Our story last week on the banks’ legal panels denying their adversaries a choice of legal advisers has prompted a certain amount of humbug on the part of the banks and their advisers. A number of law firms, scared of antagonising their paymasters, say on the record that panels “don’t necessarily” cut off client choice. You may not be entirely astonished to learn that they’re much more caustic off the record.
Meanwhile, HSBC, when asked by The Today Programme last week to explain its position on the matter, said that it had “only” 15 firms on its panel, so there were plenty of other law firms available. This, as we all know, is absolute tosh. We spoke to pretty much every serious litigation practice in the City, and the response was uniform: in practice they wouldn’t sue a major bank, even if they weren’t on the panel. (To take one random example, you can be darn sure that Lovells, for example, wouldn’t sue The Royal Bank of Scotland (RBS), even though the firm missed out on the panel review last year.)
The question we asked last week still remains: who’s left to take on this work? The bar could be the desperate client’s last resort. In-house departments have always been able to instruct the bar themselves, but the direct access rule changed this summer, and now any member of the public can instruct a barrister. That said, it’s unlikely that Tony Grabiner will end up acting for those lone conspiracy theorists alleging galactic fraud. A number of chambers are expressing interest, but there are a lot of practical problems, not least because of the rule that prevents barristers from conducting the litigation themselves.
US firms aren’t queuing up either. Cadwalader, which enjoys giving senior banks a good kicking on intercreditor spats, wouldn’t ever dream of suing them in the normal run of events. The only US firm we found which wouldn’t deem itself conflicted is Texas firm Fulbright & Jaworski, which is looking to beef up in the UK. It will have chanced upon a rich seam of work if it can find the right number of litigators. As one prominent and evidently frustrated City litigator told us: “If I wanted to set up on my own as someone who sued RBS, I’d make ten million in fees in my first year.” Amen to that.