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The double-entendre of competitive bids for fixed fees

Many law firms who compete against incumbent firms for work presume that the fix is in (But see my post of Feb. 15, 2006 on two European firms that changed panel firms.). Those in the saddle will likely keep riding, while newcomers eat dust (See my post of May 19, 2006 on Nestlé’s competitive review; and Jan. 27, 2006 about how the endowment effect may help incumbent firms.).

It is natural that familiarity breeds content[ment] but all is far from lost for the pretenders to the throne. The law departments I have consulted to and the competitive bid processes I am aware of have been quite consistently open-minded about new firms. Else, why would the department subject itself to the labor and upset of the contest? The choices are not largely predetermined, wired.

Outside counsel managers also know that they can re-assign cases to new firms without undue inefficiencies (See my post of July 21, 2006 disputing the putative losses from transition to a new firm.).