Furniture retailer MFI and its joinery business Howden are suing Clifford Chance for up to £10m in damages for its alleged role in the furniture group’s £207m pension deficit.
It is understood that MFI is claiming that the firm failed to advise in 1999 and 2000 that amendments to the pension scheme rules that had been made in 1994 were not effective to make the retirement age for male and female members of the relevant pension schemes equal at age 65.
MFI discovered almost two years ago that because the new rules were not incorporated into the trust documents properly, the company was liable to pay benefits as if all staff retired at 60, rather than 65, increasing its pension deficit by £50m.
In March last year MFI warned that it was considering further legal action against its other advisers after reaching a £12m settlement with pension fund adviser Heath Lambert in relation to its advice over the rule change.
Clifford Chance’s defence is expected to claim that as the firm was MFI’s corporate adviser and the retailer had separate pension advisers, it had not been hired to advise on whether the equalisation of pension ages was implemented properly.
In a prepared statement, Clifford Chance said: “We intend vigorously to defend the proceedings and we expect them to be dismissed in due course.”
Freshfields has a longstanding relationship with MFI as its key corporate adviser.
Barlow Lyde & Gilbert is advising Clifford Chance.
MFI declined to comment.