Clifford Chance has instructed Proskauer Rose to represent it in a clawback lawsuit brought by the liquidators of a failed fund, according to court filings. The case, filed in the High Court in London, involves claims that the magic circle law firm should return fees it received from the fund before its collapse.
Background of the Dispute
The lawsuit stems from the liquidation of a fund managed by a now-defunct investment firm. Liquidators are seeking to recover payments made to Clifford Chance, alleging that the firm was unjustly enriched. The claim is part of a broader effort to claw back funds distributed prior to the insolvency.
Clifford Chance has denied any wrongdoing and has engaged Proskauer Rose, a US-based law firm known for its litigation expertise, to mount a defense. The move underscores the seriousness of the dispute, as law firms rarely hire external counsel to defend against such claims.
Legal Implications
Clawback lawsuits are common in insolvency cases, but targeting a major law firm is unusual. Legal experts note that the outcome could set a precedent for how professional fees are treated in fund liquidations. According to a source close to the case, the liquidators are seeking approximately £5 million in recovered fees.
“This is a significant development in the legal industry,” said a partner at a rival firm. “If the liquidators succeed, it could lead to more claims against advisers who received payments from troubled funds.”
Next Steps
The case is expected to proceed to trial unless a settlement is reached. Clifford Chance has not commented on the specifics, but a spokesperson stated the firm intends to “vigorously defend its position.” Proskauer Rose has also declined to comment.
