What would your reaction be if the company you applied to asked for you to get permission from your current firm before moving forward? The situation is the company you're applying to is a client of your current firm, and you've already gone through the interview process with the new company. Thoughts?

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That sounds *extremely* suspect the way you describe it. Specifically it sounds a lot like collusion designed to lower wages by reducing employee mobility. Depending on the details that could be illegal federally or at the state level.

If you have to drop out of the process because you don't want to tell your current employer yet (or if they deny permission), I'd suggest calling up an employment lawyer in your state to see what they have to say about the matter. Get everything you can in writing!

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It might be due to contractual obligations.
I have seen this before, the client company might have a standing agreement with your current employer to disclose this type of information.
It can be awkward but it’s not unusual, especially when they don’t want to ruin business relations.
I’d only agree to this kind of disclosure if they already presented an offer though, not before.

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Contractual agreements like this are often illegal, e.g. in California.

Hard no. If they don’t choose you it could create a toxic environment. Even the fact they don’t understand that is a red flag. Even if they promised to ask without giving your name, it would be a hard no. To many ways it could come back to you.

smart

Absolutely not. Hard no.

I've been in that scenario before. I applied at a consulting company that had a contract with my employer. I told the consulting company up front. After talking with legal they asked my companies staffing contact if a person from a specific team would be allowed to join them as long as they didn't work on any contracts that posed a conflict of interest.

I ended up getting an offer and everything was fine. My name was never spoken until I accepted.

Did you sign anything with your current employer that said you had to do that if you were offered a role at a client’s organization? Do the company and client have some kind of agreement in place? That’s what my next thoughts are.

If there’s an offer on the table then ok. If it’s just to interview I have to say no.

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