A&O ousted as Serco aims to slash £10m legal spend

Serco, the contract and facilities management company with an annual legal spend in excess of £10m, has shunned Allen & Overy (A&O), Herbert Smith, Nabarro Nathanson and Simmons & Simmons following a protracted review of its external legal advisers.

The listed company, which runs the Docklands Light Railway, has created its first-ever legal panel, comprising Ashurst, Kilpatrick Stockton, Linklaters, Lovells and Norton Rose. Linklaters has been appointed as Serco's principal corporate adviser.

Ashurst and Norton Rose will be buoyant after securing such a significant new client win, but the review will leave A&O bitterly disappointed, as the firm has historically handled the lion's share of Serco's corporate and strategic work. The magic circle firm has only just advised Serco on the £235m acquisition of UK IT services company ITNET, which completed at the end of March.

Serco interviewed 18 firms as part of the seven-month tender exercise to assess them on capability, experience and pricing proposals.

Serco general counsel Mark Duckworth, who led the review, said the company launched a review for a number of reasons, including cutting costs. "We were looking to concentrate our work with fewer firms to derive value for money. Shareholders want value for money," Duckworth told The Lawyer.

Duckworth declined to comment on exactly why A&O missed out on winning a place on Serco's legal panel. "The [ITNET] deal and the panel review were run independently of each other," he said. "All the firms were assessed on a large number of objective criteria, but unfortunately [A&O] didn't make it to the last five."

As first reported in The Lawyer (4 October 2004), Serco was severely criticised for using an online tender to make panel appointments. The company is also reviewing its legal advisers for specialist and niche areas, which is still ongoing.

A&O declined to comment.