The Five Elements Of An Effective Legal RFP
Most in-house teams in the legal industry still default to using existing outside counsel for new work.
If your company adds new outside counsel, it’s often because a new general counsel or in-house attorney joins the organization and wants to use their preferred firms for legal advice. They usually choose firms they used to work at or with, opting for familiarity over fit.
Even when a company needs specialized services or requires legal expertise they can’t find within their existing outside counsel, legal leadership is likely to ask their network for recommendations.
Fortunately, legal RFPs are beginning to replace this less-than-scientific approach to selecting an organization’s legal representation. A 2021 Legal Buying World survey indicated 55 percent of law firms saw an increase in legal RFPs compared to the previous year.
That’s because an effective legal RFP is the best way for in-house teams to compare law firms’ experience, skills, and price in an objective, measurable way. We’ll show you how to use a legal RFP to find the best fit for your legal service needs and get the most out of your legal budget.
What Is a Legal RFP?
A legal Request For Proposal (RFP) encourages service providers to compete for your company’s legal work by submitting written proposals outlining their experience, processes, and costs.
You can send legal RFPs to firms and alternative legal service providers (ALSPs).
RFPs can be used to create a consolidated legal panel, to engage a specific firm for a subset of work (such as the company’s US-based patent registrations), or for specific high-value matters (such as big-ticket litigation or a merger).
An RFP for a single matter might be wrapped up in a couple of weeks, while more complex requests can take longer to complete.
Many firms submit RFPs in simple documents or spreadsheets. Others rely on RFP software to submit requests; however, whether such software is necessary depends on the volume of RFPs you issue.
In the past, general counsel and other legal leaders led the RFP process. However, many organizations now find that involving a legal operations professional early in the procurement process leads to a better balance of cost-effectiveness and legal competence among selected outside counsel partners.
Involving your organization’s procurement professionals can also help the RFP process, as procurement is well-versed in how to create and distribute an effective RFP. A 2021 Buying Legal Council survey found legal procurement now negotiates 57 percent of all legal services purchases. Their expertise helps corporate legal teams save as much as 15 percent in legal spend.
Why Should You Issue a Legal RFP?
RFPs allow legal teams to compare firms, and since firms know that’s what’s happening, they’re more likely to put their best foot (and price) forward.
This also forces firms to describe their strategy and how they’ll resource the work. This gives your in-house lawyers an inside look into how various firms operate. It also provides them with the ability to compare different strategies before the legal work starts.
Legal departments usually issue an RFP because they see an opportunity to perform a matter or type of work more efficiently or to a better quality. Here are three ways your in-house counsel can get better service with the help of a legal RFP.
Adjust Your Legal Panel
Most companies have a group of firms they turn to for the bulk of their legal work. They may formally refer to these as their legal panel or simply think about them as their preferred firms.
In-house teams rarely want to significantly increase the number of firms on their panel. It’s much more common to seek to consolidate a panel because it’s gotten too large and unwieldy to manage.
Companies can get a discount on legal work for sending more work to fewer firms. Plus, consolidation encourages closer relationships where the firms understand their business better.
For example, your legal ops team might notice that matters related to employee benefits are handled separately by different corporate offices and farmed out to many firms. This is an opportunity to consolidate the work with one firm and get a better price and standard of legal service using an RFP.
The first thing to do when deciding whether to streamline your panel is to look at your legal spend data to understand which firms are doing what work and how efficiently and effectively they’re doing it. You can use this data to compare RFP responses to actual data, ensuring you’re working with the optimal partner at the right price going forward.
Practice Area or Sub-Set Of Work
Outside of a wholesale panel review, the in-house team may use a legal RFP because they foresee the need to source new legal services they haven’t required before and want to ensure they get the best and most cost-effective counsel for this practice area.
For example, perhaps the company is looking to expand geographically, so the in-house team needs real estate counsel to help get development deals done quickly and smoothly. In this case, the in-house team will send out a tailored RFP to firms specializing in real estate work, seeking counsel only related to this practice area.
Tackle A Specific Matter
When you have a high-cost, high-risk matter that you need to resource optimally, an RFP helps you compare competing firms based on their price and legal strategy.
In-house teams that foresee a specific need, such as a planned major acquisition next quarter, or that must react to an unexpected large matter, such as a bet-the-company lawsuit, can use RFPs to look at the big picture and consider how this work can be done in a cost-conscious manner that still drives the best outcomes for the company.
What To Include In a Legal Services RFP
The results of an RFP are only as good as the RFP itself.
