Clifford Chance (CC) is facing a professional negligence claim from litigation funders over its work on the high-profile Excalibur Ventures dispute.

Excalibur hired CC to act for it on a high-profile $1.6bn claim against Texas Keystone and Gulf Keystone over petroleum interests in Iraqi Kurdistan. The claim was dismissed last autumn, with Lord Justice Christopher Clarke awarding the defendants costs on an indemnity basis in October, making four groups of third-party funders collectively liable for over £23m.

The negligence claim against the magic circle firm will argue that the CC partner advising Excalibur's funders allegedly overstated the case's chance of success.

The main third-party litigation funder in the group – Greek shipping magnates the Lemos family – has instructed Withers litigator Christopher Coffin, who has notified CC that legal action is being prepared, though no proceedings are yet filed.

Withers had acted for litigation funder Psari Holdings, which is owned by Andonis Lemos, during the costs hearing. Lemos funded Excalibur to the tune of £13.75m.

CC disputes partner Alex Panayides had helped client Excalibur gain £50m to fund the litigation through a raft of investors. But the firm was criticised by the court when it emerged that Panayides' brother George was a "trusted employee" of a Lemos family company and his father was chairman of one of their ship management businesses.

Andonis Lemos said the Panayides brothers told the family that the Excalibur claim had "a very strong prospect of success" and were not told to seek legal advice since they "felt that to all intents and purposes Clifford Chance were their legal advisers".

When he ruled in favour of the defendants, Lord Justice Clarke said that it was "Mr Lemos' misfortune […] that the advice he was so confidently given was the polar opposite of what I have decided".

CC declined to comment on the claim.