Understanding what RFPs are for legal services
A Request for Proposal (RFP) is a formal document that organizations, whether public or private, use to solicit proposals from service providers. When it comes to the procurement of legal services, an RFP is an organized, comprehensive and objective tool that helps an organization to evaluate multiple law firms and proposals in one fell swoop. It offers a platform through which prospective bidders can convey their value add and help companies select the best possible firm.
Through an RFP, you’ll get detailed responses from all of the bidders. This will not only equip you with substantial information about all the bidders to make an informed decision, but will also offer insight into pricing structures and the general market.
The inclusion of timelines and deadlines usually means that an RFP is not only a formal document, but one with real urgency as well . This need for speed can create a level of tension, but also increases motivation to develop a thorough response.
RFPs can be useful in multiple circumstances, such as:
- When you’re planning a significant merger or acquisition
- When your company has a special project in the pipeline
- If you need a new real estate transaction attorney
- If you need a commercial litigation partner
At the heart of an RFP is information, which is what you need to make the best decision. The goal is to create a logical, sound and streamlined process that makes it easier to evaluate participants against one another. It can seem like a daunting task to develop an RFP, and it can be easy to lose sight of the goals behind it. Accordingly, it’s best to keep in mind the value of the process as you consider what to include.
The building blocks of a successful legal services RFP
Every RFP for legal services should contain key elements that ensure both the organization issuing the RFP and the law firms responding, have the information needed to evaluate proposals fairly and thoroughly.
First is the scope of work. At the most basic level, it should define the type of services required. For example, is the work litigation, corporate, taxes or estate planning? Does the work require specialists? For example, is a large portion or significant amount of the work patent based requiring a specific type of technical expertise such as physics, engineering or biology? Is there any other specific knowledge or skill that is needed to complete the project successfully? Many times there are specialties or types of knowledge that are critical to the success of a project or project drivers that, if not identified by an organization, lead to lots of rework or challenge to the results. This is even more important when you have multiple law firms working as part of an integrated or coordinated team.
Many RFPs simply say we need a patent attorney or litigation attorney. But that does not allow enough latitude in choosing the best teams for the project. The goals and the objectives should be foundational to the scope. Often, organizations say a position or a project needs to be done, but do not say why it has to be done. Said another way, they do not explain what will happen if the work is not done.
Sometimes there is compelling reason why you must have a corporate lawyer. But sometimes the compelling reason is not so obvious. In that case, a provider of legal services may be better off if they know the reason for the work. There is little excuse for not being able to articulate the goals and the objectives of the project or the needs for the legal counsel. Lawyers can help with that.
The next element of the RFP is the evaluation criteria or an explanation of how the RFP will be evaluated including the criteria that will be used to determine which law firms will be selected. Sounds obvious? It is amazing how many RFPs for legal services fail to set out the evaluation criteria. This is one of the most critical areas. If the evaluation criteria are inaccurate, incomplete, or poorly written you will have your hands full answering questions from the law firms seeking clarification. Equally important, if the evaluation criteria are well written and thought out it helps focus on the project drivers.
All RFPs for legal services should have submission requirements. This is the combination of what do you want, i.e., scope, and how should it be provided to you? If you have a template law firm response to an RFP that you want all firms to use, now is the time to provide it. Having a template response will help ensure uniformity in the response to your RFP. Having uniformity in responses facilitates getting to the best law firm for the task at hand. Maintaining uniformity in all responses is a critical element to making the best possible selection.
At this point, you should be thinking is this a lot of work? Well, yes, it is a lot of work. But it is well worth the investment. What you are really doing is trying to avoid more work in the future.
How to create an effective legal services RFP
Defining Your Requirements
Describe the categories of services required, and if applicable, provide general utilization estimates. Specify types of legal issues by practice group (e.g., real estate, employment, environment). Indicate meaningfully the percentage of issues you expect to resolve without outside counsel involvement and the nature of the issues to be resolved, for example:
· Average deal size
· Average matter size
· Typical billable hours spent
· Average retention length per matter
· Experiences with complex matters
· Describe monetization of legal work (billable hours).
· General business scope (1 percent to 100 percent).
Come up with some kind of ranking system that allows you to assign a different weight to different factors so you can collate the information into a comparative scorecard. Ask for a number of references.
Formatting the RFP
Encourage clarity by keeping the document brief—no more than 10 pages—because you want the firms to include their most relevant experience. Give your prospective vendors guidance on the RFP format. For example, "proposals should be inserted in section form by answering the following questions…"
Issuing the RFP
Follow a consistent process for managing the RFP. Have a communications plan to guide how you solicit questions from firms and provide answers to all the firms 24 hours later. Let the firms decide how they want to respond—by email, hard copy, fax, etc. Includes instructions on how firms should prepare their proposals on a CD or USB drive. Specify your general scoring criteria. Make available other relevant documents, such as deal precedent, certificates of insurance, and privacy and compliance policies.
Evaluating the Proposals
Include criteria from the RFP in the scoring system. Some sample proposal evaluation criteria include:
· Firm profile
· Practice group structure
· Proposed scope of services
· Pricing and discounts
· Personnel to provide services
· Special services
· Hiring and training
· Financial statements
· Other information (such as ownership of firm).
Common Mistakes
The most basic mistake is not making your RFP user-friendly and accessible and not encouraging bidders to ask questions. Vendors will thank you for this courtesy by giving you great proposals.
