Getting the RFP Process Right
It used to be that companies selected outside counsel based on things like relationships, reputation, and tickets to sporting events/fancy dinners. Those days are fading fast. More and more the selection of outside counsel is based on the same principles and processes the company uses generally to select any vendor.
This includes the use of RFPs (Requests for Proposals) to search out and find the best firm for the problem at hand. If you do it right, the RFP process can deliver tremendous value to the legal department and the company. Here are some tips on how to run a legal services RFP process the right way:
1. What is an RFP? An RFP is a process whereby an in-house legal department requests a number of outside law firms to submit proposals to obtain legal work from the company. The proposals are in writing, usually following/completing a template sent by the in-house team. Legal departments send out RFPs for three different types of situations:
- Panel counsel – the in-house department is looking to create a panel of preferred law firms that can handle most, if not all, of the company’s outside legal work (including for specific types of matters or in specific geographies). The RFP process here is generally longer and more involved post-selection because there is likely no particularly urgent matter involved and, once selected, panel counsel will be on the panel for several years and deeply integrated with the in-house team.
- Specific project – an RFP for just one matter, e.g., a piece of litigation, a merger, or other project. They may go only to firms on their existing panel or that they’ve used before, or they might open it up to new firms. This process tends to move faster, especially if the matter is urgent.
- Specialty area – in-house counsel is looking for a firm to handle certain types of matters, ones that may require the law firm to have a special industry or regulatory knowledge – knowledge that isn’t commonly found at most firms. Examples include tax law, competition law, and ERISA.
2. What does it look like? Your RFP paperwork can take on a number of different forms. The most typical is a Word document or Excel spreadsheet. Some in-house departments are using portals that counsel can sign into or special software that not only formats the RFP document but collates the responses into a report for comparison that can save a lot of time if there are more than a few firms involved. Whether such software makes sense depends on how often, big, and detailed your RFP process is.
3. Who to invite. This can be one of the more difficult tasks in the RFP process. If, for example, you’re just looking to reduce the number of firms you already use – but not looking to add new ones – then you send it to all your current firms. If you’re looking for a panel they might include new firms, then you need to identify other firms. If it’s a specific matter or area of expertise, you may need to identify only a few firms with those capabilities. The important part is to ensure you have enough firms involved to make the process work, i.e., generate quality proposals that give you value and a real choice in firms.
4. Questions to include. The heart of any RFP is the questions that you ask outside counsel to respond to. The first challenge is to limit the number of questions so you are not overwhelmed with information. The second is to prepare questions that get useful information vs. generic marketing blabber. There are four core questions you need to ask:
- Experience of the team. You want to know the experience of the team that will actually be working on your matters. Ask for a two paragraph summary of why they are right for the team and what they bring to the table.
- Legal strategy. You want to know their legal strategy for handling your matter or matters. The important thing is to ask specific questions that require detailed, lawyer-prepared answers such as questions about the team’s record with the judge or success before the regulatory body questioning your deal.
- Staffing strategy. This matters more in billable-hour situations. In addition to experience, you want to know why the people on the team were selected and what they will be doing, what happens if more people are needed, and will the firm be using contract lawyers or alternative service providers to perform any part of the work. In short, are you getting the “A-Team” for your matter?
- Project management strategy. You want to know how they manage legal projects, how often do they provide updates, status and strategy calls, how are lawyers brought on or off, how do they track important dates, how do they manage documents and depositions, and a dozen other things that come with any legal project. Ask for specific examples of what they do and reports they prepare.
5. Customer service. How the law firm will treat you and your team is a very important part of establishing and maintaining a relationship between in-house and outside counsel. The RFP process is a great way to get to lay the groundwork for that:
- Who will be the relationship manager? This is the person you will deal with most often, especially if there are problems or concerns. What is their background, how comfortable are you with them and their “bedside” manner?
- What technology will you use to reduce my costs/do my work more efficiently? Ask them to detail how they use technology on your behalf, what technology they use, and for samples or examples of how they use it.
- What is your data security program? How will they keep your data safe and confidential? Do they comply with any particular data security standards, are they certified or have they been audited?
