Government creates first panel to cut bill by 10%

The government is attempting to reduce its annual £70m legal spend by 10 per cent by creating panels of law firms, but the process has been hampered by internal politics and bureaucracy

For the first time, the Government is setting up seven panels of firms in England and Wales that it wants all its departments to use on a centralised basis.

But the process has been beset by a bureaucratic hitch: the Treasury Solicitor’s Department has just created its own independent legal panel and is also assisting in the creation of the seven central panels.

The Treasury Solicitor, the Office of Government and Commerce and the Department for Education and Skills decided to put the seven central panels together this spring. This came after the Treasury Solicitor’s Department set up its own legal panel, which is now complete, at the beginning of the year. Central Government now has to deal with the anomaly.

The Treasury Solicitor’s independent review was led by head of procurement and commercial contracts David Gollancz. The panel, encompassing the full range of commercial work, covers England, Wales and Scotland, but the department’s main work is PFI and public-private partnership. Gollancz has expanded its existing three-firm City panel of Denton Wilde Sapte, Freshfields Bruckhaus Deringer and Simmons & Simmons to 18 firms. He said: “We expect to cut legal spend by approximately 10-15 per cent; but by excercising managerial skill, we hope to cut even more.”

The new firms are: Beachcroft Wansbroughs, Crutes, Davitt Jones Bould, DLA, Eversheds, Field Fisher Waterhouse, Irwin Mitchell, Mace & Jones, Masons, McGrigor Donald, Mills & Reeve, Michelmores, Pinsent Curtis Biddle, Semple Fraser, Sharpe Pritchard, Trowers & Hamlins, Veale Wasbrough and White & Bowker.

Although the Treasury Solicitor now has this panel, many other Government departments have preferred legal advisers. Central Government is hoping that, bit by bit, all Government departments with their own advisers will turn to firms on the seven central panels.

According to a senior Government source, the firms that have gained places on the Treasury Solicitor’s panel will be encouraged to apply for the central panels.

The seven central panels will be for: finance and banking; corporate and commercial; property; IT, telecoms and e-commerce; and construction, HR and general commercial. There is no proposal for how many firms should be on each panel.

Firms are now being invited to express their interest to the three departments coordinating the central panels. In November the departments will start asking the best candidates to submit formal tenders with a view to creating the panels in March.

This idea of creating central panels is a response to a National Audit Office report published in April last year, which said that the Government should reduce its £610m professional services spend by 10 per cent.

The report, called ‘Purchasing Professional Services’, identified the law firms which received the most Government money in 1999-2000. They were: Berwin Leighton Paisner (£2.2m), Bird & Bird (£2.1m), Eversheds (£2.1m), Nabarro Nathanson (£2.1m) and Denton Wilde Sapte (£1.8m).

By far the largest chunk of the professional budget went to accountancy firm PricewaterhouseCoopers, which received a whopping £70m of taxpayers’ money, equivalent to the entire legal spend.