PFI fees plunge

by Carol Millett



Contractors involved in private finance initiative schemes could halve their legal fees by using niche law firms or regional practices, a leading PFI lawyer claimed last week.

Mark Johnson of solicitor Devonshires said the days of large London law firms charging £300 an hour for PFI work are numbered as smaller firms enter the market.

"Large City firms cornered the market in the early days of PFI since they had the resources to reinvent the wheel on every deal and because there was a PFI skills shortage. As a result they could charge huge fees. However, regional firms have caught up, as have a number of smaller City firms. At the same time PFI has moved on and a lot of deals are now being done on accepted templates and standard documentation.

"These kind of deals just don't stand the level of fees being charged by the big firms when the regional and niche firms can do the same for £100 to £150 an hour," said Johnson.

But Tim Steadman of City law firm Clifford Chance warned that using less experienced firms could prove to be a false economy in the long-term.

Contractors take a similarly cautious view. Amey chief executive Brian Staples said regional firms were effective on smaller PFI projects but that major projects called for large experienced firms. Staples said: "We want the best and we are prepared to pay. That doesn't stress us a lot. You have to run with a high success ratio. Ours is one win to every two we bid for, so we like to work with people with a good track record."

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