Because the term midsize law firms means different things to different people, I thought I’d give you my definition before I talk about what legal procurement professionals think about them.
While utilization of sales and business development teams has become common at law firms, the level of involvement such teams have in client relationships varies from firm to firm. And how integral they are to the process of retaining and maintaining work is all over the map.
By Patrick Smith, Journalist, American Lawyer
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All law firms and proposal writers are looking for the silver bullet to win more Request for Proposals (RFPs).
Over the years, author Nancey L Watson has used her expertise with procurement and pricing methods and applying strategy for hundreds of proposals to win $3 billion in competitive bids.
Her new book The Silver Bullet – How RFPs Are Won will serve as a strategic guide to help you significantly increase your win rate – and more.
The Silver Bullet details Nancey’s top strategies for every step of the proposal process:
How legal procurement impacts law firm selection – a strategic approach
Questions firms should ask before they decide to propose for the work;
Best practices and how to analyze a “cheat sheet” to discover the key to winning RFPs;
How to get you to plan strategically through every phase of the proposal process;
How to use the magical formula to gain credibility and prove you are the firm to hire;
How to work strategically with subject matter experts as a team; and
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The Silver Bullet is primarily written for law firms but the information within will also prove invaluable for procurement professionals.
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One of the most significant developments going on today in the legal industry is how the rise of legal operations has pushed in-house law departments to work more closely with the legal ops professionals at law firms to get better value from their legal services providers.
Corporate legal departments with legal ops professionals whose jobs include process improvement, procurement, and pricing are now interacting with law firms that are staffing their own version of legal ops — legal process managers (LPMs) and pricing specialists. Legal ops professionals are being hired to create better value for their companies and clients. The increase in discussion of this topic, both in the legal media and at conference panels demonstrates that this is not just a passing fad but rather, that legal ops is becoming woven into the fabric of client service.
But with legal ops professionals at in-house departments and law firms each focusing on improving and demonstrating their own value, how can this new relationship build trust?
Recently, I had discussions with more than 150 legal procurement professionals about what they want, need, and expect when hiring outside counsel. And while there is still a disconnect, it is getting better. The good news is that it seems as though a win/win relationship is a top priority for both sides.
But with legal ops professionals at in-house departments and law firms each focusing on improving and demonstrating their own value, how can this new relationship build trust? To get to this answer, I sought perspectives from in-house legal ops and law firm pricing and LPM managers, allowing them to shed some light on how they are working together to create value and stronger relationships based on trust and a deeper understanding of the business of law.
Pricing and AFAs
First, I asked panelists what in-house legal departments are looking for in alternative fee agreements (AFAs) and pricing from law firms, and how some law firms are rising to the challenge.
Richard Brzakala, director of Global External Legal Services at CIBC, says “most sophisticated in-house legal departments are looking to their law firms to present pricing proposals that are realistic and supported by a law firm’s historical experience” adding that “they don’t want data that is based on ‘gut’ feelings.”
“Firms have to understand that buyers of legal services are empowered with a plethora of billing data that they leverage when purchasing legal services,” Brzakala explained. “Any proposals that look unrealistic or unaffordable to the client run the risk of being declined.” “Further, clients are increasingly asking themselves if they have received value for what has been delivered and are ultimately looking for transparent value at transparent prices — not just lower rates or discounts that may not sustainable over a long term,” he added.
Dwight Floyd, director of Pricing & Value at Eversheds Sutherland, clarified his role, stating that his job is not just about the numbers and setting rates. “It’s about working toward a value-based solution together — whether communicating with the GC’s office, legal ops, procurement, or my internal clients,” Floyd said. “Identifying, creating, and delivering value is what drives price, not how many hours it might take or what kind of discount might apply.”
Indeed, as legal ops grows in sophistication, it is important for law firms to show their clients the math that went into calculating their fee proposal. For example, some law firms are providing fee quotes with detailed scope.
Legal Project Management
In-house legal departments have certain expectations from their counterparts in a law firm’s legal project management department. In-house departments need to hear how law firms plan to add value to an engagement, how they will staff matters, and how they will determine who will work a matter. Increasingly, in-house departments also will want to see a law firm’s pricing specialist, project manager, and lead relationship partner in the meetings with them. These client-facing trends are considered a positive step by corporate legal ops in building stronger relationships.
“Firms have to understand that buyers of legal services are empowered with a plethora of billing data that they leverage when purchasing legal services.”
On the law firm side, their LPM professionals can keep the focus on costs and client expectations. For example, LPMs can see immediately if the scope of the project was correctly understood by the law firm when it was priced, avoiding uncomfortable discussions with the client about fees later.
LPMs also use historical data to their advantage when scoping projects to assign the appropriate number of lawyers and staffing levels to a matter. They track the matter through to completion, and along the way educate partners on the scope of the engagement, explain the math behind the pricing, and identify where efficiencies are integrated to make the entire process more client-centric.
“Legal project management, particularly with respect to complex matters, has become an expectation for our clients,” said panelist Christy Bentz, Chief Practice Services Officer at Norton Rose Fulbright. “It is one of the most effective ways to communicate with them, throughout a matter’s lifecycle, to ensure we understand their needs and to help them succeed.”
Bentz explains that clients want predictability, transparency and the confidence that their law firms deliver. “They already expect the very best legal advice and service, and it has been our experience that legal project management is a critical component of building immediate and lasting trust,” she observed.
Overall, the field of legal ops is growing not just in size, but in importance for the practice of law. The field has opened up whole new career paths for new entrants into to the marketplace, and has sparked both in-house legal departments and law firms to utilize these professionals to improve efficiency, effectiveness and to drive and demonstrate value to their clients.
Vincent Cordo, sourcing officer for Shell, and Christopher Jeffery, our legal market development lead for the energy industry, sat down with us to talk about pressures facing in-house corporate legal departments and how they’re responding to an ever-changing economic, legal and geopolitical environment. Corporate counsel preach the need to do more with less, drive efficiency and streamline operations. Cordo and Jeffery share how this manifests in today’s business environment.
What is the major focus for corporate legal departments of energy companies regarding the provision of legal services?
Vincent Cordo: The biggest focus in the industry is quantifying overall commercial value while continuously fine tuning the process to positively impact our outcomes with appropriate, value-based pricing. We are looking for efficiencies but not at the sacrifice of quality.
When it comes to process and project management, it is very important to ensure that the right resources are handling the appropriate tasks.
