Carillion demands 25 per cent cost saving

Carillion is to slash its legal spend by more than 25 per cent following its announcement of a new panel at the end of last month.

At a launch meeting for the new panel, scheduled for the end of this month, the 10 current firms will be expected to present ways in which they can help the company reduce its legal spend.

The cull of firms and slash in fees follows the appointment of new head of legal Richard Tapp in December last year. Tapp has undertaken a complete review of the way in which the company outsources work, as well as restructuring the team internally.

Around 50 firms pitched for the work, and The Lawyer understands that the tender document requested that firms suggest proposals that would offer Carillion the best value for money, looking for innovation and risk-sharing on the part of the firms.

“We were looking for something that differentiated them [the firms] from others in terms of the way that they proposed to do things – if they could do the job in a way which reduced the cost,” Tapp said. He stressed, however, that this was not the sole reason for selecting the firms on the panel.

The tender document suggested a number of ways in which firms could do this, including a combination of fixed, capped and success fees.

It also suggested that the company would not expect firms to charge hourly fees, or if they did that the rates charged would be comparable to those paid by companies of a similar standing.

Tapp said the panel was also formed with a view to building closer and longer-term relationships with the firms instructed.

However, a place on the panel does not guarantee a certain quantity of work for the firms, nor does it guarantee a certain time period that a firm will remain on the panel.

“We'll keep the panel under regular review,” Tapp said, adding that it was also a deliberate move to enable more than one firm to advise on each particular type of work.

The firms most likely to do the best out of the review are those advising the company on PFI, construction and service facility work, the three areas that will become the major focus areas for the company moving forward.

Big winners include Ashurst Morris Crisp, CMS Cameron McKenna and Linklaters, all of which will advise on PFI/publicprivate partnership matters; Altheimer & Grey and Reynolds Porter Chamberlain have scooped the service facility matters; and Masons and Reynolds Porter Chamberlain will advise on construction matters.