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Joanne O’Connor recaps the biggest stories from 2003 – all revealed in The Lawyer
This year’s abject lesson in how not to conduct a panel review came courtesy of the Royal Bank of Scotland (RBS).
What should have been a simple tender process rapidly descended into a bureaucratic farce, as firms struggled to come to terms with the unnecessarily complex online system. The process was handled by a Brussels-based procurement company called Free-Markets, and as City editor Helen Power pointed out, “Boy, can you tell: out of the bureaucratic capital of the world has come a process that would shame the European Commission.”
At least one City firm resorted to hiring a full-time administrator just to handle the RBS panel review. The bank was seeking 25 firms to work on transactions worth less than £100m and a select 10 firms to work on higher-value deals.
The point, of course, was to beat fees right down. The bank was tying firms to a three-year price commitment at the market’s lowest ebb. One partner said in despair: “What about years of ongoing institutional relationships? Do they count for nothing?” Apparently not.
In a highly unusual move, RBS introduced a one-fee-fits-all standard rate for own-account work. The Lawyer surmised in July that the policy was designed to attract business – ie borrowers – who are reluctant to shed out truckloads of cash to lawyers. For firms that depend on volume vanilla finance work at decent rates, charging heftier fees where the bank’s client foots the bill is an all-important source of fee revenue.
Not surprisingly, the lawyers took fright, and in a letter to its law firm banking clients, RBS admitted that the process had created difficulties for its “law firm friends”.
Finally, in November, the despised online tender process crawled over the finish line, and there were some pleasant surprises in store. The Lawyer reported that Herbert Smith made it on to the panel, despite not having traditionally strong ties to the bank. Freshfields Bruckhaus Deringer was also included, finding some succour for having lost the RBS corporate advisory spot earlier in the year.