Processes and assignments are not taken lightly. We audit these metrics and report on how our panel firms have embraced processes that enhance the efficiency we’re looking for, whether it is through budget performance, outcomes, utilization of technology, or improving workflow processes. The reporting requirements of external counsel continue to advance, so firms are expected to report on results to internal counsel with assurances of a high-quality work product at a lower cost, and on schedule. Scoring and reporting on the overall account management is also a very important component of the relationship.
Christopher Jeffery: Much of this same approach can and should apply to internal operations as well. I completely agree with the mantra that “the right people doing the right thing in the right way” is a priority. We’re seeing this across many energy corporations as they look to reshape their internal legal function. It translates into using the right tools and services to capture the right data and ultimately be able to make data-driven decisions. In some situations it may even mean the legal group expanding its purview to make risk-controlled, self-service solutions available to the broader business. Dynamic Q&A-led document creation is a prime example.
How is performance measurement tracked in Shell’s legal department?
Cordo: At Shell, we measure performance indicators such as whether a law firm delivered on time and on budget over a set timeframe; where the pricing came in; what the end result of the matter was; and other factors, all of which get put into a performance metric that’s used when evaluating the legal provider’s performance.
If a matter (for example, litigation or with corporate matters) goes beyond expectations, assumptions, and estimates, law firms need to communicate immediately with the in-house lead lawyer and work with his/her pricing person in advance to communicate why the matter is veering off the proposed budget and how the new scope has increased the time keeper effort required. It is imperative as part of the process to look at the previous time entry up to the point where the scope changed, to see if there were any inefficiencies that impacted the budget. That is much easier for a company to deal with and less trouble for the law firm, as opposed to working extra time beyond the budget, billing after the fact and then having uncomfortable billing or write-off discussions months later. This all goes to performance-score-card measurement.
Jeffery: I agree with Vince. Obtaining the best value from external legal service providers and counsel is paramount. This necessitates understanding the key milestones and metrics to be used when measuring the value provided. What we’re seeing in the market is a move toward broader benchmarking and analytics across peer and industry groups.
Communication is also key. As long as a firm is up front about the reason(s) for scope creep, then the expectations are properly set.
Additionally, part of the value equation needs to have a consideration if you have the right mix of internal, external and alternative legal service providers (ALSPs), especially in areas such as document review for litigation.
How does the external environment impact the corporate legal department at Shell?
Cordo: When looking at initiatives, we focus on overall commercial value, efficiency in delivery and overall quality. Staying diligent with operational and process improvement is an ongoing process. You are always looking to gauge any potential impact from external influencers. Paying attention to factors such as economics, industry shifts, technology developments and other influences that may impact our business is key.
Filled oil drums are seen at Royal Dutch Shell Plc’s lubricants blending plant. REUTERS/Sergei Karpukhin
For example, in the regulatory environment, nothing happens overnight. You need to be strategic when planning and not rely on just your internal expertise. We work with external vendors to get their perspective on what they see. We regularly engage our legal panel to gauge the impact of trends and what’s on the horizon in our industry. A unique AFA example that shows how Shell partners with our legal panel is where the panel firm agrees to apply a Market Adjustment Discount of a fixed percent that is tied to the price of crude oil, which further reduces the fees. The discount can be earned back by the firm as the price of crude oil increases, based on standard industry indices.
For example, if the price of crude exceeds 55$ USD in 2017, then we pay the firm ½ of the discounted % of the market adjustment discount during the time that crude remains at this value. If the price of crude goes over 60$ USD in 2017, then we will pay the firm the full market adjustment discount of the full discount % during the time that crude remains at this value.
Our panel of relationship partners communicate regularly with our general counsel and business leaders. They have quarterly meetings to review activities in the industry and key facts in a one-on-one forum to discuss strategy and our relationship.
This, I believe, separates us from the traditional approach of communication with panel firms. The process is continuously monitored and focus on improvements is constant. We are committed to continuing to evolve the program in a true partnership with our panel and vendors.
Jeffery: In an industry facing significant cost challenges such as the energy sector, value can sometimes be confused for the lowest cost. As Vince highlights, this isn’t necessarily the case. Value is much more than cost – it is a combination of price plus efficient delivery and the overall outcome. Vincent gave a specific example of how Shell is trying to align factors impacting its business to the legal fees paid for external counsel.
We’re seeing growth in alternative fee arrangements across the sector. This doesn’t necessarily mean fixed fees – there are a whole host of alternative pricing options being used. What is essential for any fee arrangement or billing rules is that the in house legal function has a way of measuring adherence to the agreement.
How important are strategic partnerships to the success of corporate legal functions?
Cordo: At Shell, we have a strategic focus on operational excellence and ways of working. Our message to law firms is that a true partnering relationship is essential to our success and that our panel needs to continue to help Shell achieve our strategic goals by being proactive and at the top of its game.
The law firms on our panel are continuing to analyze their AFA assignment run rate target of 100% for all their matters, service and processes, and are helping us improve our operations internally. They do a wonderful job of keeping an eye on the impact of external events in the industry, such as being our watchdog on regulatory matters or other considerations that may also result in a competitive advantage.
Jeffery: True partnership is where an external legal service provider acts as an extension of the internal team. The same is true with ALSPs and how they augment the work done by the internal team.
Another shift is for internal teams to ensure they position themselves and are viewed as true partners to the business. Partnership can and should span all areas. Legal functions of energy corporations should look for ways to streamline some of their recurring work to free up time for more strategic matters and increase the value they deliver across the business.
What does diversity mean for Shell?
Cordo: We aim to provide equal opportunities and create a workplace at Shell that supports all our staff and values their differences. Our dedication to diversity and inclusion (D&I)applies across the organization. We embed D&I in our culture, for example through our core values of honesty, integrity and respect for people. It’s seen with our business partners and the companies we hire, our internal culture and the talent we recruit, and with our social investment in our local communities.
With regards to Shell’s legal organization and the expectations from our panel firm partners, we also support firms that promote D&I. We have panel firms that have gone through the requirements set by nationally recognized organizations to become a woman-owned or minority-owned law firm. We also audit and report on the metrics that law firms provide about the diversity of people working on Shell matters and incorporate D&I metrics in our RFP bid analysis during the selection process. Fortunately, a lot of firms today know the value a talented, diverse workforce brings to their organization.
