Panel firms resist attempts to remove junior lawyer fees from pricing
While more than a dozen firms – including the entire Magic Circle – have made it onto Deutsche Bank’s latest global legal panel, an attempt by the bank to remove fees for junior lawyers has proved controversial.
The review process, which is understood to be mostly complete, stemmed from a request for proposal sent out to help Deutsche analyse its current policies and processes for external legal counsel. The process, dubbed ‘Project Eagle’, was led by global chief operating officer of legal and compliance Rose Battaglia, with appointments expected to last two years.
Currently, all of the Magic Circle firms are joined on the panel by Herbert Smith Freehills, Ashurst, Simmons & Simmons, Taylor Wessing and Hogan Lovells.
According to Who Represents Who data from The Legal 500, Deutsche Bank has previously used the Magic Circle for a variety of work. Of the Magic Circle, Allen & Overy is instructed most often for finance work, with Clifford Chance also picking up a significant number of banking mandates in the past. Slaughter and May has provided antitrust advice in addition to corporate and disputes work. Linklaters has offered employment expertise among other areas while Freshfields Bruckhaus Deringer has supplied corporate, disputes and projects work.
US firms on the new panel include Shearman & Sterling, Milbank, Tweed, Hadley & McCloy, Reed Smith, Latham & Watkins, Cleary Gottlieb Steen & Hamilton, Mayer Brown and White & Case.
As part of the panel review, at tender stage, the bank attempted to implement a system under which trainee and newly-qualified lawyers would not be able to charge for work they carried out.
‘If the client’s desire is not to show junior lawyer time because they feel the customer doesn’t want to pay for it, fine. But the figure will be the figure.’
The system, which is more common in the US, has drawn some strong reactions from the profession. However, it is understood some firms on the panel were able to negotiate themselves out of the system.
One City partner from a panel firm said: ‘We were very concerned with it. Some firms pushed hard, some successfully, not to comply with that request. Those are the firms which offer the bank value for money.
‘I have some sympathy for Deutsche’s push. It doesn’t want to pay a one-year qualified lawyer, who is still an expensive asset, to do non-value-add work. It doesn’t want lawyers to learn on the job for them and get paid £250 an hour.’
However, one head of finance at a Deutsche panel firm said the trend for institutions to delete junior lawyer fees is ‘just for show’. He added: ‘For the purposes of presenting fee estimates, it’s a matter of the relationship between the institution and the relevant law firm as to how those numbers are presented.
‘If that means the client’s desire is not to show junior lawyer time because they feel the customer doesn’t want to pay for it, fine. But the figure will be the figure.’
A Deutsche Bank spokesperson declined to comment.
tom.baker@legalease.co.uk
georgiana.tudor@legalease.co.uk