Banks are clamping down on litigation fees as they move to cope in the face of spiralling claims against financial institutions.

Top City firms are reporting growing numbers of banks pushing for alternative billing methods for litigation cases, with Barclays and Royal Bank of Scotland as well as a number of US investment banks understood to be among those increasing pressure on fees.

Some banks facing bulk claims in response to failed finance deals are pushing for alternatives such as fixed rates per case, while others are trying to secure discounts on traditional hourly billing models that would see hourly rates reduce the longer the case progresses.

The news follows a spate of claims against financial institutions with the fallout from the collapse of Lehman Brothers and several Icelandic banks adding impetus to reduce costs where long-term relationships are no longer an issue.

Herbert Smith litigation chief Sonya Leydecker said: "There has been a downward pressure on rates from banks. There is pressure on costs as the banks are being told to cut everything and, in turn, they are telling suppliers to do the same."

One City litigator said: "On pools of complaints and claims broadly similar in nature against the banks, such as from investment funds, a fixed rate per case would work both for the bank and a firm benefiting from volume work. However, you could not use a new fee structure in complex reputation-busting litigation."

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