Jeffery: At Thomson Reuters, we have seen a definite shift in power to the buy side across multiple areas. This has benefits across a number of areas, such as with billing. Increasingly the buy side is also influencing their legal service providers in areas such as diversity as well. This illustrates how the buy side can accelerate some of the positive progress legal service providers are making when it comes to diversity and inclusion.
You may be wondering why I am not writing about how to win RFP proposals and instead, I am writing about why proposals lose. Well, I’ve written a lot about winning so I thought I’d write about losing — as I’ve discovered when I’m conducting proposal debriefs — that there are a few common and often-seen reasons as to why proposals lose.
Before I do this, however, I’d like to say that clients are often very willing to grant you a debriefing session as to why your proposal won or lost.
I recommend that you take advantage of this opportunity as a way to improve your proposal win rate.
There are three main reasons why proposal lose:
- Not demonstrating knowledge of the company;
- Not proving industry knowledge; and
- Not answering the clients’ questions.
The first reason, not demonstrating knowledge of the company is surprisingly common. If the proposed client is not an existing client it is important to research the organization. The internet likely contains plenty of information about the company and its management team. However, even incumbents, although they have a leg up in this area, still need to reiterate that they understand the company, its processes, structure and needs. One way to do so would be to suggest improvements to existing processes that would enhance efficiencies that would then in turn improve work flow and fees. Also, when providing a list of representative work the matters you cite should match the size of the company. For example, a midsize company does not want to see all the representative work you’ve done for huge corporations or companies much smaller than themselves.
The second reason, not proving industry knowledge is another big one. Partners have lots of expertise in a particular industry, but often their bios are not up-to-date nor clearly demonstrate their understanding of how industry trends will affect their client or prospect in a proposal. We take for granted that our clients know the state of the industry, but in reality they depend upon their legal counsel to gauge the impact of external influences such as regulations, foreign policies, and major shifts in the industry.
The third key reason proposals fail is simply because the law firm does not answer the clients’ questions. If you don’t believe this is true just go back to a proposal you wrote about a year ago and see how you responded to all of the questions. Sometimes answers are purposely vague because the firm does not want to look weak in a certain area. However, by the time the company has read several proposals they will come to understand what a good answer looks like. This is why you need time to have a third party review your RFP responses.
Those are the most common reasons why proposals fail. Other reasons include:
- Too partner heavy — not enough balance in teams between the number of partners and associates;
- Pricing — suggested billings or alternative fee arrangements not appropriate for what was expressed in the RFP; and
- Marketing boilerplate — just get rid of it!
Addressing these concerns will likely go a long way to improving your RFP proposal, and increase the likelihood that clients will look favorably on your proposal.
Pricing is a key lever inﬂuencing and driving financial performance as well as a pressure point for law firms as their clients demand more for less and a better balance between pricing and value. Toronto-based consultant Nancey Watson sat down recently with Stuart Dodds, director of Global Pricing and Legal Project Management for Baker McKenzie, and editor of Pricing on the Front Line, to discuss the current state of law firm pricing and the evolving role of the pricing professional.
Nancey Watson: What was the initial catalyst for the role of pricing professionals in law firms?
Stuart Dodds: The initial catalyst for the growth in legal pricing (as a role/function) can be traced back to the fallout from the global financial crisis. Since 2008 there has been a much greater focus on the cost of legal services. In addition, declining or (at best) static demand for legal services has further increased competition/price pressure. However, although the financial crisis in 2008 may have dramatically accelerated the pace of what subsequently happened, change was always going to come. In 2017 there is a much greater need for law firms to be pragmatic and nimble when responding to clients’ collective requests, which does often challenge long-held traditions and models in firm profitability, the traditional partnership model, appropriate quality work product, hiring and retention, etc.
Watson: I have noticed that there are a variety of ways in which law firms structure the pricing function in the firm. Do you have a sense of which structure works best?
Dodds: This is very much driven by the size and practice-area scope of the organisation. We see legal pricing roles sit within finance, operations and marketing. My personal preference is for this type of role to sit within marketing, and indeed both my legal pricing roles have been within marketing. The rationale behind this is that firstly pricing is one of the 4Ps of marketing (the others being promotion, product and placement), but more importantly the fact that pricing really needs to clearly tie into a firm’s overall value proposition. However, as long as the pricing role is able to be client facing and engage with the firm’s partners and leadership teams regularly, it doesn’t really matter. The pricing role is very much one which acts as a conduit, bringing together various parts of a legal firm such as business development, knowledge management, finance and IT.
Watson: What are the most frequent challenges you and your peers typically face?
Dodds: The biggest challenge is around changing the behaviour within a law firm. When speaking with my peers, this is always the first theme mentioned. This is especially true when trying to convince someone to adopt a fee approach that they are less comfortable or familiar with. In addition, as law firm pricing roles begin to build greater traction within their respective organisations, there is the more positive challenge of managing capacity with increasing demand and increasing sophistication of pricing requests.
Watson: What qualifications would you recommend that a law firm look for when hiring a pricing professional?
Dodds: The pricing discipline has evolved significantly since I first started in this role in early 2008, and as such there is a much better understanding of what the role is within the marketplace and similarly a much broader range of skills which can now contribute to pricing. From a qualifications perspective, many in the field either have business-related or legal qualifications (or even sometimes both!).
However, there are a number of themes that ring true throughout. The key things I would look for are firstly the ability to engage and inﬂuence (much of the pricing role is about changing existing ways of working); followed by a good sense of commercial pragmatism. The ability to conduct financial analysis is a given but is probably less important than the previous two capabilities. Intellectual curiosity and comfort with technology would be my final two critical characteristics. Additionally, there are also now a number of existing pricing-specific courses and certifications which can add to the pricing professional’s toolbox.
Different types of fee approaches
Watson: Could you estimate the breakdown of which pricing methodologies are commonly used in law firms today within the parameters of market vs. value vs. cost plus?
Dodds: The most common approach within the legal sector when determining the price of a matter is to build it from the bottom up, i.e., a cost-based approach. Although this accurately reﬂects the costs incurred by the law firm themselves, this is often of little interest to the client as they are more focussed on the fee and the eventual outcome.
We are also beginning to see, due to competitive pressure, more market-based pricing occurring within the legal sector (i.e., when a certain matter type typically costs $10,000). Many of us in pricing roles have often heard the refrain from our colleagues of “the market price for this matter is $X. Our fee cannot be more than that or we won’t win the work.” This is a better measure in the sense that it is more market driven/less internally focused, but this too has some limitations in that there is no guarantee that the matters being priced this way are comparable. The best way, and one that is slowly beginning to build some traction within the legal community, is valued-based pricing. This is when the fee charged more accurately reﬂects the value of the work being conducted as jointly agreed by both client and law firm.
