Spoilt for choice

‘I think the market is pretty much at breaking point,’ remarks one senior banking partner of the aggressive handling of law firms by their banking clients. ‘It’s in danger of becoming abuse, but it’s not quite there yet.’

He won’t be named, understandably, as bank general counsel take a dim view of firms that don’t toe the line. But rumbles of discontent are nonetheless filtering through unofficial channels.

Perhaps lawyers are becoming less terrified of upsetting their banking clients. Maybe it’s because they don’t feel the relationship is balanced anymore. It’s hard for some to countenance that banking institutions – lambasted for the economic hangover brought on by their excesses, who have gone cap-in-hand to the taxpayer for bailouts – still have law firms dancing to their every whim. General counsel at FTSE 250 companies or public-sector bodies, who may have expected to be courted with renewed passion by their external legal advisers, must be aghast to see those same firms falling over themselves to get onto the panels of banks that are demanding that firms only have a chance if they charge at rates lower than
in 2006.

And yet the law firms keep coming back. Between November 2008 and October 2009, there were at least 12 restructurings of law firm banking panels, or new panels being formed. Many of the banks, on announcing their new panels, emphasised that ‘value’ would be a major factor. For ‘value’, read heavily discounted or ridiculously capped fees, write-offs, armies of free secondees and training. But that hasn’t stopped the law firms fighting tooth and nail to win those mandates.

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