Clifford Chance and partner fined £100k over no-win, no-fee deal
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Regulators have fined a “magic circle” law firm and one of its partners £100,000 for operating an “unlawful” no-win, no-fee deal in a controversial dispute over Iraqi oilfields.
Clifford Chance and one of its most established lawyers were each fined £50,000 after a tribunal found they had breached professional rules and the law when acting in litigation over oilfields in Iraqi Kurdistan.
The firm and Alex Panayides admitted that they had conducted litigation in the High Court under a conditional fee agreement that was “unlawful and unenforceable”.
Both also admitted to having submitted invoices and received payments for services conducted under that unlawful agreement.
The finding – made public by the Solicitors Disciplinary Tribunal on Friday – centred on a high-profile debacle several years ago for the firm and a group of third-party litigation funders.
Clifford Chance and Mr Panayides – a lawyer with more than two decades’ experience who was made a partner at the firm in 2002 – acted for Excalibur, an oil exploration company that was in a £1.6 billion dispute with two larger US energy businesses over an exploration deal in Iraq.
Mr Panayides agreed to act on a no-win, no-fee basis, but it later emerged in court proceedings that he had personal ties with one of the third-party funders. It also emerged in a Court of Appeal hearing last year that under the terms of the conditional fee agreement, Clifford Chance stood to recover 140 per cent of its normal rates in addition to a success fee.
In the Court of Appeal ruling, Lord Justice Tomlinson strongly criticised the law firm for what he said was a conflict of interest from the outset of the litigation.
After the appeal court ruling, the Solicitors Regulation Authority – the watchdog for law firms in England and Wales – launched an investigation in July.
The authority would not comment on the fine, apart from saying that it was an “agreed outcome” between the parties. The tribunal is set to publish its judgment in full at a later date.
A spokesman for Clifford Chance confirmed that Mr Panayides was still in the partnership. He went on to say that the firm accepted the tribunal’s finding that “some aspects of our conduct in this matter” did not meet the high standards that it was “committed to upholding”.
The spokesman emphasised that the firm had “self-reported” the matter to the regulator after “our own prompt and thorough internal review”.