Watson: How can law firms meet the client challenge of “more for less”?
Dodds: I think the first way that law firms can address this challenge is to really understand the value of the work that we carry out for our clients. There are a number of matters that most law firms do which help our clients conduct their day-to-day routine business, and consequently, clients are rightly looking for greater efficiency, cost control and appropriate value being delivered for these services. It is here primarily that I think we see the “more for less” challenge being articulated. Similarly, for the more complex or strategic initiatives, clients are looking for a fee that appropriately reﬂects the value of the work being conducted. It is incumbent upon law firms to work with their clients to develop fee approaches to address these concerns.
Watson: How would you describe various pricing approaches by practice area?
Dodds: Pricing approaches will vary by practice area by a number of key factors. The first of those is what is prevalent and acceptable within the jurisdiction itself (for example, some forms of success or contingent fee are not permitted in a number of European jurisdictions). The second is around the familiarity and experience of both the law firm and their client in adopting different fee approaches.
At a high level, we tend to find fixed fees being adopted for higher volume-type matters (for example, immigration and some types of employment, commercial contract review and IP trademark work). However, for those more complex matters (for example, M&A, litigation), we may find a variety of fee approaches being taken at different stages of the matter itself, ranging from fixed fees, discounted hourly rates and success fees.
The key to each approach is to ensure a transparent conversation between law firm and client to work out what approach best aligns cost to value.
Watson: What will the impact of technology play in the area of pricing and legal project management?
Dodds: There are many good tools already available within the marketplace in the area of pricing and legal project management, with a number of others in development. The key functionality of these products generally focusses on and further supports how law firms can more effectively manage their matters, ensure pricing compliance and allow for sophisticated price modelling. In addition, there has been a growing number of practice-area specific tools in the market. It is clear that technology will have a transformative effect for many conducting these roles as information becomes much more easily available; the ability to model different pricing options becomes much more accessible; and client demands become more vocal for greater transparency and collaboration with key law firm providers. This, in part, is going to change the nature and skill set of those conducting pricing roles in the future.
Watson: How do you think Legal Project Management, Knowledge Management and Pricingshould work together?
Dodds: I view each of these key law firm functions as one mutually reinforcing “triangle.” The role of pricing is to determine how best to structure the fee to deliver best client value, for an appropriate level of profit for the law firm and using appropriate timekeepers and/or technology. The role of legal project management is then to deliver that work as effectively and efficiently as possible, at or below the cost quoted.
The role of knowledge management is seeking how to improve the underlying processes in the delivery of the matter, ensure the resources are appropriately skilled and adopt appropriate technology. Each clearly feeds back into how the matter should be priced and delivered in the future. In summary, Knowledge Management has an integral role to play and is one that I think we have not yet fully taken advantage of to date in the legal sector in this context.
The broader picture
Watson: How do you see the pricing role evolving within the legal industry?
Dodds: I think the first key theme will be the increasing professionalisation of the function now that the value of the function is being better established. As more and more people undertake these roles from a wide variety of backgrounds (e.g., marketing, finance, operations, legal), the barriers to entry have been raised, especially if looking to join one of the bigger firms domestically, regionally or internationally. There are not only the expectations around either legal or business acumen (ideally both), but increasingly previous pertinent legal experience and accommodation pricing, procurement and negotiation qualifications, as firms look to accelerate their own efforts by having those who’ve seen and done it before – for some, multiple times. This is also reﬂected in some of the titles now beginning to emerge within the industry, for example, Chief Pricing Officer and Director of Client Value.
I also think that the role will become much more comprehensive in scope. This will include elements of project management and practice innovation, many of which will involve a deeper understanding of technology (as I mentioned earlier). It will become much more client-centric than it is today, with the more senior resources regularly engaging at a peer-to-peer level with their client counterparts.
A recent article in Canadian Lawyer on request for proposals (RFPs) it discussed the role of companies and their RFP process. As the number of companies sending out RFPs for their panel law firms increases it is critical for law firms to win RFPs now or be out of the running for additional work until the companies decide to undertake another round of RFPs which may take years.
I host seminars on “How Procurement Impacts Law Firm Selection” and the pace at which the legal procurement professionals are upping their game is startling. The sophistication of the software programs used by many procurement specialists is not only a factor at the proposal-decision stage, but it’s also used to measure the performance of firms after they have been selected. At a recent seminar I moderated, three out of the four panelists were going out for panel law firms. All of the panelists were looking for good pricing — but not at the cost of quality. From there, the needs varied from company to company, depending upon their individual requirements.
Trends in RFPs
Through these seminars, I’ve been able to identify several trends regarding how clients see RFPs, including:
- Using legal procurement specialists to draft more sophisticated RFPs;
- Hiring external consultants to evaluate RFP responses;
- Issuing RFPs to create legal services panels to consolidate the number of law firms they use;
- Specifying the kind of appropriate alternative fee arrangements that they want, e.g. capped fees;
- Submitting global RFPs for all services or just one legal service;
- Itemizing preferred value-add services, e.g. CLE courses and off-the-clock advice;
- Digging deep to evaluate a firm’s operations;
- Selecting a law firm based on the diversity of the teams presented in their proposal;
- Rating firms on their collaborative software; and
- Implementing reverse auctions once your firm has been selected as a panel firm.
I think the most daunting trend is the reverse auction. Some companies started using reverse auctions for legal services as early as 2010 and continue to use them almost exclusively for any legal work that is valued in excess of a pre-determined dollar amount. Companies typically use third-party software to conduct the live online auctions, but they handle the process internally.
Reverse Auctions Explained
Reverse auctions are gaining traction with clients. The typical reverse auction includes the following steps:
- A company will issue an RFP;
- Law firms respond;
- A short list of firms (or panel firms) is invited to participate in the reverse auction;
- The laws firms are invited to submit estimates for the project;
- All competing firms can see the pricing of the competitors but not the name of the competition;
- The competing firms can lower their bids while a timer counts down; and
- The company then assesses the bids and announces the winner of the work.
When preparing for online reverse auctions I always recommend to my law firm clients that they do their pricing in advance and know their bottom line and stay within it. Otherwise, it can insight a gambling type fever and all common (and financial) sense can go out the window. Many law firms who have mastered reverse actions actually like the process as it gives them an opportunity in true transparency to bid on work.