How to evaluate your legal services RFP responses
The first step in evaluating the responses received is to conduct an initial qualification review of each of the proposals. This process can be greatly assisted by issuing a checklist of items that have to be part of any complete response to the request for proposals. The first cut screening of proposals will rely upon the checklist, with more than one chance taken to make sure that all items on the checklist are satisfactorily included in the submission.
If a large number of proposals pass through the first cut screening with satisfactory qualifications, a second level of analysis may be required. If only a small number of proposals are accepted in the first screening, there is no need to go to a second level of analysis.
The second level of analysis involves a more detailed examination of the qualifications of the legal services provider. Depending upon the nature of the RFP, this may be accomplished through the current use of a rating system for determining the relative merit of the proposals. For example, the rating system might assign 5 points for identified experience in the type of legal service that is the subject of the RFP, an additional 5 points for a demonstrated ability to deliver legal services in an efficient manner , and additional points for lower cost.
In the example, 1 point might be deducted because the qualifications information was dated more than a year prior to submission of the response. Another point might be deducted if there were disclosable deficiencies in the prior performance of the law firm under its legal services retainer agreement.
The point system provides the ability to easily determine the most qualified legal services provider, including the ability to compare responsive proposals that relate to similar work by different providers. Where points are assigned for relevant experience in the context of the subject matter of the services to be provided, the point system is based upon good Triple-A Bond advice.
The RFP process provides a means to objectively evaluate the potential for success of any competitive proposal for legal services versus the alternatives. Following a structured RFP process with all the usual caveats assures that the law firm that has earned the work will have given the appropriate amount of attention to the proposal. Good Triple-A Bond advice is provided to seek the most competitive law firm proposals, without prompting an overtly aggressive bid for legal services. This makes negotiation of the final terms of the engagement agreement far easier.
Pitfalls when prepping your RFP process
All too often, organizations default to a predictable pattern when it comes to choosing a new provider. While this may feel safe and comfortable, it often results in a less than stellar fit for your specific requirements. Here are five common mistakes to avoid in your RFP process:
1. Leaving out the qualifiers
If your company has basic guidelines that you look for during the hiring process, these should be made abundantly clear in your RFP. Even if they seem obvious or judgmental, be specific. If industry experience is a big part of your choice criteria, say something like, "We need a firm that has the experience to get the job done right." That way, you’re letting respondents know what’s most important to you.
2. Too much detail
A good request for proposal (RFP) will strike the right balance between providing your potential firms with an understanding of your organization, the requirements of the contract, and the kind of candidate you’re looking for. At the same time, there’s a difference between the information they need to respond to your proposal and what you give them for context. Make sure you’re not including too much material in your RFP. Sending the wrong kind of RFP and expecting it to produce a good response is like a chef accidentally making a soufflé when he really wanted souffle: it’s probably not going to work out for either of you.
3. Assuming the purpose of the RFP is implicitly understood
Every prospective partner is going to have a different approach to an RFP. There are also different concepts of what an RFP should be and what it’s for. If you want so much as a soundbite about why they’re interested in your company, make that clear in the RFP. Let vendors know that you want them to go beyond a list of services and pricing into a competitive, comparative analysis.
4. Playing hard to get
You get one chance to impress an RFP recipient – so make it a good one. If you doggedly stick to your deadline and don’t return any calls, then these are both red flags to your bidders. It’s a scary world out there, and when you’re calling for help you shouldn’t treat people like you’re in a Taylor Swift song. Good bidders are few and far between. It may not seem like it at the time, but the good ones are nearly always worth the effort.
5. Expecting someone to understand implicitly what it’s like to work with you
Just as an employer interviews candidates to see if they’ll be a good fit, a good candidate wants to know what it’s like to work with you. If you have an unreasonably high or unusual standard for deliverables, or if your company has processes and procedures that would take a few months to get used to, make that clear in your RFP. You should provide questions that will measure their willingness and ability to adapt to your demands, while also indicating that you’re willing to work with them on the transition.
The outlook for RFPs in legal services
Emerging trends suggest that RFPs will not only continue to be a key part of the sourcing process for legal services but that they will become increasingly embedded in the legal services procurement function. Just as Gartner Group reported in that corporations forecasted using RFPs increasingly for all kinds of services beginning a few years ago, a growing body of scholarship shows that corporations are employing increasingly sophisticated techniques for procuring professional services. For example, legal services sourcing professionals are beginning to employ some of the same techniques as those employed by skilled, professional buyers such as those procuring IT or marketing services. Applying elements from Sourcing Great Solutions-a workbook published by the International Association for Contract & Commercial Management-legal services procurement experts can institute a "sourcing process" into their practices.
At the same time, we are seeing trends in corporate structure and culture that point to greater legal services sourcing. After several years of pressure, we have seen the rise of the C-Level legal services executive . Accruent, a leader in real estate performance and development software, observed in its recently-published research that the Chief Legal Officer is a key part of the C-Suite of the modern corporation alongside the CEO, COO, CFO, and CIO/CPO. Highly-skilled professionals, CLOs must manage complex organizations that increasingly span a variety of industries and global geographies while managing substantial enterprise spend, preserving value and ensuring compliance with constantly-changing regulations. Designated CLOs, moreover, serve as the legal conscience of the corporation, participating in board governance and risk management activities and establishing a compliance culture throughout the enterprise.
The increasing competitiveness of the profession, with a race to the bottom in terms of hourly rates, has created a strong sense of urgency around the need for CLOs and procurement teams to get a handle on legal spend. As a result, we are seeing an increasingly professional approach to legal services procurement, with many organizations:
As professional buyers with access to high-end providers are rapidly deploying these methods, they are showing increasingly superior performance and outcomes in terms of execution, quality and cost-savings.