Banking giant plans to assess external advisers' referral value

Barclays' corporate arm is to assess its legal advisers on the amount of referral work the bank wins from their law firms' clients.

Angela Williams, a senior lawyer at the bank, emailed Barclays Corporate's panel firms earlier this month to set out the policy.

The decision will see the bank measure both the number of referrals firms make to clients, as well as the number of times these referrals result in Barclays winning roles on deals.

While it is not unusual for law firms to recommend bank clients to their corporate client base, Barclays' decision to measure the referral activity of its legal advisers is uncommon. It is understood it is a policy that now-defunct investment bank Lehman Brothers had been considering before its collapse in 2008. BarCap subsequently acquired the US operations of Lehman.

The exercise is targeted mainly at firms with a place on Barclays Corporate's general advisory panel, such as Allen & Overy, Clifford Chance, Freshfields Bruckhaus Deringer, Linklaters, legacy Lovells, DLA Piper and Simmons & Simmons.

The move was initially discussed at an adviser conference with the bank's 52 panel firms in July last year. The bank said the process would not play a part in Barclays' panel review process, which is due to take place at the end of this year and is expected to see a significant reduction in the number of firms on the roster.

A spokesperson for Barclays confirmed the policy, describing it as a "straightforward data capture exercise within Barclays Corporate".

A partner at a panel firm commented: "This exercise is most certainly recession-linked. In-house legal teams at banks are constantly having to justify their own existence – they are trying to show that they are adding value to the business through external relationships."

While several partners said that the bank was also interested in tracking referrals from law firms for BarCap, a spokesperson said that the initiative was limited to Barclays Corporate.

Separately, BarCap has carried out a redundancy round, with the bank's legal team affected. Fewer than 10 London lawyers are understood to have been affected by the cuts, including several senior counsel.