Vague, poorly written RFPs lacking critical details will lead to in-house teams not hearing back from the right type of firms or getting the wrong responses from those firms.
If you don’t take the time to properly specify your company background, the type of services you need, and your expectations, legal service providers won’t have enough detail to give you a good response. RFPs should be long enough to cover all the necessary information but not so long as to drown firms in too much unnecessary work to properly respond.
Your RFP should clarify the scope of work, how you will evaluate success with this matter, and how you value the work firms will provide.
1. Explain What Services You Need
Here, you should provide some background about your company, your industry, the scope of work, and the outcome you’re seeking.
Set page limits for the RFP response to keep proposals tight and relevant.
2. Highlight The Price Structure You Want
While hourly billing remains the most popular approach for law firms, nearly every firm now has some type of alternative fee arrangement available based on client needs and preferences.
Describe whether you are looking for an outcome- or time-based structure or are open to all billing arrangements.
You can use your own legal spend data to understand a reasonable fixed price or hourly rate based on the legal services you need. This is essential to evaluating the reasonableness of any offer you receive.
3. Ask For Staffing Details
This section will be an open template where the firm submits biographies describing who will be on the team, their experiences, and their areas of expertise.
Firms must also include resourcing plans describing which fee earners will be doing what work. You’ll want to look for a mix of cost-effective associates and expert-level partners to balance affordability and capability.
Again, your historical spend data will guide you on the optimal staffing mix for the type of work requested so that you can do a data-driven review of the responses.
4. Detail The Legal Strategy You’re Looking For
Here is where you will ask service providers to explain their approach to legal strategy for the services you’re requesting and how they’ve handled similar legal matters. Be sure to ask for examples of outcomes they’ve delivered for other clients, anonymized to the extent necessary.
Case strategy may be more detailed for an individual matter RFP than a general work type like employee benefits. Still, even in these more general categories, it’s useful to understand the firm’s philosophy and approach.
You should ask the service providers to delve into their project management approach for big-ticket items like mergers and acquisitions and high-cost litigation.
You want to know that a service provider will communicate clearly and frequently to keep your corporate legal department updated on progress and setbacks. Ask how often they will set up planning sessions and review sessions. Firms must also explain whether they provide a dedicated project manager to manage timelines and scope.
Also, ask about the technology and software the firm will use to handle your matter most efficiently. Don’t forget to ensure they have a sound data governance policy in place.
Another potential obstacle to working with a firm is whether they have potential conflicts of interest. Make sure the firm details how they handle these situations and find out whether there are potential issues they foresee.
5. Set Your Timeline
Work back from the day you want to onboard your law firm to set your timeline.
Explain timelines for submission, review, questions, and RFP response presentation meetings clearly, plus any known timelines related to the work itself, such as desired start date, resolution date, and any major milestones. Try to make sure the process doesn’t overlap with major holidays or quarterly reporting dates that might lead to some people being crunched for time and not fully engaged.
Ensure your timeline includes enough time for potential firms to ask questions of your in-house department and for you to respond so they can deliver a strong proposal.
Finally, plan on meeting with your top three firms to go through their proposal, preferably in person but by video if necessary. Give yourself time at each meeting to ask follow-up questions of each firm. Everyone on your review panel will need time to collect their thoughts and discuss the proposals as a group.
Finally, notify the firm you chose, and give the firms you rejected a courtesy call.
Onboard Your New Law Firm In Your Vendor Management System
To run effective RFPs, you need a modern legal spend management system. Legal spend software helps your law department at every stage of the process.
First, it helps you identify practice areas that could benefit from an RFP by indicating where your panel has gotten too large, by demonstrating that you’re sending similar work to too many firms. It also helps you identify which kinds of high-cost matters would benefit from individual RFPs.
You can also use legal spend software to spot areas where work is increasing so you know it’s time to onboard a new provider.
Once firms have responded to your legal RFP, use your legal spend tool to compare their prices to what you have paid in the past for similar services. You should also compare how their resourcing plan stacks up against how your other firms have staffed for similar matters.
Finally, after onboarding the new firm, use your legal spend tool to ensure your selected legal services provider sticks to the proposal they submitted, including the discounts, rates, or alternative fee arrangements they proposed. A good proposal is only as good as its enforcement.
Your legal spend software also ensures the legal invoices your firm submits meet the staffing, timelines, and costs the firm agreed to.
Brightflag’s legal spend management software gives you complete visibility into each stage of the RFP process, from identifying your needs to onboarding your firm and reviewing the work they performed. Learn more about how Brightflag helps you manage your vendors.