A letter of recommendation is a valuable job-searching tool. (Also called a letter of reference.) For example, it's no secret that employers often use the cover of legit layoffs to get rid of undesirable employees. If you get laid off, it might raise the eyebrows of an interviewer or two. Was it because you were among the ranks of the undesirable or simply because your job was eliminated? A letter of recommendation that praises your performance and explains why termination wasn't your fault might come in handy.
An employer might accept a letter of recommendation in place of grilling one or more of your references. That has several advantages. For one, it lets your references off the hot seat. The more often your references have to sit in the hot seat, the less willing they might be. For another, a letter of recommendation might speed up your hiring process. It takes more time to grill your one of references by phone or mail than it does to read your letter of recommendation. It also eliminates the risk that your reference will be unreachable, or might do a poor job because he or she was busy or having a rotten day. All it takes is one unreachable or poor reference to turn the tide against you, while only one stellar letter of recommendation might be enough to satisfy your potential employer. The biggest advantage of a letter of recommendation is that you'll already know exactly what your reference has to say about you.
A letter of recommendation might even impress and comfort a potential employer. Some employers justifiably fear involvement in lawsuits resulting from poor references. Consequently, they typically document what your references say. If you have a letter of recommendation, you've already documented for them while reducing their liability.