Lawyers pick up £1m fees on failed Paddington Health PFI

The law firms advising on the mammoth £1bn Paddington Health Campus (PHC) PFI scheme will reap around £1m in fees for their work on the collapsed project.

Berwin Leighton Paisner (BLP) was instructed almost three years ago to advise the St Mary's and Royal Brompton and Harefield NHS Trusts and Imperial College London on the scheme. The project would have seen the creation of a state-of-the-art hospital on the site of the current St Mary's Hospital in Paddington.

A key element of the project's design demanded the acquisition of land belonging to the Paddington Develop-ment Corporation (PDCL), a group which includes Reuben Brothers, Multiplex and Pearcroft. However, negotiations between PDCL and PHC broke down earlier this year.

Sources close to the deal said the project was highly unlikely to go ahead in the absence of a land deal with PDCL.

BLP notched up £735,000 by the end of last year, with sources at the firm estimating total billings of just under £1m. Capsticks also advised on the PHC project, although its fees are understood to be less than £10,000.

Olswang, which advised PDCL, will also see its fees reimbursed by PHC. Under an agreement between PDCL and PHC, the latter will stump up for advisory fees incurred by the private company between 23 December 2004 and 1 March this year, up to a maximum of £300,000. PDCL has claimed £260,000, a small proportion of which is understood to be legal fees for Olswang.

In total, the NHS will stump up around £7.5m in advisers' fees for the project. One source close to the deal said: "This whole ludicrous project has cost £7.5m in fees to deliver bugger all. It's lamentable."