Former liberal creates a precedent (7)
I believe the answer is:
example
'a precedent' is the definition.
(I've seen this before)
'former liberal' is the wordplay.
'former' becomes 'ex' (prefix meaning former or onetime).
'liberal' becomes 'ample' (I've seen this in other clues).
'ex'+'ample'='EXAMPLE'
'creates' is the link.
(Other definitions for example that I've seen before include "warning" , "Thing characteristic of its kind" , "Punishment" , "Thing illustrating a general rule" , "Someone to emulate" .)