Allen & Overy is investigating allegations of fraud involving its corporate client, engineering and aerospace company TI Group.
The claims arose in the US and appear to be backed by the US Government.
Litigation partner Tim House and two assistants from the firm are being instructed by TI Group legal director Stephen Clarke to look into the matter.
A TI Group spokesman confirms the instruction and adds: “We would have to point out that no formal notification has ben received, and no proceedings have been served. This is a prudent step we are taking.”
New York law firm Engel & McCarney is understood to have issued a press release in the US in which it makes the fraud allegations.
Engel & McCarney acts for a former employee of a TI Group subsidiary in the US, Dowty Woodville Polymer, which supplies the USAF with seals for swing-wing aircraft.
The US lawyers claim that the former employee warned the company in 1991 that it was overcharging the US Government for the seals.
TI Group is also instructing US law firm Crowell & Moring, a specialist in defence contracting.
The US Government appears to have taken over the case from the original plaintiff. This is standard practice for such actions in the US.
The next stage, if there is one, would be to issue proceedings.
Tim House of Allen & Overy says: “Without having received the complaint, our understanding is that the US Government has joined the action which was commenced by an individual under the False Claims Act.”