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GC’s succumb to expensive, name firms to protect themselves from potential criticism

A recent article by two partners in a small litigation firm, published in Met. Corp. Counsel, Vol. 16, July 2008 at 39, starts with a provocative claim. The authors believe there are “two very simple reasons why litigation costs have spiraled out of control.” First, law firm attorneys are motivated to overwork the case because doing so generates more fees and thus compensation.”

This post addresses the second reason: “corporate counsel often hire expensive, big name law firms for the political ‘cover’ it provides them in the event the ultimate disposition of the litigation is unsatisfactory.” Many people allege that self-protection wins out over prudent spending (See my post of Sept. 10, 2005: the “Buy-IBM effect; Aug. 16, 2006: cynics mention self-protection as a reason to hire firms; Dec. 28, 2006: second opinions from outside; May 4, 2007: firms not hired due to their “prestige”; May 23, 2007: firm name must impress CEO and Board for it to provide CYA protection; and June 30, 2007: one of 13 obstacles to cost control is the “insurance policy” of the name firm.).

The slur surfaces all the time, but how can anyone ever prove it or disprove it unless a large number of general counsel were preternaturally candid?