The Government has lined up three of the highest-paid QCs in the country after deciding to try to force an early High Court hearing with disgruntled Northern Rock shareholders who are suing the Treasury over the nationalisation of the bank, The Times has learnt.

Lord Grabiner, QC, the Labour law lord who has been advising the Government for the past few months, has teamed up with Philip Sales, QC, the Treasury’s regular source of outside legal help, and Clive Lewis, QC, one of Britain’s foremost public law experts. The barristers are working with a team of solicitors from Slaughter and May, one of the City’s leading commercial law firms.

Supported by a team of junior barristers, they face what promises to be the most high-profile, politically charged and expensive judicial review hearings in more than a generation at the High Court. The bill is expected to total several million pounds for retainer fees to barristers and thousands of man hours of work by City solicitors on all sides of the dispute.

The High Court proceedings will challenge the Government’s right to nationalise Northern Rock and fight its proposal for evaluating compensation to shareholders. Northern Rock was nationalised in February after months of being propped up by Bank of England loans. Under legislation introduced at the time of the nationalisation, compensation payouts for Rock shareholders are based on the assumption that the beleaguered bank was unable to continue without public support.

With a £24 billion debt to the Bank, this would make shares in the Newcastle-based bank worthless. However, shareholders insist that the bank’s £110 billion of mortgage assets gave the company a net asset value of about 320p a share. They want the legislation to be amended so that they receive higher compensation. The United Kingdom Shareholders’ Association (UKSA) has raised £60,000 from members for its legal fight, and six of the country’s leading QCs have been hired to represent the shareholders.

The High Court hearing was supposed to take place early next year, but legal sources said that the Government had sent letters to lawyers for Northern Rock shareholders this week to try to agree an “expedited hearing”. A hearing could come as early as the autumn, and an announcement on timing is expected in the next few weeks, sources said. The hearing is expected to last about five days.

SRM, the Monaco-based hedge fund, is being advised by David Pannick, QC, a leading human rights advocate, who is expected to lead the oral argument at the High Court. SRM has also hired David Anderson, QC, who is a leading advocate on human rights in European courts.

For commercial and insolvency expertise, SRM is calling on Matthew Collings, QC, who has worked on cases relating to the restructuring of British Energy, the battle with the Bank of England over the collapse of BCCI, the failed bank, and Formula One.

Jonathan Gaisman, QC, is being retained by SRM for his expertise in valuations of troubled companies as much as for his advocacy skills, which may, at later stages of any legal proceedings, be needed to counter Lord Grabiner, for the Government, who is renowned for his ability to think on his feet.

Mr Gaisman acted for Ernst & Young in its successful defence of a multibillion-pound negligence claim brought by Equitable Life, the insurer. White & Case, the Anglo-US legal giant, is co-ordinating SRM’s action.

RAB Capital has retained Michael Beloff, QC, a prominent human rights activist, who is as famous for his work defending international athletes on doping-related bans as for his numerous appearances at the House of Lords on administrative law issues. Nabarro, the City law firm, is providing RAB with legal advice.

The UKSA, which is being advised by David Greene, of Edwin Coe, the City law firm, has hired George Bompas, QC, a seasoned financial services barrister. Mr Bompas cut his teeth on cases ranging from the collapse of BCCI and the Brent Walker refinancing to the Guinness affair and scandals surrounding the Blue Arrow rights issue and the Barlow Clowes affair, in which he acted for the Department of Trade and Industry.

Mr Green said: “We are all working on ensuring it takes place as efficiently and effectively as possible.”

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