Magic circle firm received £14m in legal fees from key client since height of credit crunch

Freshfields Bruckhaus Deringer has received more than £14m in legal fees from the Bank of England (BoE) since March 2008, according to new figures that show the extent to which the bank's legal spend has fallen since the height of the financial crisis.

The magic circle law firm – which is the UK central bank's preferred legal adviser – billed £4.7m for work from March 2008 to February 2009 as the credit crunch reached its peak, followed by fees of £5.7m for the following 12 months.

High-profile roles for Freshfields in the months following the collapse of Lehman Brothers included advising on BoE's £50bn liquidity support programme for the commercial banking market in early 2008, as well as the multi-billion-pound bailout of some of the UK's biggest financial institutions in the weeks following Lehman's fall.

However, since the 2009-10 financial year, BoE's legal spend has fallen significantly, with total law firm fees paid between March 2010 and December 2012 standing at £5.2m, down from almost £13m over the preceding two years.

As such, Freshfields has seen its BoE fees decline. From March 2011 to February 2012, the firm billed a relatively small £1.1m, although this amount was still comfortably higher than any other law firm. In total, since March 2008 Freshfields received almost £14.5m in legal fees from BoE's total spend of £18m. 

BoE's second-highest biller over the period is Clifford Chance (CC), with total fees of £1.4m, while Bird & Bird ranks third with £647,000. Other notable recipients over the near five-year period include Kirkland & Ellis (£378,000) and Travers Smith (£287,500).

BoE is well known as one of Freshfields' key clients, and the longstanding relationship was cemented further in 2009 with the appointment of former Freshfields partner Graham Nicholson as the bank's chief legal adviser.

Speaking about the possibility of a conflict of interests for Freshfields in representing a regulating bank as well as the banks themselves, a finance partner at a competing law firm said: "I don't think Freshfields has conflicting interests by serving BoE. I think BoE would rather have a rational firm such as Freshfields advising banks. Other financial institutions may also approach the firm due to its inside knowledge of BoE."

Freshfields declined to comment.