By Mary Mullally
Bradford & Bingley building society is to slash its 40-firm legal panel to as few as 10 firms. The cuts will fall across the board and will have an impact on firms instructed in all disciplines.
Clifford Chance, Slaughter and May, Freshfields, Denton Hall, Rosling King and Hammond Suddards are among the firms on the existing panel. The review will be conducted throughout 1999 in consultation with outside firms.
Bradford & Bingley is the second-largest building society in the UK, and one of the top 10 lending institutions. Its lending book is estimated to be in excess of £13bn.
Paul Jordan, head of litigation at Bradford & Bingley, confirmed that the cuts would be "significant" and said that he anticipated the panel would be reduced to approximately 10 firms.
He said: "Going forward we need a manageable exterior legal function. We wish to cut it back to manageable proportions.
"The factors we are taking into account are a mixture of the firms' charging rates, their past performance and whether the services they provide fit into the structure that we are going to adopt."
Bradford & Bingley is one of a growing number of lending institutions implementing panel cuts. Jordan acknowledged this trend: "All businesses are realising that management of exterior firms is an important part of the business and this has led to reducing the panel size."
The cuts will impact on firms specialising in the already dwindling building society sector. Following a spate of building societies converting to banks, the sector has already lost some of its largest lenders and the market has contracted.
Jordan could not disclose which firms were on the panel. But he did say "most large firms will be there in some capacity".
Lucci Dammone, head of the lender services department at Hammond Suddards' Leeds office, said that he saw panel reductions as inevitable as client companies sought to retain better management control and look for ways to streamline their service.
"It is a very competitive industry," Dammone said. "I think that in the market they operate in it is inevitable that panel reductions will distinguish between the 'haves' and the 'have nots'."
John Pearson, banking finance partner at Rosling King, agreed. He said that panel reductions had a large impact on solicitors working in this sector. "Work is moving between firms, clients are picking and choosing, hiring and firing and there are winners and losers."