A working group of senior judges has instructed leading counsel to advise on the legal options, including suing the Lord Chancellor, Lord Falconer of Thoroton, QC. The move opens up the intriguing question of which judge would hear a case brought by the judiciary against the Lord Chancellor.

One solution would be for the case to be heard by a judge unaffected by the row over pensions. But last night Andrew Tyrie, a Conservative member of the Commons Constitutional Affairs committee, gave a warning against potential legal action. Mr Tyrie said: “If it is the case that parts of the judiciary were considering taking legal action, I would have thought that would be very unwise.”

But both sides in the row have gone to counsel to try to sort out the problem, it is disclosed today in The Lawyer magazine.

The senior judges — as well as the Lord Chancellor’s own legal advisers — have instructed counsel at the leading pensions set of chambers, Wilberforce Chambers, to help to resolve the crisis that has arisen over tax changes to take effect in April which severely hit judges’ pensions. A senior High Court judge confirmed that leading counsel had been instructed, saing: “If you’re asking me, ‘is suing the Department for Constitutional Affairs a theoretical proposition?’, I don’t see why not. If you’re asking me, ‘is it actively under consideration?’, I’m not in a position to say.”

The barristers instructed to tackle the mounting problem are Michael Furness, QC, one of the country’s leading pensions experts, and a junior barrister, Michael Tennet, both from Wilberforce Chambers.

Several judges are threatening to resign unless the Lord Chancellor takes steps by April to protect their pensions from the impact of the new legislation. The Lord Chancellor has pledged to introduce a Judicial Pensions Bill to restore the judges’ position, but that is unlikely to find a slot and, even if it does, is unlikely to be carried by the Commons, which regards it as special pleading by the judiciary.

Lord Woolf, who recently retired as Lord Chief Justice, said that a pay rise of 20 per cent would be needed as compensation if the Lord Chancellor failed to protect judges’ pension rights.

But that option, too, is thought remote as there is insufficient time for a pay rise to be agreed and brought into effect. The crisis has arisen because of tax rules that will impose a lifetime cap of £1.5 million on the sum of accumulated pension savings that qualify for tax relief, after which a tax of 25 per cent, on top of income tax, is imposed.

If no solution is found, some judges will want to look at judicial review proceedings on the basis that they took up their posts under one set of conditions, only to find them drastically changed midway through their tenure.

A Department for Constitutional Affairs spokesman declined to comment on alternatives to the Bill, saying: “Our Bill is still the preferred option as Lord Falconer wants to make sure the judiciary has the right package and the appropriate package for their position and standing.”

Representatives from the Judge’s Council, of which all judges are members and which acts as the collective voice of the judiciary, have met the Government, but have not yet found a solution. .

One judge said: “I can hardly walk out of my room without someone accosting me to talk about pensions.”

Judges argue that they are alone in being penalised among professional groups, undermining their status and deterring high-earning barristers from coming to the Bench.

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