In 2000 David Maister, Charles Green and Robert Galford published The Trusted Advisor. The book teaches consultants and other professional advisers how to earn a client’s trust. It promises that “once you become a trusted advisor, your client will openly discuss both personal and professional issues with you.”
Green’s trust equation adds credibility, reliability and intimacy, and divides the sum by self-orientation.
Section 203 of the Sarbanes-Oxley Act limits how long the lead audit partner may stay with one client. Under the SEC rules that apply it, an accounting firm is not independent if its lead audit partner or concurring partner has performed audit services for the same client “for more than five consecutive fiscal years.”
The partner must then take a five-year “time-out” before returning to the same client.
As a general rule, federal law requires agencies to buy through “full and open competition.” The Competition in Contracting Act of 1984 made this the rule for government contracts, with some exceptions.
A standard clause in federal contracts also allows the government to end the work whenever the contracting officer decides it is in the government’s interest. “The Government may terminate performance of work under this contract in whole or, from time to time, in part” if the contracting officer “determines that a termination is in the Government’s interest.” The clause rests on the government’s interest alone. It does not require any fault by the contractor.
On June 5, 2019, the Securities and Exchange Commission adopted Regulation Best Interest. Under it, a broker-dealer that is not also registered as an investment adviser is presumed to violate the rule’s disclosure obligation if it uses the word “adviser” or “advisor” in its name or title.
Firms had to comply by June 30, 2020. Brokers and investment advisers must also give retail clients a short form that explains which relationship they are entering.
American service contracts commonly include a clause on the relationship of the parties. A university contracts manual gives typical wording: “Nothing herein shall be construed to create any partnership, joint venture, employment, or agency relationship.”
The same clause also says: “It is mutually understood and agreed that an independent contractor relationship is hereby established.”
In May 1992 José Ignacio López took over purchasing at General Motors. He reopened long-standing supplier contracts and demanded sharp price concessions. Automotive News later wrote that he “turned the supply industry topsy-turvy by shredding contracts, demanding price cut after price cut.”
In 1993 López left GM for Volkswagen. The Christian Science Monitor reported that some of GM’s new low-cost suppliers could not deliver the quality or volume they had promised.
In the fourth season of Mad Men, in the episode “Hands and Knees” (2010), Lee Garner Jr. of Lucky Strike tells Roger Sterling that the company plans to end its contract with the agency, after a 30-year history together.
In the next episode, “Chinese Wall,” word leaks that Lucky Strike has gone to the rival agency BBDO. Roger tells the partners it was part of American Tobacco’s “cost-saving consolidation of accounts.” The loss puts the financial security of the whole firm at risk.
In April 2018 Procter & Gamble reported that it had cut the number of agencies it works with “from 6,000 to 2,500 partners.” Marc Pritchard said the number “could decrease by another 50%.”
The cuts had saved “$750m over the past three years” in agency fees and production costs. Pritchard called the new model “a joint value creation opportunity.”
In 1971 Barry Manilow wrote the jingle “Like a Good Neighbor, State Farm” for the insurance company. He was paid $500. Manilow later called it “my greatest hit.”
On May 27, 2023, State Farm stopped accepting new applications for home insurance in California. It named construction costs, “rapidly growing catastrophe exposure” and reinsurance costs. In March 2024 it announced that it would not renew 72,000 property policies in the state.