Allens Arthur Robinson, the legal firm that advised building products group James Hardie during its restructuring and Netherlands relocation, may come under fresh scrutiny by the NSW legal watchdog.

The Office of the Legal Services Commissioner (OLSC) is expected to launch a new inquiry into the conduct of the firm, which allegedly told James Hardie in 2001 its planned move to the Netherlands would not affect the payment of asbestos claims.

The firm allegedly said nearly $2 billion in partly paid shares would cover claims, but in 2003 James Hardie abandoned those shares. ASIC believes the advice was misleading because James Hardie had no intention of retaining the shares once the move was finalised.

Previous investigations by the OLSC into Allens Arthur Robinson have been hamstrung by legal privilege, but the government body is armed with new powers passed in 2004 that allow it to waive legal professional privilege in certain cases.