All said and done, sophisticated procurement-led RFPs are on the increase and firms are being closely scrutinized on how they respond. And it’s a trend that is not going away anytime soon.
I recently required the services of an attorney. I must admit that when I received the bill I was shocked — it was double what I expected. The attorney attached all the documentation to my invoice; included time spent on voicemails, emails, etc.; and provided the backup information needed in order to understand it. I reviewed it carefully; and sure enough, he was right.
Given this, I was happy to pay the invoice immediately and have recommended him to several of my colleagues. I might also add that the bill was sent to me immediately once the work was completed. That way, there was no memory lapse as to the value of the service he provided. I suspect that the same principle applies to most law firm clients.
In his 17 years of managing external counsel, Richard Brzakala, Director of External Legal Services at Canadian banking giant CIBC, has seen it all when it comes to how firms bill clients. “Whether it relates to legal work, staffing, budgeting or legal costs, clients have a very low tolerance for the unknown but yet have high expectations from their law firms on delivering legal advice without any billing surprises,” states Brzakala. “Nothing undermines a positive client experience more than receiving an unexpected, excessively high bill, or charges for disbursements that don’t make sense or appear to be egregious and unjustified.”
“Whether it relates to legal work, staffing, budgeting or legal costs, clients have a very low tolerance for the unknown but yet have high expectations from their law firms on delivering legal advice without any billing surprises.”
Brzakala has always recommended to firms that they adopt and practice the mantra of “no surprises” and to always be proactive and upfront with their clients on any billing issues that may potentially have an adverse impact on their relationship.
“Advance warning of billing charges or explaining unforeseen variances prior to issuing a bill should be the preferred modus operandi for a law firm,” says Brzakala. “If a flat-rate fee, budget or estimate was negotiated in advance of a matter, then a firm should stick to it and never bill in excess. The last thing that anyone wants to see are surprises on an invoice that embarrass a client and undermine the credibility and reputation of a law firm.”
Items that should Never be Included in a Legal Invoice
In my previous blog on billing transparency, I promised that I would provide details about what entries should not show up on invoices and some of the information that clients need to see. Here are what my legal procurement contacts say about the Top 5 billing “No-Nos” and advice on what should be included on an invoice:
- Six-Minute Billing Charges: Companies do not want to see several 6-minute billings. This is a red flag that lawyers are charging for every little thing that comes across their desk including such routine tasks as accepting a meeting request. Worse still is the practice of rounding up the charges to the next half hour. Clients watch for decimal places when checking invoices and the math needs to add up.
- Disregarding UTBMS Codes: This is a common practice among law firms that clients have on their radar. The Uniform Task-Based Management System (UTBMS) task code assigned to each invoice line item is tracked by clients and they do not appreciate having to call attorneys to review line items that contain multiple tasks. UTBMS codes are designed to standardize categorization and facilitate analysis of legal work and expenses. Using UTBMS codes provides more credibility and transparency with your clients. The UTBMS codes are currently going through a review as it is recognized that the codes need to be updated. In a separate effort, Toby Brown, Chief Practice Management Officer at Perkins Coie; and Adam Stock, Chief Marketing and Client Services Officer at Allen Matkins Leck Gamble Mallory & Natsis, are working with another group to develop an industry standard for matter type codes. These codes, used in conjunction with the task codes, will enable both law firms and clients to better understand the costs of various types of legal work.
- Overtime Hours: Most law firms post the number of work hours on their websites, i.e. 7 to 7.5 hours per day. Billing an excessive number of hours per day is not showing good time management nor is your work perceived as being done at peak efficiency. If your firm is charging a high number of hours per day you need to re-examine how you are staffing your projects — or your client will. On occasion, attorneys may need to work on a weekend. But every weekend? Not likely, unless you are overworked and under-staffed. Clients will likely question these practices either amongst themselves or call you on it.
- Double-Billing: A general counsel for a large financial institution stated that when they perceive an attorney is double-billing, they stop using the firm. I asked the GC if the company tells the law firm why they are not being used any longer, and she said, “No, we don’t have time.” Therefore, my advice to attorneys is to specifically itemize the tasks performed by different team members. Perhaps you are not double-billing, but perception is reality. Providing detailed backup information is an important step in building trust.
- Billing by Attorneys Not Up to Speed: Many in-house attorneys come from large law firms. They know when someone is charging time on a file that they are not familiar with and thus are not providing true value. Companies track all of the lawyers who are assigned to them and can spot a new staff member immediately. If you need to use an attorney who is unfamiliar with the file, then let the client know in advance and make sure your invoice reflects true value for the time the new lawyers spent.
One last point: timely invoices reinforce the good work you did before it becomes a distant memory. Billing practices are all part of building a long-term relationship with clients that is based upon trust.
Recently, when I told a legal procurement professional that my next blog was going to be on Billing Transparency he said: “Whoa! You really don’t hold anything back do you?”
I don’t mean to go for the jugular, but I find that in my consulting business many law firms underestimate the importance of submitting invoices that are clearly understood by their clients and that represent “value billing”.
In its recently released Annual Law Department Survey(available for purchase), HBR Consulting President Nick Quil said:
“Leading law firms are holistically looking at the entire lifecycle of a client relationship — from the outside counsel selection process all the way through the billing process — and are leveraging client perspectives to drive change within their organizations. Areas that may have traditionally been viewed as ‘back-office’ support functions, such as IT and procurement and billing, are becoming strategic points of differentiation for many law firms.”
I have noticed that more corporations are asking for models that reflect transparency of the law firm’s billing process as part of their Request for Proposal (RFP) selection criteria.
I wrote previously that it’s important for law firms to “make sure your invoices add up to value for the fees requested. The bills must be easy to understand. Needless to say, accuracy is critical.”
And in a blog post earlier this year by Thomson Reuters’ Bill Josten, he highlights five of BTI Consulting Group’s communication practices that can help a law firm shift from being one whose bills are always questioned, to one whose invoices represent true value to the client:
- Share a detailed strategy for the matter prior to commencing work and then provide regular progress updates;
- Provide a budget before the work begins — and before the client asks — and stick to it or update the client of the need for possible changes;
- Outline potential problems and how they could impact the scope, budget and timing of the matter, and notify the clients if and when these events occur; and
- Explain unusual or unexpected items in the invoice.
In a previous blog post, I wrote that it’s important for law firms to “make sure your invoices add up to value for the fees requested. The bills must be easy to understand. Needless to say, accuracy is critical.”
