Allen & Overy has partnered with legal tech firm Factor to assist the financial services industry in updating contracts related to the London Interbank Offered Rate – commonly known as LIBOR -  to new replacement rates.

The changes are due to go ahead at the end of 2021 despite the mass disruption caused by COVID-19.

According to Factor, which has recently rebranded from Axiom Managed Solutions, around 40% of the 100 million contracts involving the London Inter-bank Offered Rate have no language dealing with the cessation of the benchmark, and will need changing before the end-date.

The non-exclusive partnership will see the two firms provide technological and legal assistance financial service clients to accelerate this process. 

A&O has previously released a tech product, called IBORMatrix, to assist clients in this space – and the new partnership will use this tool as part of the new platform. 

In a statement, Chris DeConti, head of strategy at Factor said: "The LIBOR transition impacts so many contracts and lines of business that the challenge is insurmountable with legacy models of working."

The LIBOR benchmark came under intense scrutiny after a number of banks were found to have maniuplated the rate in order to make profits.

Since then the Financial Conduct Authority (FCA) noted that the absence of active underlying markets and the scarcity of term unsecured deposit transactions raised serious questions about the future sustainability of the LIBOR benchmarks.

The FCA has recommended the the Sterling Overnight Index Average (SONIA) as an alternative to LIBOR.