In their efforts to reduce what they spend on outside counsel, many law departments have asked the law firms they rely on significantly to give them a special privilege – the best hourly rates that the firm has agreed to for any other client. Like agreements between nations to lower tariffs to the lowest rates applied to the best trading partner, these so-called ‘most-favoured nation’ (MFN) requests may seem innocuous – but they are not.
Not that MFN requests are everyday occurrences. Mostly, only large and prestigious companies’ law departments feel they deserve the best treatment. Even then, when they press for that advantage it is mostly with law firms where they spend a lot and over who they have some leverage. But an MFN demand seems like an easy cost-saver and it is simple to explain, so we are likely to see more such requests by law departments in the coming years.
