Utilities giant to assess performance of 16-firm line-up as part of wide-ranging examination of legal function

National Grid is due to assess the performance of its existing panel of legal advisers with a view to extending their terms ahead of a wider review later in the year.

The utilities business will launch a 'closed' review over the coming weeks to evaluate value for money and the performance of its existing 16-firm line-up with the intention of extending the panel terms for a year. Some firms could be dropped when the current three-year term expires on 31 March.

In May the energy giant will begin an 'open market' review and invite both panel and non-panel firms to tender for a spot on a revamped roster, set to go live in 2015. A decision on the final line-up is expected by Christmas.

Both reviews are being led by UK general counsel and company secretary Karen Clayton (pictured), who took on the role in 2009 and reports into group general counsel Alison Kay.

National Grid scaled back its panel in a 2011 review, handing appointments to Allen & Overy and Linklaters as the company's main corporate advisers, while Berwin Leighton Paisner, CMS Cameron McKenna and Eversheds all won spots to advise on commercial, construction and disputes work. Other firms to take places include Irwin Mitchell, Dundas & Wilson, SGH Martineau, Dentons, Walker Morris, Squire Sanders, Bircham Dyson Bell, Brook Street des Roches, Field Fisher Waterhouse, DLA Piper and Needham & James.

"Everything is on the table," said Clayton. "The current panel has worked fine for us, but the market has changed a lot in the three years since we did our review, and there are greater savings, efficiencies and relationships we can get."

Despite being one of the largest listed companies in the UK, National Grid has a fairly modest annual legal spend of between £15m and £20m. However, it is a figure Clayton is keen to bring down further. The upcoming reviews are set to focus on reducing costs, with litigation identified as one priority.

"Like most clients, we have a whole range of cost and fee structures for different types of work, but litigation spend tends to be more on an hourly rate basis," she said. "It has been that way forever and a day, and I'm keen to move away from it."

Clayton added that the separate decisions of E.ON and Balfour Beatty to partner with Pinsent Masons as a single provider for day-to-day legal work were particularly interesting to her. "We will not be moving to a single provider – just to scotch that possibility – but it is still an interesting development and an area I would like to look at," she said.

"The changes in the way clients ask their tier one firms to sub-contract work to smaller or regional firms is another feature we will be paying closer attention to, and hardwire into the instruction."

The open market review will also follow an internal audit of the in-house legal team's capacity and remit, which Clayton said would help dictate what the company will need from its external advisers. The structure and size of the in-house team will also determine how many panel places are up for grabs. 

"We have been forensically looking at the in-house value to the business for the last year, and in the summer I will be recommending a course of action to a senior group in the company," Clayton added.