RBS posits Mexican wave model to cut legal outlay
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New legal chief Campbell to reassess external legal work; favours pairing advisers over LPO
Miller McLean, Chris Campbell, RBS
Incoming RBS general counsel Chris Campbell is considering introducing a Mexican wave-style relationship between his panel firms in a bid to reduce the bank’s £200m annual legal spend.
Deputy general counsel Campbell, who will take control of the legal function when current chief Miller McLean retires at the end of April, is floating the idea of having lower cost base panel firms take on the commoditised elements of deals that would normally be handled solely by its top-billing advisers.
While the plan is still in an embryonic stage, one source close to the bank said it could be in place by the end of the year.
It is understood that Campbell favours this approach to using a legal process outsourcer (LPO) because it would allow him the potential to slash costs while continuing to work with firms with which the bank has longstanding relationships.
While the process would require the partnered firms to work closely together to avoid issues such as duplication, the source said its panel firms were chosen with potential cooperation
in mind.
“The panel had a very good review process [in 2009] and is pretty well evaluated,” added the source.
Firms on RBS’s legal panel include Linklaters, which handles all of the bank’s top-end work and was by its side throughout the financial crisis, Eversheds, Freshfields Bruckhaus Deringer, Halliwells and Herbert Smith. Campbell was unavailable for comment.
The measures are part of a wider crackdown on costs that was started as part of the recent panel review. Firms were asked to ensure they were committed to value-added services, such as supplying secondees, while also reducing their fee levels by around 10 per cent.
Rushad Abadan, head of group transactions and projects at RBS, said of the panel review: “Cost is obviously a focus all the time. We try to negotiate bespoke fee arrangements for every transaction we do. I’m keen on fixed arrangements where this is appropriate.”
Abadan’s six-lawyer department is overseeing the bank’s restructuring, which will see it divest numerous businesses, including its branch network in England and Wales, RBS Insurance, Global Merchant Services and the bank’s position in RBS Sempra Commodities.
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Readers' comments (6)
mary | 8-Mar-2010 12:25 pm
In theory this is a very good idea but how would it work in practice? The firms may have been well evaluated but does that necessarily mean that they'll work well together? Who will oversee the work - the dominant firm in the pairing or someone at RBS? What happens if things go wrong further down the line - who'll take responsibility for errors? If they can work all that out it could be a very beneficial arrangement and one that will save money for the bank we all own. That would be good given that the legal spend id £200m!!!!!!
It's only a mater of time before more inhouse lawyers look at this I reckon.
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Johnny | 8-Mar-2010 12:42 pm
One wonders whether this could end up being something of a false economy unless RBS can guarantee fixed fees on all their transactions.
Otherwise, it might be a case that lower fees come hand in hand with an increase in billable hours as the firms work out how to offer something that's fully joined up.
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scotlandthebrave | 8-Mar-2010 3:48 pm
Duplication of work could certainly be an issue here but so long as it was well managed there's no reason why it would be a deal breaker. legal process outsourcing is no longer a scary concept for most firms, but it has its drawbacks, such as the amount of time you have to devote to training the team working on your account. This would potentially be much easier to put in place and to verify what the quality would be upfront.
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Suhasini Sakhare | 10-Mar-2010 6:36 am
I work for an LPO, Zeta Intelex. Have also worked as a solicitor in London for a couple of years.
RBS has the wrong end of the problem. Non standardization, hoarding of knowledge, anti-KM and anti-collaborative practices happen because legal work is distributed within the firm in a whimsical, capricious and error prone manner. LPO in fact would not appeal, if the process of allocating work was reasonable.
Its a self feeding cycle of errors, work gets allocated on random basis, which have nothing to do with consumer welfare, and knowledge stays muddled. Knowledge stays muddled, there is no way to objectively track merit, and work continues to be allocated on random basis.
Its rich if RBS thinks that it could leverage the fundamental problem afflicting an employed solicitor's work life to solve consequent problems.
It won't work, simply because this fundamental problem did not originate at the workplace at all, but has its roots in how lawyers get trained. Or rather, in how they do not get trained.
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Anonymous | 25-Mar-2010 5:20 pm
what on earth does the LPO'er's comments mean??!?? Its no wonder LPO arrangements do not work if that type of person is behind them. Good grief!!
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C Johnson | 8-Apr-2010 10:38 pm
Please stop using the term "Mexican Wave" to explain this concept. The world is global now and firms and corporations can not afford to allienate the Latin America and Mexican market places or talent that comes from these regions. The proper term would be "maquiladora" which really refers to the old miller's portion concept for grain mills. Moreover, the practice of maquiladoras spans all through Latin America, and it is not solely something that is set up in Mexico. Challenge yourself to find better words that do not offend a large number of people, even if it just for the sake of your company's image and reputation. The world is now an international place and survival requires respect across cultures and countries.
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