Panel reviews are a cut-throat business these days, even for firms like SNR Denton and Slaughter and May. The duo was recently evicted from the Land Securities legal panel after a year-long review by group general counsel and company secretary Adrian de Souza. It seems not even the big hitters are immune to facing the chop.
With legal spend in a continual free fall, panels are now being cut and firms are under the cosh to prove their worth. But instead of simply trimming down his existing panel de Souza has also added two names, with Hogan Lovells and Herbert Smith Freehills both making the grade. And this time around de Souza did things a little differently.
He not only asked firms to detail how they plan to take care of his business needs across a number of issues (rather than working in silos) but show how committed they’ve been to their own practices over the last five years by supplying him with real estate turnover figures from 2007.
Herbert Smith Freehills, which showed just a 1% variation between 2007 and 2012, came out on top whereas other firms have seen their real estate revenues decline dramatically. While firms are certainly forced to list what they’ll do for the client in exchange for work, they’re rarely asked to demonstrate the commitment they have to their own business, particularly in a downturn.
With a legal spend of £20m up for grabs, who wouldn’t declare themselves to de Souza? For example, Hogan Lovells made the grade, de Souza tells us, because of its strong real estate litigation practice.
Each panel A firm, with the exception of Nabarro, is thought to receive roughly £2m each in legal spend. Nabarro, the darling of the panel, is understood to receive at least three times as much.
With legal spend in a continual free fall, panels are now being cut and firms are under the cosh to prove their worth.
This is a boon for the firm, which has been under pressure ever since the property market fell off the cliff. De Souza praised it for taking a holistic approach to Land Securities’ needs, which set it apart from other candidates.
De Souza’s move is particularly interesting. Firms should demonstrate to their clients just how committed they are to running a successful business no matter how boom or bust the markets are. It’s no use to Land Securities to appoint an adviser which has seen its real estate revenue and practice tank over the course of the last five years.
Dedication to success is now more important than ever before. In asking firms to prove in real terms just how integral a practice real estate is, de Souza cuts through the tender puff and those platitudes about ‘commitment to your business’.
Firms missing out will certainly feel the pinch as de Souza runs the legal department at the UK’s largest commercial property company, which in turn has one of the largest legal spends in the country. Firms have until 2016 to better themselves, when the next review starts.
But competition looks to become increasingly fierce as de Souza’s ambition is to slash the main panel even further next time around. It’s going to be every real estate partner for themselves for the foreseeable future.