Retail tycoon Sir Philip Green is threatening to sue work and pensions committee chair Frank Field over some of his comments relating to the collapse of BHS.
Green has appointed law firm Schillings, who today wrote to Field demanding an apology within 24 hours.
The lawyers claim Field accused Green of stealing money from the BHS and Arcadia pension funds in an interview on BBC Radio this morning.
"This statement is highly defamatory and completely false. Our client has never stolen any money from BHS, Arcadia or the pension funds and you know that," Schillings said.
"In particular, there is nothing in the recent Report of the Work and Pensions and Business, Innovation and Skills Committees, (the Report) (of which you were one of the Chairs) to support your allegation.
"Clearly an allegation that our client is a thief is likely to cause him serious harm."
Although the report itself and parliamentary hearings are protected by privilege, the same does not apply to the radio interview.
Speaking on Sky News earlier tonight, Field described the action as "disappointing".
"I would have thought his job is actually now to make good the pensions deficit and not chase me around the studios because we are trying to speak to the report which parliament has approved," Field said.
A spokesman for Schillings could not be reached for comment.
The row comes a day after the publication of a hard-hitting report by MPs into the collapse of BHS.