Clifford Chance (CC) is advising both Barclays and the Royal Bank of Scotland (RBS) on the fallout from the Libor scandal, with a Chinese wall set up to avoid potential conflicts.

The magic circle firm has been instructed as UK counsel to Barclays alongside US firm Sullivan & Cromwell, which recently advised the bank on its multimillion-dollar settlement with US regulators for interest rate manipulation and false accounting charges.

CC's role for Barclays has included advising the bank on its £59.5m settlement with the Financial Services Authority (FSA) – the largest-ever fine handed down by the UK regulator – for manipulation of the Libor interbank lending rates. It is understood that the magic circle law firm is fielding a multi-disciplinary team including banking lawyers, litigators and white-collar crime specialists.

Meanwhile, CC is also advising longstanding client RBS on Libor-related issues. One partner told Legal Week that the firm has been acting as defence counsel to RBS in relation to Libor-linked litigation – including several ongoing class actions in the US – for a number of months.

In order to service both banks, the firm has adopted a so-called 'Chinese wall' to divide two completely separate teams working for their respective clients. Law firms are permitted to set up such information barriers within their offices to avoid a direct conflict, providing they have client consent.

A host of US law firms are also advising banking clients on Libor-related fallout. Gibson Dunn & Crutcher is acting for UBS, while Simpson Thacher & Bartlett is advising longstanding client JP Morgan, with Paul Weiss Rifkind Wharton & Harrison in for Deutsche Bank.

Meanwhile, Davis Polk & Wardwell is acting for Bank of America Merrill Lynch, while Shearman & Sterling has won a role for Credit Suisse and Hogan Lovells is advising HBOS, a longstanding client on both sides of the Atlantic.

The news comes as the Serious Fraud Office (SFO) on Friday (6 July) formally launched an investigation into the rigging of Libor. However, a spokesperson declined to comment on which institutions and individuals were being probed.

Chancellor George Osborne confirmed last month that the FSA was not able to impose criminal sanctions for the manipulation of Libor – the benchmark interest rates used in financial markets around the world – due to the limited scope of its criminal powers.

However, the SFO can investigate whether bankers complied with the Fraud Act of 2006 and whether false accounting took place between 2005 and 2009, while the regulator's press release confirming the investigation references its powers derived from the Criminal Justice Act 1987.