Business of Law Firms
The Role of Panel Solicitors​

By Jake Rickman

What do you need to know this week?

Deutsche Bank, one of the largest investment banks in the world, confirmed last week it had nominated three of its panel member law firms to take on its trainee solicitors to complete a contentious seat as part of the SRA requirements for trainee supervision.

As The Lawyer confirms, Herbert Smith Freehills (HSF), Simmons & Simmons, and Norton Rose Fulbright (NRF) have been selected by Deutsche among its wider panel of law firms.

Separately, Allen & Overy and Slaughter and May have won spots on water utilities public company Pennon Group’s panel.

In light of this, this week’s Business of Law Firms article will look at the role of panel solicitors for commercial clients.

Why is this important for your interviews?

Overview

The way in which law firms win work is often something we may not be as clear about compared to other aspects of a law firm’s business. To be fair, neither law firms nor their clients like to disclose the particulars as to how they win business (or offer it). But understanding the client’s rationale behind legal panels will better help you understand a law firm’s business more generally.

Legal panels are among a few ways that clients instruct law firms. Panel firms refer to arrangements between a client and one or more law firms where the client agrees to funnel certain work to the panel member firms over the length of the arrangement, which is usually three or more years.

Typically, only large businesses like Deutsche Bank and Pennon Group use legal panels because of the size and scale of their various business divisions. The panel may contain as many as a dozen firms, each of which may be awarded work on certain kinds of matters. For instance, HSF, Simmons & Simmons, and NRF were not Deutsche’s only panel members but were the ones Deutsche chose to train its trainees for their contentious seats.

To get on a client’s legal panel, interested firms typically submit proposals called bids following the client’s request for proposals (RFPs). A firm’s bid will pitch its strengths and outline pricing, as well as the sort of discounts and alternative fee arrangements it may offer the client.

The client, typically led by the general counsel, evaluates bids based both on their content, as well as the strength of any pre-established relationships with the bidding firms and any of their senior fee-earners. This latter factor is quite important from the perspective of the tendering law firms because while the effect of a panel is to centralise the distribution of work to external legal advisers, the individual relationships that senior managers within the client’s business have will have always been of utmost importance for a law firm’s business generation capabilities. Leveraging these “inside relationships” with the prospective client during the tendering process for panel membership is a subtle art.

Role of a panel member firm

Each law firm the client chooses to add to its legal panel while having an agreement for services that sets out certain terms including:
  • which matters the panel member can expect to be instructed for and the rates the law firm will accordingly charge;
  • concessions the law firm may provide the client, such as capped-fee and fixed fee arrangements, retainers, success fees, and “value-based pricing” (which describes fees agreed between the client and firm after the fact to reflect the value of the work undertaken and its outcome); and
  • “value-added services” the law firm agrees to provide the client (usually at no charge) which includes offerings like secondments (as in Deutsche’s case), legal knowledge management, technology services, and bespoke legal updates.
These agreements are commonly called service level agreements (SLAs).

Benefits of legal panels

Large clients have become increasingly sensitive to the cost of external legal advisers. Panels allow a large firm to centralise the process through which work is handed out to external legal advisers and by more expressly negotiating the price paid and services received with a few select law firms, clients gain more control over these expenses.

Panels can also promote stronger client-adviser relationships because panel membership lasts for at least a couple of years. This extended relationship also helps clients economise the management of high-volume matters like contract management and dispute resolution because many SLAs give the client access to a law firm’s own high-volume matter management.