UK lawyers have again found themselves in the firing line over fees on PPP and PFI deals.
According to a Pubic Accounts Committee report published last month, legal fees on the London Underground Limited (LUL) PPP topped 70m. Freshfields Bruckhaus Deringer, which advised LUL, notched up 29.2m in fees on the Tube Lines and Metronet PPPs. The bill ultimately cost Freshfields its relationship with LUL: after LUL was transferred to Transport for London, the firm was dumped in favour of Herbert Smith. Lovells advised Tube Lines, the consortium responsible for the maintenance and upgrade of the Jubilee Line, the Piccadilly Line and the Northern Line. For its three and a half years of work, the firm scooped 13.6m in fees, while Norton Rose collected 7.8m for its work advising Tube Lines’ banks and funders. CMS Cameron McKenna, meanwhile, notched up 14m in fees for the two Metronet contracts, with Ashurst collecting 6.2m as adviser to the banks and funders.
In their defence, none of the firms advising on the deals achieved 100 per cent returns on their fees. For example, Metronet called a meeting with its advisers in December 2002, after which the lawyers involved agreed to take a bath on fees until the deal closed in April 2003.
One lawyer commented: “We didn’t charge a premium for our work. We didn’t see it as an opportunity to milk the cash cow.”
However, despite the controversy, PPP remains a growing industry in its own right and PPP lawyers are more active than ever in the roads, hospitals and schools sectors.
Whereas PPP/PFI lawyers did not even exist 10 years ago, today most major firms have dedicated practices and PPP is a major export for UK firms.
London’s Lord Mayor Michael Savoury has taken to jetting around the world to promote the PPP model, with Malta becoming the latest jurisdiction to unveil a PPP initiative, based on the UK model. And again, it is UK lawyers who are reaping the leading roles – Field Fisher Waterhouse, for example, has scored the lead role for the Maltese Ministry of Finance.
It may be unpopular, but whether in the UK or globally, PPP is here to stay. TMT