The alleged “dismal failure” of panels to cut outside counsel costs, and other condemnations

The new editor of Legal Week, Alex Novarese, does not mince words. “The evidence is now incontrovertible that in the vast majority of sectors in which they have been deployed, panels have been a dismal failure at cutting costs.” Writing in Legal Week, Vol. 9, May 10, 2007 at 2, Novarese doesn’t bother to offer any of the incontrovertible evidence, but rushes on to condemn panels on other charges.

Panels have “contributed to the breakdown of loyalty between clients and law firms.” The “mandate chasing” has “resulted in ethical compromises.” His list of far-from-ideal developments that have emanated from panels continues: “liability capping, client dumping, non-exclusive arrangements, and rows over conflicts of interest are linked to the panel system, or at least to the broader shifts in adviser/client relations.”

Many general counsel probably disagree. Panels (usually thought of as “convergence” in the US) can heighten loyalty because there is more commitment on both sides. I can’t speak to ethical slippage, but I suppose if you criticize the strained objectivity of an employed lawyer then you can likewise question the objectivity of a panel firm beholden to one client for millions of pounds of work. The connection between panels and the liability of law firms in the UK to third parties, which liability caps seek to limit, is unclear (See my post of Nov. 9, 2006 on such caps.). “Client dumping” could be a wise and worthy effort to reduce conflicts of interest.

In short, more sides to panels exist than this traditionalist critique of Novarese.