THE BOND between in-house counsel at City banks and other financial institutions and their core City law firms is being tested to the limit as the current economic uncertainty hits home, according to a leading in-house counsel.

Peter Maynard, director of group legal services at Prudential, has told The Lawyer that he expects his panel firms to be proactive in bringing to his attention financial services products which may unnecessarily expose the company.

Even the most standard documents that were written during the upturn have to be scrutinised closely to see whether the underlying criteria justifying the product has changed, he said. “When you manufacture a product, you have to make decisions based on the market conditions at that time. When these conditions change, a proactive external lawyer will be quick to identify those decisions and bring them to the client for review.

“It is the quid pro quo of putting a lot of work with certain firms – they know your products and businesses well enough and are active in bringing potential problems to your attention.”

His views were echoed by several other in-house lawyers at investment banks who were also looking for their outside counsel to warn them of potential problems.

One in-houser with exposure to the Russian currency crisis said firms such as Linklaters, Allen & Overy and Clifford Chance were providing regular updates on the situation – for instance, digesting the business implications of the regular dictates from the Russian central bank. But he added that more could still be done.

And he said his hands were tied when it came to paying fees. He is looking for his external counsel to understand the pressures that he is under. He said the bottom line was that external counsel fees would only be paid once the bank itself was paid by its client.