Freshfields Bruckhaus Deringer‘s role on the Northern Rock saga has been marginalised after the mortgage lender passed into public hands last week.
Freshfields, whose oldest client the Bank of England had to turn to Clifford Chance for advice on its multibillion-pound loan to Northern Rock, was advising the stricken bank as a potential takeover target, with finance partner Alan Newton leading. But as the bank has been nationalised, advice in that respect is no longer required.
Linklaters partner Charlie Jacobs has been instructed to advise the bank’s new chairman Ron Sandler, as well as the board he has appointed to run the bank.
Freshfields, which has worked for Northern Rock since 1997 and remains on the bank’s roster of preferred firms, although it did not have a role on the nationalisation. The firm claimed that its role as the bank’s principal adviser continues.
It is believed that, since instructing Freshfields last September, Northern Rock has clocked up fees of around £10m with the firm. That bill has now passed to the Treasury.
Appointees to the new board of Northern Rock include former Swiss Re finance director Ann Godbehere, former Abbey finance director Stephen Hester, Gordon Brown’s former principal private secretary Tom Scholar and Philip Remnant, the chairman of the Shareholder Executive.
It is understood that each member was advised by Jacobs before accepting their position. Jacobs will also give ongoing advice to the board in relation to risk and documentation, although it is not anticipated he will have a major role to play in restructuring the bank.
Slaughter and May corporate partner Charles Randell, who advised the Government on the restructuring of British Energy, as well as on the privatisations of British Gas and the electricity industry in England and Wales, guided the Treasury through the nationalisation process.
Slaughters’ legal bill to date is thought to be somewhere in the region of £3m, but that is expected to rise significantly once the post- nationalisation process is underway. Slaughters declined to comment.