Clifford Chance is believed to be a matter of weeks away from agreeing to pay up to £10m plus costs to four Canadian banks in settlement of a £610m negligence claim, thought to be the largest claim ever against a UK law firm.
The Lawyer revealed in June 1995 that the banks – Canadian Imperial Bank of Commerce, Royal Bank of Canada, National Bank of Canada and the Bank of Nova Scotia – had issued writs in London and Canada against Clifford Chance blaming it for their losses in the insolvency of Olympia & York, the developer of Canary Wharf.
At a hearing in Toronto in June of last year, Clifford Chance won the right to fight the issue in the London courts. Partner Perry Simpson told the Toronto press at the time that whatever the outcome of the case the banks stood to recover only “at best £5m to £10m”.
Clifford Chance admitted that it had made a mistake in 1989 in determining the status of the Canary Wharf holding company Olympia & York Holdings, saying it was a limited company when in fact it had unlimited liability. The banks claimed this left them unable to enforce their collateral security. But Clifford Chance argued that this did not stop the banks making subsequent loans of tens of millions of pounds to the company.
The banks claimed in their writ that had they realised the status of the holding company, they would have refused to make any loans at all.
Clifford Chance would not comment on the case last week. Its official line has always been that the matter is “nothing to worry about”. However, sources say the case is “weeks away” from being settled and that Clifford Chance will pay all the banks' legal costs plus a seven-figure sum in settlement of the dispute.
Legal costs are likely to be substantial. Freshfields' leading litigation partner Ian Taylor acted for the banks in the UK while leading Toronto firm Blake Cassels & Graydon is representing three of the banks in Canada.
Clifford Chance instructed Lovell White Durrant partner Michael Seymour in the UK.