Insurance giant Eagle Star is considering opening an in-house insurance litigation team in Manchester to cut its legal bills in the north west.
The company, which is a major supplier of legal work to firms in the region, says the move has been prompted by concerns over its "claims and litigation costs" in the area.
The company announced that it was only considering the move in Manchester and was not opening a national department. It denied rumours that it had already started its search for lawyers to staff the proposed department.
Manchester is a major centre for insurance with several big names like Commercial Union, Royal Sun Alliance and Eagle Star strongly represented.
Chris Phillips, head of insurance litigation at Manchester firm Halliwell Landau, said: "Eagle Star is a major supplier of legal work. Some law firms in the area will be utterly devastated if that were to change."