Zurich is set to slash the number of law firms it uses by half.

Following a three-month review, Zurich's new claims director, Bill Paton, said that from 1 January 2004 the company would cut the number of solicitors it used from 28 to 14 in England and

from five to two in Scotland, while retaining all three law firms used in Northern Ireland.

He explained that the purpose of the review was to consolidate the legal panels serving separate business areas, such as Zurich London, Zurich Commercial, Zurich Municipal and the company's Retail Financial Services business, into one panel for the entire business.

Paton said: "Managing 28 different solicitors is simply too difficult." He said the reduction in numbers would help create a "club-type feel".

He was unable to confirm the names of those firms shortlisted for the board or those which had been unsuccessful, as some negotiations were ongoing.

Paton said the review was prompted by the difficulty of liasing with such a large number of firms. "Cost was not the main reason for this decision."

He stressed that he hoped to maintain good relationships with those leaving the legal board: "We don't ever want to close the door to firms."

Work will continue with the unsuccessful firms while any unresolved claims are dealt with. Some cases could take months or years to complete.