BRITAIN'S biggest law firm is being sued for £610 million sterling in connection with the financial collapse of Olympia & York, developers of London's giant Canary Wharf office complex, it emerged today.

Legal proceedings were launched by four Canadian banks which provided a £450 million loan to Olympia & York in 1989 to finance Canary Wharf's main holding company.

Olympia & York is understood to have pledged its shares in the holding company as security.

The legal claim is said to centre on the advice given by the law firm, Clifford Chance, concerning the unlimited liability status of that holding company.

A Clifford Chance statement said: "We can confirm that two sets of proceedings were commenced against Clifford Chance simultaneously, in England and Canada in June 1995, in connection with the collapse of Olympia & York, to which the four claimant banks had made loans totalling £450 million.

"To date, no evidence has been produced to us that any loss was incurred by these banks in relation to these loans following the collapse of Olympia & York as a result of any alleged negligence on the part of Clifford Chance."

Canary Wharf went into administration in 1992 following the collapse of Olympia & York, the property group owned by the Canadian Reichmann family.

A subsequent restructuring involved 11 banks, including the four claimants, gaining control of the project but they sold out last year to a consortium led by Mr Paul Reichmann, the original developer.

The four Canadian banks Royal Bank of Canada, Canadian Imperial Bank of Commerce, Bank of Nova Scotia and National Bank of Canada - lodged their claim against Clifford Chance last June before the sale was concluded.