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Clifford Chance turns to Clydes as SRA launches probe into firm on Excalibur litigation

Clifford Chance (CC) has instructed lawyers at Clyde & Co to represent it in an investigation by the Solicitors Regulation Authority (SRA), reportedly involving the firm’s part in the Excalibur professional negligence case, resulting from a claim in which an appeal judge criticised CC for an ‘acute’ conflict of interest.

In 2013, CC represented Excalibur Ventures in an unsuccessful $1.6bn Kurdistan oil deal damages claim against Gulf Keystone Petroleum and Texas Keystone.

London’s commercial court ruled against Excalibur in 2014, ordering Lemos, an ad hoc investor which helped Excalibur fund the case, to pay the defendants’ indemnity costs of £13.75m on top of their original funding advance.

During the original case,  CC partner Alex Panayides positively assessed the litigation, to which the funders looked for their lending evaluation. In December 2014, Panayides was sued for professional negligence by litigation funder Lemos, which was represented by Withers partner Christopher Coffin.

At the time, Lord Justice Clarke of the appeal court stated the claim had been ‘an elaborate and artificial construct… replete with defects, illogicalities and inherent improbabilities’. He said it was worth about $3.3m, not $1.6bn as claimed.

CC settled the professional negligence claim for an undisclosed sum in December 2015.

In November 2016, at the Court of Appeal hearing of the decision, it was alleged that Panayides overstated Excalibur’s prospects of success. The judges ordered all the original claim’s funders – Lemos’ company Psari, Platinum partners and Blackrobe – to pay indemnity costs up to the £20m total they had funded Excalibur.

As Panayides’ father was a chairman of the ship companies owned by the Lemos family, and his brother was a Lemos employee, the Court of Appeal also criticised CC, saying it had an ‘acute’ conflict of interest on the case.

The appeal judges said in particular that it was due to Panayides own agreement to conduct the case for Excalibur on a partial contingency that CC themselves had from the outset ‘an acute conflict of interest, the extent of which worsens as their own investment in the case increased over time.’

The SRA, CC and Clydes declined to comment.