The HR specialist in the law department drafts and negotiates a complex severance agreement, which later turns ugly. Should that lawyer also handle the dispute and possible lawsuit? The environmental lawyer in-house handles the reps and warranties regarding several sites that are being sold. Should that lawyer handle the lawsuit that arises over remediation costs? The same issue arises with a law firm that handled documentation that later gives rise to a dispute.
One reason the Chief Legal Officer retains outside counsel for litigation is to separate the advising role from the disputing role, for what lawyer would remain objective when defending his or her own advice? At the same time, the lawyer most familiar with the underlying legal service would know the most about the facts and law, albeit not litigation tactics and procedures.
The best solution is probably a team: the inside lawyer familiar with the transaction combining with a litigator, as often happens in patent litigation.