RBS drafts in Richard Susskind as firms put on standby for panel cull
23 June 2014 | By Kate Beioley
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Royal Bank of Scotland (RBS) has turned to change theorist Richard Susskind for advice on its next panel process, which is expected to result in its adviser roster being reduced for a second time.
The bank, which is majority owned by the taxpayer, has warned more than 20 firms that sit on its tier 1 and 2 panels that they will be asked to make cost efficiencies if they are to maintain a spot following the 2015 review.
It would be the second consecutive panel cut after the bank reduced sub-panels from 13 to five and cut the roster by 40 per cent in 2013 (23 October 2012).
RBS has also enlisted the help of legal consultant Susskind to advise it on how to best to distribute work among its panel firms. The bank is expected to request that more firms work in collaboration as a result.
At a town hall meeting in May, RBS told the firms that it had conducted an analysis of its legal budget, which had uncovered that the bulk was being spent on magic circle lawyers. Clifford Chance, Allen & Overy (A&O) and Linklaters were all appointed to tier 1 in the 2012 review. While there is no suggestion that the trio will be cut, the bank is considering how it might better deploy its resources.
A source said: “The team has said that they expect the panel to be slimmed down. I don’t think anyone knows exactly what will happen. But the bank has analysed where its current spend is and it’s been with the magic circle. I think they are now questioning whether that’s the right thing to do going forward.”
Another added: “There’s a mind set change of ‘do we always need a magic circle firm to do this particular thing’.”
Lawyers close to the bank said it had expressed an interest in shaking up the way work was managed with a view to managing work more efficiently. Instead of handing whole mandates to its magic circle firms, the in-house team is expected to take more direct control of work and demand more collaboration between firms on its panel.
“Collaboration has been a recurring theme for a year or more and again it’s about how the bank can get greater efficiency of out of its legal spend,” said someone familiar with the situation.
Deputy general counsel Johnwill lead the review again when it begins in earnest next year. The last panel process began in September 2011 and was finalised in October 2012, with firms put in place for three years.
Though the new-look panel will not be unveiled until 1 January 2016, firms are preparing now for some major changes coming down the line. “The RBS panel will come into place in 2016 which means any forward thinking law firm is starting to work on the new panel,” another source said.
The magic circle dominates the top two panels, which handle M&A, restructuring and big litigation work. As well as Clifford Chance, A&O and Linklaters, the top tier is also understood to include Dundas & Wilson, now CMS Cameron McKenna, Ashurst and Stephenson Harwood. Ashurst is one of RBS’s longstanding advisers, as is Berwin Leighton Paisner (30 January 2012).
The bank chopped its roster from in 2013 and now has a tier 1 own-account, tier 2 own-account, customer transaction, operations and alternative provider roster.
Eversheds, Burges Salmon, Osborne Clarke and Ashurst are understood to have roles on the firms customer transaction panel, for which customers pay the fees, as well as CMS Cameron McKenna. The opportunity to upgrade its relationship to a tier 1 position is thought to have been central to the CMS merger with Dundas & Wilson (1 May 2014).
The top tier rosters and LPO list were a key focus at the last review. The bank was keen to create a select list of own-account firms and a strong list of alternative service providers able to handle the volume elements of complex work. The bank also culled a swathe of firms from its adviser list, which dropped from 100 to between 55 and 60.
Now it is expected to continue with that trend by asking for more collaboration between firms. In line with other in-house teams it is keen to rationalise and disaggregate mandates. In-house teams have been slower than other sectors to embrace LPOs and disaggregation. However Susskind’s advice could see the bank steer further towards unbundling work.