Bank crisis mandates fail to deliver while Rock sale goes off panel

The Government's much-derided record on legal procurement has come under fresh attack after it emerged that the panels set up in the wake of the banking crisis have generated little or no work for mandated City advisers.

Allen & Overy (A&O), Herbert Smith and Simmons & Simmons were all appointed alongside Slaughter and May in November 2009 to advise UK Financial Investments (UKFI), the body managing the Government's stakes in banks such as Northern Rock.

The panel was formed to reduce the risk of legal conflicts and provide better value for money to the taxpayer after it emerged that the Treasury's primary legal adviser, Slaughters, had billed more than £20m by April 2009 for work relating to Northern Rock's nationalisation and other matters, such as bank bailouts and recapitalisations.

UKFI has now confirmed that with the exception of a "small" regulatory matter in 2010 on which Herbert Smith advised, there have been no new instructions since the panel was formed, with Slaughters advising only on matters commenced before the panel was created.

Meanwhile, a separate roster of firms, formed in October 2009 to advise the Treasury on financial stability matters, has also failed to generate any instructions for Herbert Smith and legacy Lovells, which were appointed alongside Slaughters. Slaughters itself has only worked on mandates started before the creation of the Treasury panel, which would have required all of the firms to pitch for any work emerging.

The news comes after Legal Week reported last week that Freshfields Bruckhaus Deringer had been selected ahead of the UKFI panel firms to advise both Northern Rock and UKFI on the Newcastle-based mortgage lender's forthcoming sale, with corporate partner Barry O'Brien leading for Freshfields.

The off-panel appointment has raised questions among advisers about the role of UKFI's legal roster.

One partner at a panel firm commented: "This shows that both the Treasury and UKFI created these panels as a gesture to appease the taxpayer, not to mitigate the risks of legal conflicts."

He added: "On the Northern Rock mandate, it was only ever a two-way race between Slaughters and Freshfields, and UKFI could not be seen to instruct Slaughters after all the commotion surrounding legal spend back in 2009."

However, another adviser countered: "It was always going to be an appointment for the long term. Some of these assets are simply not worth selling until they have progressed along the recovery path."