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“Most favored nation” (MFN) rates from law firms – quixotic quicksand

Law departments, especially those with big budgets and brand names, like to thump their chests and demand from their firms the best rates the firms give. Setting aside my mistrust for rates-based billing (See my posts of May 4 and August 24, 2005 savaging discounts on hourly rates and Sept. 5, 2005 on Citicorp’s GC and discounts.), this is a delusional quest.

A law firm can distinguish any client from any other client, and honestly (though disingenuously) swear that “your company gets the best rates of all our clients like you.” And, how can a law department find out what a competitor is being billed by the firm, in part because matters differ so much in staffing, complexity, prior familiarity, write offs, billing policies, availability of law firm resources, urgency, partner personality, firm compensation systems, and a host of other dimensions.

You can be sucked into the quicksand of focusing on rates, and tilting at the mirage of MFN rates, but Sancho Reeso says that effort is only for crazy squires.