Dentons fees for Carillion advice revealed as report forecasts £20m legal costs for insolvency
National Audit Office report sheds light on expected fees for advice on high-profile insolvency
June 07, 2018 at 06:04 AM
2 minute read
The original version of this story was published on Law.com
Dentons took home £100,000 in fees for nine months of advice to the Cabinet Office on the collapse of Carillion, it has emerged, as a new report reveals that law firms are expected to earn a total of £20m for their work on the construction giant's insolvency.
The National Audit Office report, which breaks down the actual and forecasted costs of the collapse, says that for the remainder of the insolvency, legal advisers are expected be paid £20m, with accountants picking up £50m. The report projects the total cost to the Cabinet Office at £148m.
Dentons was contracted on 29 August last year, following discussions between the government and Carillion about the firm's sizeable July profit warning. The firm was appointed by the Cabinet Office to help gather legal intelligence on supplier contracts, an instruction that ran until 29 April this year and for which it was paid £100,000.
The Cabinet Office also appointed PwC on 17 September to advise on contingency planning for Carillion's potential insolvency, at a total cost of £600,000.
A separate Dentons team also acted for the official receiver following Carillion's collapse, including London restructuring partners Nigel Barnett and Neil Griffiths.
Last month, the parliamentary inquiry into the collapse accused magic circle law firms including Slaughter and May, Clifford Chance (CC) and Freshfields Bruckhaus Deringer of "squeezing fee income" from the company as it collapsed through "recklessness, hubris and greed".
The inquiry's final report – produced by the Business, Energy and Industrial Strategy and Work and Pensions select committees – detailed how the company's directors were supported by an "array of illustrious advisory firms" that were used as a "badge of credibility". Slaughters, CC and Freshfields were listed in the report alongside Mills & Reeve, Sacker & Partners, Willkie Farr & Gallagher and Akin Gump Strauss Hauer & Feld.
The report alleged that advisory firms are "not incentivised to act as a check on recklessly-run businesses", stating that "a long and lucrative relationship is not secured by rocking the boat".
Separately, a letter released by the firm last month revealed that Slaughters billed Carillion a total of £8.4m for advice in the 18 months prior to its liquidation in January this year.
Dentons was contacted for comment.
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