Law Firm Selection and the Value of Transactional Lawyering

Journal of Corporation Law, Forthcoming

Duke Law School Public Law & Legal Theory Series No. 2015-39

44 Pages Posted: 12 Aug 2015

Date Written: August 11, 2015


Following the contraction in demand for law firms’ services during the Great Recession, “Big Law” was widely diagnosed as suffering from several maladies that would spell its ultimate demise, including excessive fees, excessive size, increased competition from in-house counsel, the commoditization of legal work, and the decline in demand for “relationship firms.” While each of these market pressures is only too real for certain segments of the law-firm population, their threat to the most elite U.S. law firms has been largely misunderstood. Even as many firms reduce their fees and contract in size, we should expect certain firms to continue to charge more and grow bigger. The current prescriptions for fixing Big Law fail to recognize that the top-tier firms within the group serve a unique market function.

Focusing on a particular type of legal work – major corporate transactions – this Article proposes a novel theory of the value created by elite law firms: their private information about “market” deal terms, acquired through repeated exposure to the same types of transactions, provides clients with a significant bargaining advantage in deal negotiations. By aggregating expertise in the ever-changing and ever-increasing set of deal terms for certain transactions, law firms help their clients price such terms more accurately and thereby maximize their surplus from the deal. This pricing function – traditionally thought to be limited to investment banks – is one that cannot be replicated or subsumed by in-house counsel, other service providers, or commoditized contracts.

Keywords: law firm, agency cost, market, information, transaction, contract

JEL Classification: C78, D82, G34, K12, K22, L14

Suggested Citation

de Fontenay, Elisabeth, Law Firm Selection and the Value of Transactional Lawyering (August 11, 2015). Journal of Corporation Law, Forthcoming, Duke Law School Public Law & Legal Theory Series No. 2015-39, Available at SSRN: or

Elisabeth De Fontenay (Contact Author)

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States

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