American insurance giant AIG has carried out a review of its UK-based legal panel and established a new 64-member roster to cover the company’s European operations across 12 countries.
Both reviews were carried out at the same time by the company’s Legal Operations Center. The UK panel review, which was primarily a housekeeping exercise around the 25-firm panel established in 2013, took three months, while the Continental roster took a year due to the size and volume of firms and the administration involved.
Firms on the UK panel were selected in ‘Phase one’ of the process in 2013 and include Bond Dickinson, Freshfields Bruckhaus Deringer, Linklaters and Norton Rose Fulbright. This round, ‘Phase two’, reviewed the original terms and conditions of the UK roster, as well as finalising the continental panel of 63 firms.
Speaking to Legal Business, EMEA general counsel Chris Newby (pictured) said: ‘Our commitment to those 25 firms was really to build long-term strategic relationships. This has really been a review of rates and getting more strategically positioned around value-added services. We’ve put systems in place to capture all the value-added services we are getting so we can give the law firms credit and we’ve got a centralised database of everything that is going on. It was not a panel review to cull and shrink it – it wasn’t done with that strategic purpose.’
According to Newby, the nature of the continental insurance market means there isn’t a great deal of crossover between the two panels and the majority of the 64 firms are specialist or local to the different jurisdictions in Europe.
The company operates on a two-year cycle for reviews and Newby used a reverse auction for a second time to help set rates. He added: ‘It wasn’t an exercise in expecting rates to go down. In most cases we used the reverse auction process to let the market find its right rate. In most areas rates stayed the same and in certain areas they came down because of the way the market is – people thought they could charge less. As a process it lets the legal market set the price and I think it is the fairest and most transparent way of doing it.’