Richard Brzakala, Director of External Legal Services at CIBC, commented at a recent panel forum of legal procurement experts, that “sophisticated buyers of legal services are swimming in a plethora of billing data and have increasingly utilized analytical tools to manage their legal costs. The old legal paradigm under which law firms have operated in terms of pricing has experienced tectonic changes and shifted pricing power to the client who is better informed and has tremendous influence in the legal marketplace. Law firms should keep this in mind every time a bill leaves their office. They should ask themselves, is this a fair bill and will the client question whether they received value for our legal services.”
Moreover, invoices must be easy to understand. Does your client have to pay administrators to unravel your invoices and frequently seek clarification at their cost? You should monitor the number of times you get a call about your invoice because that may indicate that you need to make changes on how you invoice your clients.
In other words, don’t wait until you are in trouble to speak to procurement professional and your GC — speak up before you start racking up charges.
Earlier this year, the GC of a leading financial institution told the attendees of a Legal Marketing Association event that they check all invoices in great detail and the firm that double-bills or makes them spend a lot of time double-checking their invoices is not invited back. And at another seminar, Vincent J. Cordo, Global Sourcing Officer at Shell Global, commented that “delayed recording of work lowers the accuracy and the details of the entries. There is evidence to suggest that the longer a timekeeper waits to bill, the more they inflate. Firms that track their activities in real time and penalize late record-keeping are the law firms we work with.”
Finally, in a previous blog post, I noted that a panel of global procurement professionals had a good recommendation:
If the matter (for example, litigation) goes beyond your expectations and estimates, work with your pricing person in advance and explain why you will be over-budget and by how much. That is much easier to deal with and less trouble for the client versus working extra time beyond the budget, billing your client after the fact, and then having uncomfortable billing or write-off discussions months later.
In other words, don’t wait until you are in trouble to speak to procurement professional and your GC — speak up before you start racking up charges.
In my next blog post, I will provide details about what entries should not show up on invoices and how they need to be explained.
By Gregg Wirth
As today’s legal marketplace becomes more competitive and clients themselves become more savvy and demanding, no issue is more at the pinch-point of the lawyer/client relationship than procurement. While procurement is simply the client’s selection process for which firm will be put forward based on the firm’s pitch to the client, for the legal industry, it is the essence of the business.
And few know how vital procurement has become better than Nancey Watson of NL Watson Consulting, a procurement and proposal writing specialist, who has seen how a law firm’s pitch can be the determining factor in whether the firm gets a certain piece of business or not.
“There is definitely a disconnect between law firms and a client’s procurement process,” Watson said. “Procurement specialists at companies recognize this and law firms recognize it. And I want to open a dialogue between the two.”
Part of that dialog occurs at regular seminars Watson organizes. Her next one, entitled “How Procurement Impacts Law Firm Selection”, will be held on Feb. 8 in Houston. Speakers include Vincent J. Cordo, Global Sourcing Officer at Shell Global; Marco Perez, Senior Director and Head of Procurement USA & Legal Global Category for the Royal Bank of Canada; and Toby Brown, Chief Practice Officer at Akin Gump Strauss Hauer & Feld.
Part of the seminar is going to cover exactly how law firm proposals are evaluated by a client’s procurement people, Watson explained. “We want to discuss what does a company’s procurement professionals do with a proposal once they get it at their end. How do they analyze it? What are they looking for? What do they want — and don’t want — to see? And how do they transmit the results to the general counsel?”
“There is definitely a disconnect between law firms and a client’s procurement process. Procurement specialists at companies recognize this and law firms recognize it.”
— Nancey Watson, NL Watson Consulting
All important — and somewhat daunting — questions to be sure, but Watson explains it’s crucial for law firms to understand the other end of this process. “I want the law firm to know that procurement is not the enemy,” she said. “A client’s procurement people have a job to do, but their job is not just to cut prices — it’s to find the best law firm at the best price.”
Nuts & Bolts of Procurement
The panel is also going to analyze the nuts and bolts of the procurement process, including how companies craft their request for proposals (RFPs); the different types of pricing structures and alternative fee arrangements; and how to survive the dreaded reverse auction. “They are brutal, I don’t care what anybody says,” Watson noted.
Another facet of the process to be discussed — and one that many lawyers may not be aware of — is performance tracking done by the client. Companies will measure whether a law firm had delivered on time and on budget in the past, where the pricing came in, what the end result of the matter was, and other factors all of which get put into a performance metric that’s used by the client for evaluating the firm. “I think this is news to a lot of lawyers,” Watson said.
“I think a lot of law firms are surprised that procurement doesn’t only put their recommendations forward as to which law firm to choose, but they also monitor the service they are getting from the law firm, right down to the lawyer.”
With procurement’s growing importance in the relationship balance between law firm and client, the more the lawyer side understands of what goes into a client’s procurement decision-making process, the better for both sides.
Although no one feels comfortable conducting performance reviews of their outside legal counsel — that is why legal procurement professionals often handle the review — law firms must know what they are being reviewed on to ensure the likelihood of consistent, high-quality performance scores.
As I’ve written in previous articles, companies are becoming more sophisticated when it comes to measuring their outside legal counsels’ performance — right down to tracking the performance of individual lawyers.
Many attorneys go into their law firm’s performance evaluation blind. Don’t go into the meeting unprepared; prepare in advance of your review by discussing your client’s performance metrics.
What steps you should take prior to performance reviews to ensure you understand your client’s needs and expectations
Let’s look briefly at the key elements of a typical performance review and determine the information you will need to meet expectations, prior to the performance review.
1. Inquire about the performance indicators
- Ask the client to define their performance expectations and understand the specific performance criteria used for tracking and measuring or evaluating your service; and
- Know what Key Performance Indicators (KPIs) are the basis for their performance scorecard (especially in regards to fees).
2. Ask about the client’s evaluation method
- Ask what kind of evaluation methodology is being used: evaluation forms, in-house performance surveys, system metrics, and/or software applications; and
- Ask for clarification regarding the methodology used to evaluate performance, g. the quality of work, responsive service or fees; for example, do they track how many: corrective actions were taken, complaints received, times not staying within budget, inaccurate invoices, deadlines missed, etc.
3. Find out how you are classified by your client
- Ask how you or your firm were classified by practice/industry expertise (determining where you sit vs. the competition); and
- Find out how you are categorized by law firm/attorneys based on how critical the matter is to your client.
