Lawsuit covering university sale (7)
I believe the answer is:
auction
'sale' is the definition.
(I've seen this before)
'lawsuit covering university' is the wordplay.
'lawsuit' becomes 'action' ('action' can be a synonym of 'lawsuit').
'covering' indicates putting letters inside.
'university' becomes 'u'.
'action' going around 'u' is 'AUCTION'.
(Other definitions for auction that I've seen before include "Selling" , "Competitive sale" , "Lots are sold here!" , "Public sale to highest bidders" , "Caution about method of sale" .)