Clifford Chance faces £54m suit over China deal

Clifford Chance is being sued for £54 million – one of the highest claims ever faced by a UK practice – in a row over a Chinese power plant deal. The £54 million writ, which will be heard in London's High Court, claims Clifford Chance acted negligently when it drafted a contract for the consortium involved in building and upkeeping the Shajiao C power station in Guangdong province.

Southern Energy (Shajiao C) Ltd, a global energy provider and its subsidiary Consolidated Electric Power Asia, are among the five-strong consortium suing the law firm for the alleged breach of the 1991 contract. Clifford Chance, which has built up a prosperous practice in Hong Kong with 130 lawyers advising Chinese companies, grossed more than £440 million last year and so can afford to absorb the claim if it loses and is forced to pay full damages.

In any case, the amount will probably be covered by professional indemnity insurance: law firms such as Clifford Chance's typically pay out five percent of their turnover on indemnity and settling claims. This lawsuit is the latest in a series of multi-million pound claims against law firms which have prompted lawyers to lobby hard for limited liability partnerships to be allowed in the UK. Clifford Chance will gain LLP status in the US when it merges with Rogers & Wells next year, but legislation allowing LLPs in the UK is unlikely to be finalised for at least 18 months.