Barclays calls lawyers in for cost-cutting summit
24 June 2013 | By Joshua Freedman
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Barclays’ external legal advisers are expecting widespread spending cuts by the bank’s legal function as part of its Transform Programme to drive efficiency and improve the UK lender’s image.
The bank invited selected panel firms to a Transform Supplier Summit earlier this month in which senior executives such as CEO Antony Jenkins and deputy general counsel Michael Shaw addressed advisers on the impact of Transform.
While no figure has been given for the size of the cuts in the legal department, recent media reports suggest the bank is looking to cut £2bn from its overall cost base of £20bn and could shrink its company-wide staff headcount by as much as 30 per cent from 140,000 to 100,000.
Relationship partners at law firms say this will have a major impact on legal spend, while other demands such as increased legal process outsourcing (LPO) and innovative fee structures are also expected to be on the cards.
The Transform Programme was initiated by Jenkins following a strategic review carried out by the former retail and business banking chief after he took over from Bob Diamond as CEO in August 2012.
Other measures large firms have been asked to take on to improve efficiency in recent years include working in collaboration with small firms on finance or M&A deals, either in parallel or in a subcontractor structure.
One partner commented: “I think it’s public knowledge as to what he’s [Jenkins] doing, trying to turn the bank round into something that’s better for customers and I’m sure cost comes into that somewhere. They’ve been talking about cost and reducing costs for some time.”
Another relationship partner said: “Obviously Project Transform is a much broader project but Barclays are looking to all of their suppliers, including legal advisers, to try and assist in achieving their objectives.
“It has several [aspects]. The most important one is enabling them to achieve the big transformation they’re looking for. It’s unlikely people will say I’m going to go to Barclays because they have excellent outside counsel, but they might may they will because they are very professional and are very economical.”
The conference, held at the bank’s Canary Wharf headquarters on 11 and 12 June, was aimed at communicating the bank’s strategy, including Transform, to a range of suppliers in different industries.
The bank last held a relationship-building conference for panel firms in 2009, and also holds quarterly lunches with firms to keep ties up.
The news comes ahead of Barclays’ legal panel review, which was pushed back by a year from this June and has to be completed by 1 July 2014.
The current panel terms run until 30 June next year, following a decision by the in-house team to extend the terms of the roster by twelve months (14 January 2013).
Over 100 firms are on several sub-rosters, with the general advisory panel including firms such as Allen & Overy, Clifford Chance, Freshfields Bruckhaus Deringer, Linklaters and US trio Cleary Gottlieb Steen & Hamilton, Shearman & Sterling and Sullivan & Cromwell. It was last reviewed in 2011 (1 July 2011).
It is unclear whether Barclays will follow the Royal Bank of Scotland’s lead by cutting the size of its panel and put a heavy focus on LPO (23 October 2012). Lloyds Banking Group also slimmed down its own-account adviser list last year (2 November 2012).
A Barclays spokesperson said: “Barclays invited a small number of its key suppliers to a workshop to discuss the important role they play in helping Barclays deliver its Transform Programme. The event showcased some of the great work already underway and also explored new ideas and ways to work together, in partnership, to achieve Barclays’ goal of becoming the ‘Go-To’ bank. Over the coming months, we will be implementing some of the great ideas that came out of the workshop.”
Meanwhile, Barclays is still in the process of selected its new general counsel following the retirement of Mark Harding, with Shaw seen as the frontrunner (10 May 2013).
Other tipped as likely candidates include Judith Shepherd, global general counsel for corporate and investment banking (11 February 2013).