The attacks, which commenced in December 2009 and have continued through January 2010, are believed to be linked to Gadens's representation of Bank South Pacific (BSP) in a recent court case.

Gadens confirmed today that the firm has been forced to place all partners in PNG under 24-hour guard and two junior lawyers under guard at their homes.

Speaking to Lawyers Weekly, Port Moresby Gadens managing partner Winifred Kamit confirmed that the firm had last week withdrawn legal services to BSP, a long-term client.

"This decision was not entered into without our very careful consideration - balancing both our professional standing with the lives of our people here," Kamit said. "We feel we took the right decision".

A report in The Australian said that in late December, five shots were fired at about 3am into the property of one of the firm's lawyers by an unknown person, and on January 6 another was threatened by five people with guns.

Kamit told Lawyers Weekly that in the second attack, the thugs had jumped out of a car and said: "That's him, he was the one who was in the court." Kamit said the attackers then held a gun to the lawyer's head and said to him: "What do you think you are going to achieve?".

Gadens had been representing BSP, the nation's largest banking institution, in a case attempting to recover debts from a company previously owned by former Papua New Guinea (PNG) MP Peter Yama.

The armed attackers did not mention a specific case, though the lawyers attacked were involved in the BSP case.

The incidents follow last year's arrest of Gadens' senior partner and New Zealand national Erik Anderson, on the basis of allegations by Yama that BSP was trying to defraud him. This month, two Australian banking staffers at BSP were also arrested on similar charges.

The situation is a significant blow to Gadens in the jurisdiction, with BSP having been a big client of the office, despite changes in ownership and name, since the office was opened in 1969.

Kamit said that whether the firm acts for BSP in other matters in the future will be "a decision for the bank". "We don't choose our clients, and we are not sure how they will take this," she said.

Kamit considers the firm's plight as "a serious matter of national importance", one that is likely to affect the perception of the jurisdiction among the banking community, as well as the legal profession.

- Ben Abbott