled in 2014 against Excalibur and ordered the Lemos family, who funded its claim, to pay the defendants’ indemnity costs of £13.75m on top of their original funding advance.
During the case, Panayides gave a positive assessment of the litigation, to which the funders looked for their lending evaluation. CC was subsequently sued for professional negligence by Lemos in December 2014.
After CC settled the professional negligence claim in December 2015 for an undisclosed sum, a November 2016 Court of Appeal hearing of the decision saw CC criticised for having an ‘acute’ conflict of interest in the case, as Panayides’ father was a chairman of one of the ship companies owned by the Lemos family.
However, in the decision today (1 December) the SDT did not identify any conflict of interest.
In a statement, CC said: ‘We take our obligations to our clients and the profession extremely seriously and are committed to upholding the highest standards at all times. We accept the SDT’s findings that some aspects of our conduct in this matter did not meet these high standards. The issues referred to the SDT were not prompted by any complaint but had all been identified and self-reported to the SRA by the firm following our own prompt and thorough internal review.’
The £50,000 fine administered to CC and Panayides pales in comparison to the financial penalty Locke Lord incurred in November. The US firm received a record £500,000 fine from SDT after its former lawyer, Jonathan Denton, engaged in ‘dubious financial arrangements’ with a client’s bank account.