As most lawyers not living on Mars will know, the deadline for the ‘qualifying round’ of the Royal Bank of Scotland (RBS) panel review was last Monday.
The tender is run out of Brussels by a procurement company called FreeMarkets, and boy, can you tell: out of the bureaucratic capital of the world has come a process that would shame the European Commission.
Apparently, it has led at least one City law firm to hire an administrator whose sole purpose is administrate the RBS panel review. Now you might think that stimulating London’s admin-based economy is a good thing, so why are lawyers whinging so much?
Well, lawyers hate procurement types – they just can’t stand the thought that they are being assessed by the same people who decide who will clean RBS’s toilets. To add insult to injury, in this case the whole process is web-based, which is problematic for the old school, who never got to grips with internet.
Beyond the bureaucracy, though, the serious point is that RBS will hammer down fees. On the recent Barclays panel review, even Freshfields offered to cut fees and still didn’t make it onto the panel.
The ‘transactional panel’ will be the core one and has a probable annual legal spend of a whopping £117m. The bank wants 25 firms that can do work on transactions worth less than £100m and 10 firms for higher-value stuff. There are already 24 firms on the bank’s main panel and lots more, including a host of US firms, have been asked to bid.
Unfortunately for the law firms, the bank isn’t interested in blended rates or bulk-rate discounts. One partner bidding almost replied in desperation to that question: “What about years of ongoing institutional relationships? Do they count for nothing?” The answer, it seems, was no.
Then RBS will go away and come up with a ‘ceiling price’ (an odd name for something that actually means a floor price) for each type of work and then firms will submit a final tender. Some time before Christmas, hopefully, it will all be over.
The bank is Scottish to the core, so we know it’s a bit canny. It’s tying its firms down on price for three years – at the bottom of the market. And there’s so much competition in the UK that firms will probably have to take their medicine – and restrict their grumbling to The Lawyer.