Conflicts, capacity, chemistry and competency all narrow what seems to be a range of desirable law firms
When an in-house lawyer needs to retain a law firm, the simplifying assumption outsiders make is that many firms of equivalent ability are available to vie for the privilege. Something close to a perfect market exists: many willing buyers transact with many willing sellers and economists are charmed.
Down on earth, however, in-house managers of external counsel often end up feeling hemmed in, without much choice or room to maneuver regarding external counsel.
Conflicts of interest knock some of the potential firms out of the running (See my posts of July 16, 2007: 19 references collected to that date; Nov. 7, 2007: competitive bids and conflicts; Nov. 22, 2007: conflict waivers given in advance; Nov. 27, 2007: when law firms fire clients; Dec. 17, 2007: clients are becoming more hard-nosed; Feb. 17, 2008: a team of academics at a firm; and Feb. 17, 2008: ill-effects of partners changing firms.)
But conflict-free firms may not be able to take on more work effectively because of capacity constraints (See my post of May 16, 2007: infinite capacity assumption not borne out.).
But but beyond conflicts and capacity, firms must clear the hurdle of chemistry (See my post of April 4, 2008: quarrels with “chemistry.”). The in-house team has to cotton to them.
But but but the law department lawyers need to be convinced of the technical skills and experience of the firm (and possibly its location).
Once each of these grounds culls out some of the erstwhile eligible firms (See my post of Feb. 10, 2007: capacity and conflicts in the context of industry specialization.), the range of eligible and desirable firms may shrink to few or create unsatisfying tradeoffs (See my post of Feb. 12, 2006: in many countries not a buyer’s market.).