The Treasury considered retendering for a new principal legal adviser on the sale of its stake in Eurostar midway through the transaction over concerns that Freshfields Bruckhaus Deringer’s £2.8m bill was too high, it has emerged.
A report by the National Audit Office into the sale of the Government’s entire 40 per cent stake in Eurostar in March, released today (6 November), found the Treasury considered switching legal advisers as it was “concerned about the cost of the legal work”.
It subsequently decided “a change of the legal team midway through the process would have been inefficient and problematic due to the time-critical nature of the work” and continued to instruct the magic circle firm.
The Treasury paid Freshfields £2.8m on a billed time basis rather than a fixed fee, the report revealed.
Around £500,000 of the firm’s bill was spent negotiating the legal aspects of the transfer of shares from the Department of Transport to the Treasury, which was “more complex and therefore more costly than expected”.
The report reads: “Although the legal adviser’s fees were at a discount to scale rates, some of the fees were high relative to the costs of the civil service staff who were working on the sale project team.
“HM Treasury was concerned about the significant legal fees being incurred during the sale process and considered re-procuring the legal adviser or altering the contract to a fixed fee basis.”
The entire cost of the transaction was £8.2m, with £3.7m paid to the Government’s financial adviser UBS.
The Government sold its 40 per cent stake in Eurostar to Anglo-Canadian consortium Patina Rail in March 2015 for £757.1m, making good on a plan laid out in the 2013 Autumn Statement.
Freshfields was appointed to advise the Treasury on the deal following a procurement process. The team was led by corporate partner Stephen Hewes.
The firm’s appointment followed a longstanding relationship with the Treasury, working closely with it on a number of deals including UKFI’s sale of shares in Lloyds Banking Group and the privatisation of Royal Mail.
Freshfields declined to comment.