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“You Had Me At Hello” or “Let Them Go?”: Law Firm Selection, Retention, and Defection in the Investment Banking Industry | Author: Karl D. Shehu

“You Had Me At Hello” or “Let Them Go?”: Law Firm Selection, Retention, and Defection in the Investment Banking Industry | Author: Karl D. Shehu

Drawing upon the theoretical concepts of reputation and social networking, this article’s main objective is to assess how investment banks choose external law firms. Using qualitative methods, I show that investment banks, to varying degrees, rely on internal counsel, procurement specialists, and boards of directors to decide which firm to select. When choosing a specific law firm for the first time, corporate decision-makers are likely to evaluate law firms based on intangible factors like reputation and the word-of-mouth referrals of their colleagues. In subsequent selections of a law firm, these factors are transplanted by past results. Firm expertise and cost considerations impact procurement decisions regardless of whether a law firm has been previously retained. Despite claiming that the individual lawyers providing the service is a more important selection criterion than the firm that employs those lawyers, investment banks seem to experience a degree of embeddedness that keeps them using the same firms time after time.

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