Increasing a Fixed Fee Cap in Law Firm Engagement Letters

James Wilson, Senior Counsel, European Bank for Reconstruction and Development, UK

I work as an in-house lawyer for the European Bank for Reconstruction and Development (“EBRD”). As a public institution, EBRD is subject to strict procurement rules whenever it engages contractors. In general terms, at least one law firm will be engaged by EBRD for each project which it enters into and, given that EBRD finances hundreds of projects every year, the law firm engagement is a key part of each project cycle: there is standard documentation which must be used (from which no serious deviations are permitted) and there are very developed and structured legal selection and procurement procedures to be followed internally before EBRD enters into (or amends) any law firm engagement. It is an internal rule for EBRD in-house lawyers that they can agree directly a selection of outside counsel with a fixed cap without embarking on a full competitive selection procedure if the overall contracted legal cost is likely to be less than a certain amount; if the legal cost is likely to exceed that sum then the basic assumption is that a competitive selection process must be run by which the EBRD team selects one from not less than four competing law firms based on their technical and financial proposals. For all EBRD law firm engagements, a fee cap is generally mandatory.