Magic circle firm loses third top client this year after billing LUL an estimated £30m
Freshfields Bruckhaus Deringer is reeling after key client London Underground Ltd (LUL) dropped the firm in favour of Herbert Smith. The move, part of an overhaul of LUL's legal panel, is a significant blow for Freshfields, which is estimated to have reaped around £30m in fees over five years of advising the group on three controversial public-private partnerships (PPPs), worth £7bn. Sources indicate that the firm lost a place on the new panel due to cost issues. However, Freshfields declined to comment on its fee rates. The panel review, first revealed by The Lawyer in June (16 June) has been triggered by the transfer of the LUL to Transport for London (TfL) last month. At the same time, LUL's legal department underwent a reorganisation, resulting in 48 employees out of a total 85 staff moving to TfL. Although Herbert Smith already counted LUL as a client, under the revised panel it will become its principal adviser for all commercial work arising from the PPP. Jeffrey Rubinoff, project finance partner and relationship partner for LUL at Freshfields, said: "Obviously we're disappointed not to have been selected. But we've enjoyed our relationship with LUL in the past and are happy to have been involved in the most significant transactions." Herbert Smith project finance and lease finance partner Andrew Preece will be in charge of managing the firm's new four-year contract with LUL. Shearman & Sterling, an original panel member, was also invited to pitch for the role of principal adviser. However, it is understood that the firm was conflicted out, since in the past it has acted for another party involved in one of the three PPPs that completed in April. As well as the Tube Lines project, two separate Metronet PPPs were finalised earlier this year. LUL has now moved on to the second stage of its panel review, led by acting head of legal Sarah Atkins, who will select a group of four or five smaller firms to provide general legal advice.