Cornhill Insurance is cutting down the number of its external legal advisers as part of a cost-cutting exercise.
The law firms facing the axe are those providing insurance litigation advice to Cornhill's claims and services department.
According to industry sources, Cornhill will send out invitations to tender to a selected number of firms in late September before beginning the bidding process in December.
Keith Mahon, claims and services executive at Cornhill, says: "We are trying to concentrate on legal services, we want them put into fewer hands.
"Fewer firms will mean a cost benefit, but we can also see who we are comfortable working with and who understands our business."
Mahon says the move to reduce its legal advisers is part of an on-going cost-monitoring process.
"There is little money to be made in insurance, we are facing constraints in operating expenses," he says.
However, Mahon denies rumours that the firms will have to undergo a re-tendering process, adding that the company does not have a set panel of legal advisers.
An industry source says: "Cornhill are one of the most active panel reviewers but this is really quite serious."
Among the company's insurance litigation advisers in the South are Beachcroft Wansbroughs and Barlow Lyde & Gilbert.
In the North, Cornhill uses Berrymans Lace Mawer, James Chapman & Co, Jacksons, Newcastle-based Hay & Kilner and Leeds-based JH Milner & Sons among others.
Mahon says: "We have got some important relationships and we sometimes need firms that can be available readily who can drop things and get on with it."
Cornhill's legal advisers refuses to comment on the impending cuts but a spokesman at Barlow Lyde & Gilbert says: "We are aware that they are going through a lengthy process looking at the way they appoint their lawyers."
Cornhill is the latest in a long line of insurance companies which have undergone a review of their legal advisers.
CGU recently reduced its property management panel, four months after cutting its insurance litigation advisers from more than 100 firms to just 18 (The Lawyer, 23 August).