Ministry of Defence cuts legal spend to top billing advisers as magic circle firms see fees fall

Legal fees for the Ministry of Defence’s (MoD) biggest billers fell by more than 80% last year, as the government department cut back on spending to top UK law firms.

Figures obtained by a freedom of information request show the MoD’s five biggest-billing law firms were paid 84% less in 2016-17 than the previous financial year.

Linklaters, Freshfields Bruckhaus Deringer, Slaughter and May, Simmons & Simmons and Herbert Smith Freehills (HSF) – the five biggest MoD billers since 2013-14 looking at combined earnings – were paid a total of just £1.7m last year, compared with £10.6m in 2015-16.

Linklaters – the top-billing MoD adviser since 2013-14 – has been paid £13m in legal fees by the MoD in the last four financial years, but while it billed an average of more than £4m a year between 2013-14 and 2015-16, last year the firm earned just £852,000.

The magic circle firm has advised the MoD on numerous projects in recent years, including the production of the Queen Elizabeth Class aircraft carriers (pictured). The two warships will be the biggest ever built for the Royal Navy.

Simmons, the second highest-billing law firm over the same period, has earned a total of £8.3m for its advice, but also saw a significant drop in fees last year from £3.5m in 2015-16 to just £17,334. The firm has also handled a number of high-profile mandates for the ministry in recent years, including the financing for a training package that involved the delivery of a range of helicopters, infrastructure and ground-based training equipment.

HSF is the third highest UK top 50 biller during the period at £7.3m, followed by Freshfields on £4.4m and Slaughters with £3.2m.

In December 2014, the MoD appointed 10 firms to its major projects panel, with Linklaters, Simmons, HSF and Freshfields among those winning places. Between them, Linklaters and Simmons have billed more since then – £21.4m – than all other firms on the panel combined (£19.5m).

However, some of the smaller firms on the panel saw their MoD billings increase in 2016-17, including Mills & Reeve, which was the biggest earner from the MoD last year, billing £1.4m from the department, nearly £1m more than it did in 2015-16. Burges Salmon also saw an upturn in MoD fees last year, earning £621,378 after billing an average of about £150,000 in the previous years.

Despite not being a panel firm, Slaughters has been paid more by the MoD than the majority of the other firms on the major projects roster.

Other non-panel firms to have billed more than £1m during the past three years include BLM (£2m), Squire Patton Boggs (£2.2m) and Scots firm Morton Fraser (£1.9m).

In a statement, the MoD said: “It may be helpful to explain some of the reasons that potentially give rise to a variation in legal costs on a yearly basis. These will include, but are not limited to, the fact that procurement projects require more support at certain stages than others and the number of projects may either increase or decrease over the years.

“Additionally, last year the MoD switched to a new commercial procurement system, which may have caused a delay in some payments being submitted and processed. Overall, however, the MoD external legal support is only sought when there is a business requirement that cannot be met internally.”