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For comparable lawyers, fluctuations of billing rates across different cities?

Do some law firms charge different rates in different cities for partners who have the same levels of experience? I have heard that some law firms have offered to implement a cap on the rates of their higher-end partners (See my post of Dec. 31, 2006: cost of living and partner rates.). More appropriately for this blog, what would the repercussions be if a general counsel decreed that the law department would not pay more than the median billing rate of any group of similar partners?

A policy such as this might incur higher travel costs, assuming distant partners with lower rates chip in, but that is a small price to pay (See my post of Sept. 21, 2005: law departments can internally arbitrage compensation differentials; and June 15, 2006: the use of associates from lower-cost cities.). To start this technique, ask for the rates of comparable lawyers in different locations.