Barclays is planning to extend the value account system it introduced in 2014, where law firms are required to pay a rebate if they fail to hit their value targets, to all external advisers as part of its current panel review.
The value account scheme, officially called ‘relationship accounts’, works by giving firms an annual value of free legal services they must provide in return for volume of work – primarily through legal advice and secondments – with the downside being that firms must reimburse Barclays if they fail to meet those benchmarks.
The system currently applies to Barclays’ list of ‘preferred’ advisers, which includes Allen & Overy, Clifford Chance, DLA Piper, Freshfields Bruckhaus Deringer, Linklaters and Simmons & Simmons, but the bank is planning on expanding this system to include its second-tier group of law firms – its ‘approved’ advisers.
Barclays currently splits its panel law firms into two groups. The division between preferred firms, which take the bulk of the work, and ‘approved’ firms was made during the bank’s last panel review, in 2014, with Boies, Schiller & Flexner; Cadwalader, Wickersham & Taft; Davis Polk & Wardwell; Latham & Watkins; and Skadden, Arps, Slate, Meagher & Flom among the ‘approved’ firms.
The new rules mean that once a base level of legal fees is passed, the relationship account programme will be triggered. This will apply to all panel firms, with the objective to ensure that all law firms are treated fairly.
A City partner pitching for the Barclays panel told Legal Business: ‘The RFP [request for proposal] for the Barclays panel detailed that it will roll out its relationship account programme to a wider group of law firms. At the moment, it only effects a core group, but Barclays is looking to expand this so that an increased number of firms will have to repay Barclays if they don’t hit their value targets. It’s a good thing for the UK firms, as so far the US firms have got off scot-free.’
Barclays is expected to conclude its panel by 1 July. Earlier this year, the bank put a ban on its 600 lawyers accepting corporate hospitality during the course of the panel review. In a missive from Barclays’ general counsel office, lawyers were told that the ban has been put in place to ensure a fair evaluation of law firms during the course of the panel review.