4. Determine who’s calling the shots
- Inquire as to who will be responsible for reviewing your firm’s performance and analyzing the data that is collected (g. the CEO, CFO, GC, procurement professional, in-house counsel team, etc.); and
- Ask about how evaluations are shared with in‐house counsel and business department heads; find out how they measure which firms perform particularly well in certain areas and with in-house counsel leadership.
5. Feedback is important to attaining or maintaining a strong relationship
Do not take it personally if you or your firm is criticized regarding an area of performance —look at it as a red flag that has been sent up as a “gift”. This process is not just about critiquing your performance but rather, about helping you improve your performance.
Performance reviews give you the chance to examine your processes and service delivery, as well as to compare your firm with the competition. Ask yourself: How does our firm measure up in areas discussed? Are there areas that need improvement? Don’t shy away from performance reviews — they often can be the best source of competitive research you can get. Utilize this information when responding to request for proposals (RFPs).
Using performance reviews as a feedback mechanism will help your firm make changes that will keep you competitive not only with your reviewing client but other clients as well.
As I’ve written here before, companies are becoming more sophisticated when it comes to measuring their outside legal counsel’s performance, yet law firms do not always ask their clients to detail the Key Performance Indicators (KPIs) their clients are using to measure their performance.
These KPIs form the basis of benchmarking of your services vs. your competitors — both during the proposal process and while you are providing legal services to your client. The Association of Corporate Counsel has a number of KPIs on their website that I would like to comment on as well as some of my own.
In my experience, I have taken note of a few key measurements, and basically they fall into three main buckets: Quantitative, Billing and Subjective. I would like to interpret the buckets and how they relate to law firm performance and proposal content.
Bucket #1: Quantitative
Quantitative measurements are important statistics to track as they can be used during performance reviews with the client as well as internally. The information can also be used in proposals to prove expertise and performance delivery.
Quantitative measurements include:
- Expertise (wins/losses, close the deal, etc.) — Clients track the performance of law firms and individual lawyers; however, what is amazing to me is that many law firms do not track this information themselves. Expertise data is very useful in client retention and bidding for more work.
- Quality of work product (performance measurement score) — The measure of work-product delivered is good value relative to the amount of time spent or the fee amount. Some would argue that this is more subjective; however, quality is measurable and needs to be looked at from the client’s viewpoint. Comparisons that show the same type of work as well as the time and fees should be analyzed. Think how useful this information would be if put into a proposal.
- Service efficiency (project management, on time) — Time management systems and processes usually are asked about in RFPs. Process improvement is more than a buzz word. Be ready to state the systems you use in your proposals and give clear examples of how they help you manage and execute the projects in a timely manner.
- Process (timely completion and submission of reports, early case assessments, and after-action reviews lessons learned) — How do you track your processes to prove that you actually have processes in place to meet deadlines and add value with lessons learned? Without examples of processes or software to prove everything is in place you will have a difficult time demonstrating that in a proposal.
- Efficiency/Process Management (tasks are completed on time; timely response on deadlines; returned inquiries on phone calls and emails; sufficient lead time for client’s legal team to review documents) — Do you have a 1-800 line? Literature shows that it is one of clients’ top needs. Think of how much time a general counsel needs to review documents to determine your delivery timing, allow for follow-up questions, etc.
- Technology (current, effective) — Showcase your technology and the training your team receives. Your clients depend upon technology and they want to have a comfort level that you do too. Take screen captures or make videos of how your technology will benefit your client.
- Deliverables (on time, on budget) — What software do you use to ensure that you track your projects and deliver on time? If you are going to be late for reasons not under your control do you let your client know in advance? Discuss your software and policies to address budgets in detail in your proposal even if it is not directly asked for.
Bucket #2: Billing
Accurate, value-added billing is king. This is where the rubber hits the road. Invoices often determine the depth and longevity of any client relationship.
Billing KPIs include:
- Predictable Cost/Budgeting (disbursements all agreed upon in advance; tasks performed at the most cost effective level; project is managed within budget; variance from budget is immediately communicated to client) — No one likes unpleasant surprises, particularly GCs and procurement professionals. Suffice to say that when disbursements outweigh the time spent, it is time for a law firm to take a second look at its billing practices. You need to prove this in your proposals with facts (e.g.technology), not marketing boilerplate.
- Billing (detailed, accurate, understandable) — Make sure your invoices add up to value for the fees requested. The bills must be easy to understand. Needless to say, accuracy is critical. And when you save a client money, put it on the invoice to remind them — if you don’t, they won’t know. Also, it would be a good practice to send a sample invoice to a prospective client as part of your proposal to prove that you have detailed invoices.
- Alternative Fee Arrangements (number and in-kind) — AFAs are not new. You need to articulate numerous choices for the client so they can select the best options for a particular kind of project. The more alternatives you present in a proposal the better — it shows your creativity and how truly interested you are in gaining the client. This also applies for existing clients.
- Results (number of alternative dispute resolutions [ADRs] vs. court decisions) — You need to know if your client would prefer to settle out of court or go the distance. You can easily track your ADRs and court wins. This is great fodder for proposals, too.
Bucket #3: Subjective
All being said and done, it is still the relationship that lawyers have with their clients that is key. If you are doing good work, are easy to work with, deliver on time and bill with value in mind you will likely still get the work. Subjective KPIs are harder to measure, but it is not impossible. Make sure your client is happy with the following KPIs.
- Expertise (provide good business advice) — You know if your advice was helpful to your client. Track it for performance reviews and proposals.
- Innovation (service delivery, technology, processes, AFAs) — Although these are qualitative KPIs, you need to analyze them in the light of whether they could be considered innovative to your clients. You may need to do some research to see what innovations are evolving in the market.
Many RFPs are now asking for examples of innovation, and you need to be prepared to address this.
In an upcoming blog post, I will discuss performance reviews to help you prepare for your review with your client and avoid unpleasant surprises, or at least, how you can properly deal with negative feedback.
Companies are becoming more sophisticated when it comes to measuring their outside legal counsel’s performance. It always amazes me that law firms do not ask their clients for their Key Performance Indicators (KPIs). They spend a lot of time coming up with their Client Satisfaction Survey but don’t take into consideration what they themselves will be judged on — i.e., the KPIs that are important to the client — and then add this information into their satisfaction survey/review.
How are you measuring up?
