Magic circle firm Slaughter and May was accused of running up an ‘astronomical bill’ to the Treasury by a Liberal Democrat peer today.

The firm received £22m in legal fees for work relating to ‘financial stability’ in the financial year 2008-09, according to Liberal Democrat research.

The party’s Treasury spokesman Lord Oakeshott said: ‘This payment is simply mindblowing. It comes to £175,000 for every single equity partner of the law firm. ‘How can the Treasury defend allowing the firm to run up such an astronomical bill, the equivalent to 22,000 billable hours of partners’ time at £1,000 an hour?

‘Even if the financial crisis meant that there was no time to shop around at the start for the best legal deal, the Treasury should then have driven a much harder bargain, not left them like a fleet of taxis in Whitehall with their meters running for months on end.’

Slaughter and May’s practice partner Paul Olney told the Gazette: ‘We acknowledge it is a significant sum of money, but this covers work over a long period of time covering a range of projects including Northern Rock, bank bailouts and the collapse of Icelandic banks. In the context of the scale, novelty and difficulty of the work involved, and the period of time it covered, we do not consider the fees to be unreasonable. Indeed, we believe our competitors would have charged much more.’

A Treasury spokesman said much of the legal costs would be charged back to the banks concerned. He said a competitive process had been undertaken but that choice of law firm had been restricted by conflicts of interest, with many firms acting for major banks.