Published on:

Law firms that are not preferred, hired one-off, should not get away scot free on terms

When a legal department chooses a group of primary law firms and those firms offer deep-dish discounts, what happens if later on the department chooses a firm other than one of them to handle a major matter? Will that firm be yoked to the same discount schedule?

If not, if clients violate the notion of an implicit tradeoff of rate advantages for volume, being a primary firm becomes a lot less attractive, and cost savings ooze away.

Certainly, unusual situations justify a general counsel crossing up the preferred counsel on the panel and selecting a specialist firm. Or external pressures on the general counsel, such as an investment bank or a powerful director, at times outweigh the intention to stick with the handful of firms that conceded special rates and terms.

But those panel firms deserve fair treatment. So, if a law department roams, it should strive to retain and manage the affair on terms that are comparable to the terms applicable to its stable.