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“It’s more disruptive to replace a firm than to live with poor service” (InsideCounsel)

Rob Vosper, Executive Editor of InsideCounsel, writes in the July 2006 issue, at page 10, that in-house counsel pay law firms’ bills, but the “firms run the show.” As incredibly, he then asserts that “firms know that most in-house lawyers believe it’s more disruptive to replace a firm than to live with poor service.”

Rob, with all due respect, I disagree completely, for three reasons: law firm unease over client loyalty, law department’s axes, and overstated transitional costs.

Law firm partners worry about their hold on clients and do not take for granted that the manna will fall forever. With convergence, turnover of general counsel, cost control mandates, conflicts of interest, virulent marketing by competitors, in-house evaluation systems, and changes in clients’ businesses, uneasy lie the heads.

That law departments cut law firms off is undeniable, if only by not giving new matters to firms that fall behind. The institutional hold of firms is thin soil on a windy hill: always at risk of being blown away.

And, finally, familiarity does root incumbent firms but they can and are deracinated when their service drops to poor, since another firm will gladly implant itself and even absorb some ramp up costs (See my post of Aug. 14, 2005 on litigation transaction costs.). It seems to me, in fact, that in specialty areas of law the hold is least secure.