"Anything that leads to the end of panel processes – and more supportive relationships on both sides – can only be a good thing," says one City banking partner, of the news revealed by Legal Week last week that Barclays is calling time on traditional panel reviews.

The bank yesterday (1 March) begun the last ever formal review of its global legal panel, with the new line-up set to come into effect on 1 July.

That roster will be in place for three years, but the bank has already put in place new systems which will enable it to evaluate external advisers on an ongoing basis. When the latest panel appointments come to an end in 2021, Barclays will fully move over to the new model, with lengthy panel reviews – and the laborious RFPs they entail – becoming a thing of the past.

The new set-up, dubbed 'active relationship management', will give the bank more flexibility to manage the size and composition of the panel, with law firms added and removed from the line-up on an ad hoc basis.

Barclays argues that this model will help it to develop deeper relationships with its long-term advisers, while the bank is also looking to increase its use of alternative fee arrangements and move towards the "redundancy" of the hourly rate.

Attention will now turn to whether other major clients will also be inspired to ditch panel reviews in favour of a similar system, and many City lawyers are convinced of the benefits of Barclays' new approach.

One London banking partner says: "Poor service is often down to someone being overworked, or that it is not clear what is expected. You might have a feedback meeting in December, at which the client complains about something that happened in January. If you are told at the time that the client is unhappy, then you can act to try to sort it out immediately. This kind of continuous feedback is a really positive step."

The new system, which will see law firms graded on a number of metrics – including billing rates, service delivery and alternative fee arrangements – will also help the bank's in-house team and its external advisers to get clarity on "what good looks like", according to head of external engagement Stephanie Hamon, who has led the overhaul since joining from King & Wood Mallesons in December 2015.

"We have found that our in-house lawyers often only have a handful of law firms that they regularly deal with, and so it can be hard to know what good looks like," says Hamon. "By giving people a benchmark across a number of firms, this has helped our lawyers' understanding of what external firms should be aiming for."

Chris Grant, the bank's head of relationship management, adds: "It's an educational tool for both sides – the law firm side and us. Our lawyers might think the firm they are engaging with is doing well, but the metrics allow them to compare what they could be getting if the law firm was more engaged."

The reaction from private practice suggests that this process will help advisers to provide a better service and avoid unwittingly upsetting clients.

Another banking partner comments: "If I was the client, I would want my in-house lawyers to be rating the service of their law firms. The relationship between a law firm and client can often be quite hard to quantify, and the in-house lawyers are best placed to understand exactly what is going on."

Barclays' last panel review in 2016 saw it cut the number of law firms it works with by about 60% to 140, with Ashurst, Hogan Lovells, Simmons & Simmons, Addleshaw Goddard, Eversheds, Bond Dickinson, DWF and Reed Smith among those appointed.

Making sure that Barclays' law firms understand exactly what the bank wants from them is also crucial to the new system, and fits in with its aim to provide clarity and transparency for its firms. "If we sit down with firms and tell them what we want and then they develop and improve, then certainly they would move up through the ratings," says Grant.

Caroline O'Grady, a partner at legal spend management consultancy Coote O'Grady, believes that a focus on performance and value for money, rather than panel appointments based purely on cost, is "the only way" to effectively buy and manage legal services, but that for now, traditional RFP-led panel reviews will remain standard practice as clients take the time to adapt to new ways of thinking.

"Barclays has made this investment of time and energy to refocus on value, rather than simply cost. It will take time for mainstream legal procurement to catch up to the reality of buying legal services, and therefore lengthy RFPs will still be commonplace.

"Too often, organisations do not invest in understanding how their firms perform once appointed to a panel – this is the key to driving real value."