LEADING liberal legislators Martin Lee Chu-ming and Szeto Wah have hired an alternative firm of solicitors to conduct their libel suit against former Appeal Court Judge Simon Li Fook-sean. Haldane Midgley & Booth have now taken the case, after the Deacons firm terminated its agreement for reasons not yet known. A spokesman for Deacons said he could not comment because of confidentiality. Mr Lee, a Queens Counsel, said in London yesterday he had encountered ''unusual difficulties'' in finding a law firm for what he described as a ''straight-forward libel case''. He said the general feeling was that their action against the leading figure in the Preliminary Working Committee on the Special Administrative Region Preparatory Committee was considered a sensitive issue. Mr Lee said it was important that there were always lawyers willing and ready to act on any type of case, including the one brought by him and Mr Szeto. Legislator Emily Lau Wai-hing said she was concerned about the preservation of the rule of law if lawyers turned down cases for fear of offending China. ''If the whole legal profession is afraid, where is the rule of law and human rights we most cherish and keep fighting for?'' she asked. The chairman of the Law Society, Roderick Woo, and Bar Council member Kumar Ramanathan said there were many legitimate reasons for solicitors to decline taking cases. ''Obviously, there would be some cases lawyers do not want to take on because there is a political ingredient in them,'' Mr Woo said. ''But I think there is no cause for worry, as the situation on the whole is quite good.'' Professor Peter Wesley-Smith, of the Hongkong University Law Department, said it would be unsatisfactory, unethical and reprehensible for lawyers to decline a case for political reasons.