The struggle to wrest from clients their felt prerogative to choose outside counsel

A general counsel who does not control virtually all decisions on which law firm to retain falls short – to the degree that right is absent – from being a fully empowered general counsel (See my post of Sept. 13, 2005 on Carey’s Board.). In the United States that power of retention is usually not questioned.

It is questioned, however, are in companies where clients of the law department perceive that law firms help them generate business or succeed at business. The most notorious examples include investment bankers, commercial bankers and real estate brokers. Each believes that law firms refer them business or make a difference in the completion of deals. These clients jealously guard their prerogative to send work to those law firms they perceive as reciprocal beneficiaries.

In my consulting projects, I have never been able to quantify the actual value of referral work, but the opinions of clients are wide spread and fiercely defended: “Our bottom line depends in part on the law firms we use and reward with work.”

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