Legal panels face rationalisation following insurers' merger

Insurance law firms will be awaiting the outcome of the latest major shake-up in the insurance industry the £15bn Commercial Union and General Accident merger with great trepidation.

Firms known to act for Commercial Union on the insurance side include Berrymans Lace Mawer, Hugh James and Weightmans. General Accident has, in the past, instructed Hammond Suddards, Vaudreys and Palser Grossman.

According to litigation partner at Hammond Suddards' Leeds office, Peter Metcalf, rationalisation of the panels of insurance lawyers currently used by Commercial Union and General Accident is “a virtual certainty”.

Insurers are increasingly looking to appoint law firms on a national basis to ensure consistency in quality.

There is also a growing trend for insurers to set up their own in-house litigation teams.

Metcalf added that law firms were also having to make a significant investment in IT to meet the demands of the larger insurance companies. Larger firms with their greater resources will have an advantage over smaller firms as a result.

The merger will undoubtedly add fresh impetus to the search by such law firms for their own merger partners. It follows that of Sun Alliance and Royal Insurance in May 1996 to form the Royal & Sun Alliance.

In a move seen as a response to the creation of the Royal & Sun Alliance, London law firm Berrymans and North West firm Lace Mawer merged to form Berrymans Lace Mawer. Berrymans had acted for Sun Alliance and Lace Mawer for Royal Insurance.

The consolidation of the insurance market is seen as the reason for the proposed tripartite merger of Beachcroft Stanleys, Wansbroughs Willey Har- grave and Vaudreys, reported in The Lawyer in January.

Insurance law firms will also fear that CGU will follow Royal & Sun Alliance and Eagle Star and set up an in-house litigation team.