Barclays puts emphasis on innovation with six firms appointed to new panel

Barclays

Six of Barclays’ core advisers have won places on a new legal innovation panel being piloted for the bank, with Ashurst and Simmons & Simmons among those making the cut, Legal Week understands.

The bank selected the six firms based on four key criteria: the use of legal project managers, collaboration with other law firms or other services providers, sophistication around pricing arrangements, and thought leadership.

“Based on this, we have identified a group of law firms that we felt were the most aligned with what we are trying to achieve,” said Stephanie Hamon, managing director of Barclays’ newly created commercial management team, which sits in the bank’s legal department.

Hamon ran the bank’s overall panel review process, including the launch of the innovation pilot, alongside Chris Grant, a director and head of law firm management.

The pair selected firms from its core panel for the innovation pilot. While the bank declined to confirm the names of those appointed to the pilot, other key advisers have historically included Clifford Chance, Freshfields Bruckhaus Deringer, Linklaters, Allen & Overy, Hogan Lovells and US firms such as Latham & Watkins, Shearman & Sterling and Sullivan & Cromwell.

Barclays is already working on various projects tied to the pilot, including several apps, with Hamon suggesting the bank is particularly interested in apps relating to regulatory changes associated with Brexit.

Outside of technology, Hamon said innovative ideas would include law firms hiring project managers, with Barclays playing a role in the recruitment process or giving the bank’s legal team specific training for a new skillset.

She insisted that Barclays is not “pitching firms against each other”, adding: “We are inundated with suggestions that we have to choose between. But it’s not a competition between law firms. If the idea is good we will do it; it is not a question of saying we will only do three.”

The innovation work will sit under the bank’s relationship account system, which involves panel firms providing a certain volume of free legal services annually in return for a set volume of work from the bank. The account gives each panel firm credit in three areas: secondments, discounts on legal advice, and innovation. The relationship account covers all firms with which the bank spends at least £1m a year.

Grant, who joined the bank in 2004 from Freshfields Bruckhaus Deringer, said the expectations for pilot firms’ free legal services have not changed and that they would have to request approval “for use of the innovation funds”.  He added: “It may be that firms on the innovation pilot allocate more from the innovation category, but this is not mandated.”

Hamon said law firms’ innovative ideas had not previously been visible to the bank’s senior management. “There was no visibility at a higher level, and law firms were not getting credit for it either. Talking to law firms, they have ideas but they weren’t making their way to us.”

The pilot was first set up as part of Barclays’ wider panel review process this summer, which saw the lineup slashed by 60% to 140 firms.

The new roster, which took effect from 1 July for a two-year term, will be partially reviewed in January as a result of a change introduced as part of the latest review process. This will see each firm’s position reviewed and the bank able to move it between tiers.

“Changes can be made to the coverage any firm may have,” explained Grant. “We are actively managing the firms that we work with to make sure the coverage they have remains relevant.”

Legal Week reported in June that Simmons, Ashurst and Hogan Lovells were among a number of firms holding onto places on the bank’s panel.

Barclays introduced three tiers of adviser during the latest review: panel, core specialist and specialist. It previously had two tiers – preferred firms and approved firms. As part of this review, the bank also increased the trigger point for relationship account firms tendering for work from £25,000 to £100,000.

The commercial management team, which was set up in December when Hamon joined the bank from King & Wood Mallesons, is expected to boost efficiency within the legal department and deepen relationships with its external legal advisers. It now comprises 15 staff including Hamon and Grant.

Ashurst and Simmons did not respond to requests for comment.