It should be irrefragable that business executives do not retain outside counsel on their own. With rare exceptions, such as the CEO once in a long while or a Board committee, the legal department should be the sole arbiter of when to go outside and to which firm as well as on what basis. If the Board and senior executives hold the general counsel accountable for all legal decisions of the company, no one but the lawyers should independently make representation decisions.
A corollary however deserves recognition. Even if the law department has retained a law firm, lawyers at that firm should not communicate directly to any non-lawyers at the client company unless an in-house lawyer is present or has given explicit permission. The law department remains accountable for all legal advice given its client so it must know what is being counseled.