- How will you learn my business? Any law firm that wants to develop a real long-term relationship will offer free hours to get up to speed on your business, the industry, and the specific matter.
- How will you handle conflicts? This is often a problem for the bigger firms who may represent a large number of clients some of whom may be in the same industry, an adjacent industry where that client may or may not like your company, or an arch-competitor. Find out now if you’re a top dog or if you’ll be fired.
- The RFP process is the perfect time to ask for (or demand) positions around diversity at the firm and on your matter(s).
- What do I get for free? If you make the cut, what can the firm offer us to sweeten the pot? This can take on many forms with the most common being:
- Free hours every month to use for phone call/short general advice issues.
- Free CLEs and training for the department.
- Access to firm resources (online library, forms, Lexis/Westlaw/Practical Law, checklists, templates, AI, etc.)
- Industry/Developments presentations to the business or the department
6. Price. And here is the Golden Fleece of the RFP process – price. In the end, this is really what it’s all about, i.e., how can I get high-quality services at the lowest price?
- Fixed price. This is typically nirvana for in-house counsel because you get certainty around cost. To make this work you should expect to provide a lot of information to the bidding firms so they can correctly price the project.
- Blended rates. These sound great in theory, but be careful that you understand how the project will be staffed and how much work will be pushed down to lower cost attorneys who may not have the experience to do a good job (or do it efficiently).
- Discounted rates. Another thing you have to watch closely. You want discounts from the regular rates of the people working on your matter and not some firm average or rack rates that no one pays. The RFP will give you a lot of insight into who has the flexibility to do the work at the best price.
7. Legal procurement. If there was ever a time to get professionals involved, the RFP process is it. Not only can they handle the mundane chores around creating the RFP and collating the responses, but they will also have data and the experience to use in the negotiations. And the good news is that the legal department will have the final say in who gets hired, only the decision will be made with the help of real data points and on the best value.
8. Timing. Many in-house lawyers vastly underestimate the amount of time it would take to complete the process. There are two forces at play here. The first is to ensure you give the law firms sufficient time to complete the RFP. The second is leaving yourself enough time to evaluate the RFP responses, down-select to the firms you are most interested in, conduct interviews, and then make your selection(s). Unless there is an emergency/urgency (see below), you should plan on giving the law firms at least three to four weeks to complete their responses. When faced with the shorter turnaround time, you have three choices a) ask only firms you have used in the past to participate, b) streamline your questions to the bone and just ask the firms you are interested in to power through your timing, or c) just use who you always use and try to strike the best deal you think you can make with them.
9. Picking the winner. Assuming you have the time, the ideal process flows like this:
- Gather the responses and compile the information into a format that allows you to compare the firms in a head-to-head manner.
- Set up one-hour interviews with the firms you are most interested in, likely no more than three. Doing the interviews in person is by far the best method. Video a distant second. And by phone bringing up the rear – more of a last resort. Be sure that the review team is part of every interview so everyone involved in making the decision sees each firm.
- Make the decision, usually at a meeting of the internal team where you have asked everyone to rank their favorites and why.
- Document your deal like you would any contract.
- Do the right thing and contact each firm you did not select, either by a phone call or in an email offering a phone call. The reason for this is they will want to know why they were not selected. Provide that information, as your feedback is important to them.
10. Resources. If you are interested in learning more about the legal RFP process, we recommend the following:
- The Buying Legal Council’s Legal Procurement Handbook.
- The Corporate Legal Operations Consortium’s Model RFP (Panel Counsel).
- Practical Law – Request for Proposal (RFP) for Legal Services Template (subscription required).
- The American Lawyer – The RFP Process is Broken. Here’s How it Might Get Fixed.
- RFP Advisory Board – RFPs: Best Practices and Obstacles to Avoid (YouTube video)
- You and your team – ask your network of in-house lawyers if they have advice, forms/templates, and ideas for running an RFP process.
All in-house legal departments, wherever located, should consider developing a repeatable RFP process and use it as often as possible for selecting outside counsel (panel, specialty, or by matter). You’ll most certainly get better pricing and services if done correctly.
If you have questions about this blog or need assistance with a litigation matter, please reach out to [email protected]