Barclays is tearing its corporate recovery panel in half blaming diminished business for the reduction.
The panel currently consists of 13 firms but is expected to be slashed to between just four to six practices in a process which will be completed by the end of June.
William Lewis, head of legal services (recovery), says: “Due to the state of the economy we do not have as many recoveries as before.”
He adds: “This means the work is being spread too thinly between the firms. We will concentrate the work on a slice on the panel.
“This is being done in order to concentrate the spend.”
The firms will now be split into two categories. Those firms who will advise Barclays will be grouped as “preferred” suppliers.
The remaining seven to nine firms will be labelled as “approved” and will be kept in reserve for certain work.
Lewis says: “These firms will be used from time to time, maybe when there is a conflict or if a particular firm has knowledge of a particular area.”
Barclays has consistently reduced its panel over the past two years, from more than 100 firms to a total of 30, which was slashed again to the current number.
One source says: “This is not a surprise. The banking sector is beginning to monitor its legal spend very closely.”
He adds: “Some banks are even thinking about taking the work in-house in order to reduce costs.”
Mark Campbell, managing partner of finance at Clifford Chance, refuses to comment on Barclays' decision.
But he says: “A lot of the big banks and financial institutions would be looking at reviewing their panels from time to time.”