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A plausible goal: 80 percent of all work to the selected panel of firms?

At a recent presentation, a senior lawyer in a huge financial services company described how his department had selected its dozen or so preferred counsel. Starting with an RFP sent to about 35 law firms, the department lopped off contenders in two subsequent stages to reach its current panel of preferred firms.

Importantly, the department now tracks what percentage of its external fees goes to those preferred firms. The goal was 80 percent, but it turned out that the department reached closer to 90 percent in the most recent year. The number, in my view, is unlikely to climb higher because there are specialized circumstances where the general counsel might want to bring in a law firm that is not on the approved counsel list. The reasons to stray from the preferred fold include conflicts of interest, specialized talent, massive capability, departures of key partners, new in-house capability, or pressure from a Board member or senior executive.