Barclays to back new tech solutions from panel firms as part of major innovation drive
Barclays has told its panel law firms that it is willing to help them bring new technology ideas from concept to fruition, as part of an extensive panel review overshadowed only by the bank’s decision not to unveil the names of the successful firms.
The banking giant, which put innovation at the heart of its latest review, has agreed that if a panel firm has a new solution that it wants to take from concept to pilot, and if that idea is of interest to Barclays, Barclays will back it.
Rather than investing cash, Barclays will take money off its ring fenced relationship account, which measures law firms’ contributions to the bank in terms of ‘value-add’ services such as secondees. These services are compulsory and if law firms don’t meet the target set for them, they have to pay the bank the equivalent money owed.
The panel review was led by Stéphanie Hamon, managing director of a newly-created commercial management team, which has been set up to review and run the panel. Hamon said: “One interesting thing about the process was hearing about law firm incubators with major IT players. It’s no longer just about nearshoring or offshoring but better use of technology.”
Key to law firms’ selection on Barclays’ panel was being able to show that they could help deliver both legal excellence and commercial innovation. The latter includes more legal project management (LPM), alternative fee arrangements and eBilling.
LPM is already on the rise among law firms but it is far from widespread. Hamon said: “We believe that for major matters, if you introduce project management the result is increased efficiency. It gives us more predictability and price security, as we break down matters into phases and tasks. On the law firm side, it allows them to run in a more profitable manner.
“We have already had great engagement from law firms asking what Barclays means by LPM; everyone has a slightly different meaning. Law firms are asking us how we see it operating and would we want a project manager on their side. We understand that Barclays has provided the impetus for firms to engage with LPM and they are now using it on other clients.”
According to Hamon a number of firms have already gone as far as hiring or looking to hire their own LPM head, in an example of how a big muscle client can help to drive a trend across the market.
Hamon added: “The legal market has different levels of maturity in the change journey and when you have a major client that is strong driver of change, it’s up to law firms to invest. Most see it an as opportunity.”
The bank has introduced a three-tier rate card – ‘medium, complex and flow’. These will form the basis of its move towards alternative fee arrangements, where it has approached firms with a menu of different arrangements, with the ambition of moving entirely away from the hourly rate.
Hamon said: “It’s about recognising that not everything you do is strategic. If you are negotiating or structuring something that’s strategic but if you are supervising due diligence it is not. It’s about influencing the market that it can bill different rates.”
Barclays, which once famously had over 500 law firms on its panel, has this year cut the roster by around 65%, moving from 400 advisers to 140, spread across a core panel and specialist firms in support.
Legal Business has reported that a raft of firms including Clifford Chance, Ashurst, Eversheds, Mayer Brown, Reed Smith, Simmons & Simmons, Hogan Lovells, Pinsent Masons, DWF and Bond Dickinson have won places on Barclays’ reduced legal roster, however DLA Piper has lost its spot following the global panel review.