Freshfields Bruckhaus Deringer has been put under the spotlight for charging £2.8m in legal fees when advising HM Treasury during the £585.1m sale of the government’s 40% stake in Eurostar International Limited (Eurostar) in March this year.
A report by the National Audit Office said HM Treasury was ‘concerned about the cost of the legal work and considered re-procuring the legal adviser during the sale process but it decided that a change of legal team midway through the process would have been inefficient and problematic due to the time-critical nature of the work.’
The report on the sale also noted that while Freshfields’ fees were discounted, some of the fees were high relative to the cost of the civil service staff who were working on the sale project team.
Freshfields fees were charged on a billed-time basis rather than a fixed fee, and the legal cost for an internal transfer of shares from the Department for Transport (DfT) to the Treasury was £500,000.
The Magic Circle firm was appointed following a procurement process and a team led by corporate partner Stephen Hewes worked on the deal.
The firm refused to comment.
The adviser fees in total and other costs related to the transaction totalled £8.2m, which amounted to 1% of the proceeds of the 40% stake in Eurostar and the preference share. Financial adviser UBS was paid around £3.6m.
The government agreed to sell its share in Eurostar to winning bidder Patina Rail – a consortium made up of a Canadian investment fund, and UK based Hermes Infrastructure.
It’s been a bad week for Freshfields as the report comes after news broke yesterday (5 November) that the UK Takeover Panel had publicly criticised the firm for its role in the Bumi transaction.
Read the full report here.