In a recent forum with Marco Perez, Senior Director, Head of Procurement USA & Legal Global Category for the Royal Bank of Canada (RBC); Vincent J. Cordo, Global Sourcing Officer at Shell; and, Justin Ergler, Director of Alternative Fee Intelligence and Analytics (Global) at GlaxoSmithKline (GSK) that they have between 65 to 100 KPIs on their scorecards to measure the performance of their legal services suppliers.
As a consultant to law firms, I admonish my clients to start thinking like a procurement professional right from the beginning of the relationship. For example, when responding to a Request for Proposal (RFP) you need to provide answers that will show up on your client’s “KPI radar”. Some questions may seem to be intrusive or even superfluous; however, you need to think about the question behind the question. For instance, if you are asked about your hardware/software they really don’t care if you are using a ThinkPad P70 laptop or the brand of document management software you use; the real question is whether you are using obsolete hardware or software that will make it hard for your timekeepers to do their job.
Clients care about a seamless mobile work environment where their files can be accessed immediately in response to a question, especially when the attorney is not in the office. You should also include information on how your legal services team, at all levels, is trained on the software they are using. That will demonstrate to the client that you understand that having current technology is good but knowing how to use it effectively is vitally important. To procurement professionals, it all adds up to better service and ultimately cost savings.
Another example of analyzing the RFP questions is the typical query about using electronic signatures. You may think “who really cares?” However, what the client really wants to know is how much time and resources you spend to i) sign a document; ii) scan the document (particularly if it is a large file); and iii) then email it back to the client (when an electronic signature is considered to be a legal signature in the first place). Once again, saving precious and costly time and money.
Embracing Good Process
Many companies employ Six Sigma methodologies to manage their processes. (Both Cordo and Perez have earned Six Sigma black belts.) Therefore, when it comes to process and project management, it is very important to ensure that the right people are doing the right thing the right way. All law firms say that they do this in their proposals. However, questions about processes should not to be taken lightly. Clients are looking for proof that you have embraced good processes that enhance the kind of efficiency they are looking for, whether it is through utilizing technology or improving work flow processes. You need to provide assurances of high-quality work product at a lower cost, available in less time.
When submitting proposals that require diversity as part of the criteria for servicing a company, law firms often submit diversified teams but later change out the players. This is does not go unobserved by procurement. It is all part of tracking the performance of legal suppliers. You need to live up to what you promise in your proposal; after all, it is regarded as a legal contract.
“Performance measurement really kicks in once work commences,” Ergler observed, adding that measurement is about comparing the proposal to the results. “If there are gaps, they need to be addressed.”
In my next blog on procurement measurement, I will discuss the qualitative and subjective measures procurement professionals use to analyse when compiling a firm’s performance scorecard. This information will help you gauge your firm’s performance and allow you to enhance the position of your firm vs. the competition.
You can write the best pitch proposal with all the strategy and bells and whistles you want, but if you don’t have the right pricing methods you won’t win.
This is the message that was clearly acknowledged at our recent seminar, entitled “How Procurement Impacts Law Firm Selection”, held in in Houston this February. Speakers included Vincent J. Cordo, Global Sourcing Officer at Shell Global; and Marco Perez, Senior Director and Head of Procurement USA & Legal Global Category for the Royal Bank of Canada. The speakers gave great advice to lawyers, pricing professionals and proposal managers on how to be creative when pricing proposals and on-going client services.
In-house lawyers receive the questions lawyers ask regarding the request for proposal (RFP), the panel noted. Perez admonished “Send in your questions, don’t guess. Procurement rarely gets good questions for clarification on fees. Communicate with us, it is not happening often enough.”
Price right — not high — and go in different, the panel also advised.
Pricing’s Lateral Move
A recent survey from The American Lawyer and LexisNexis survey found that only 28% of respondents said that hiring laterals had been “very effective” over the past five years, and 10% said hiring laterals was either neutral or negative. Cordo told attendees to be creative. “If a lawyer moves laterally to a different law firm they should strategize on how to partner with their clients on building their book of business,” he said. “Therefore, provide the client with a 30% discount off their rate while they are trying them out at their new firm, for example.”
If the matter (for example, litigation) goes beyond your expectations and estimates, work with your pricing person in advance and explain why you will be over-budget and by how much.
I asked the panelists for suggestions on how to provide a fixed fee when information on the scope or volume is not provided in the RFP. The consensus was to provide assumptions. For example, provide the math for assumptions based upon the team structure (number of attorneys, level and expertise) and kind of matter. Provide fees based on hypothetical volume levels. “We all love examples, so give examples on pricing in your proposals,” Perez said.
The panel also had another word of advice: If the matter (for example, litigation) goes beyond your expectations and estimates, work with your pricing person in advance and explain why you will be over-budget and by how much. That is much easier to deal with and less trouble for the client versus working extra time beyond the budget, billing your client after the fact, and then having uncomfortable billing or write-off discussions months later. “If it is a corporate matter and the schedule is off, scope impact needs to be broached with the lawyer right away,” added Shell Global’s Cordo. “It all comes back to project management. It’s not just about price, it’s about how the schedule also impacts the overall commercial value and risk.”
Basically, as the panel explained, pricing comes down to a paradigm shift, rather than plugging in hourly rates with a 10% discount — ask questions, seek clarification, and do the math.
“Challenge us if you don’t understand what we need,” Royal Bank of Canada’s Perez recommended. “Give us strategic suggestions based on your knowledge of our business, industry and the law.”
Cordo agreed, summing it all up by saying: “If you aren’t familiar with your true costs, and effort needed around supporting the client on any opportunity, it will make our discussions tougher when planning out appropriate pricing.”
Indeed, my observation during the seminar that “procurement is the new normal” was strongly underscored by members of the panel, and the sooner law firms understand how to work with procurement and provide value based pricing, the faster we can all get back to business.
Law firms want to provide their qualifications in the best possible light in response to a Request for Proposal (RFP). In order for them to do this, procurement professionals need to provide clear and concise information.
Lawyers need to understand your needs. But your view of expertise and great service might differ from their view, so to get better responses from law firms, you need to communicate what you really want and expect.
TIPS FOR BETTER RFPS:
COMMUNICATE CLEARLY: Communicate clearly about the expertise and service you expect. Don't assume the firms know or understand your needs. Vague terms like “efficiency” or “project management” mean different things to different people. For example, are you referring to technology or programs?
CUSTOMIZE YOUR RFP: Terminology and jargon used in other professional services industries does not always fit with legal services. Be careful when you “cut and paste” questions from other RFPs. Tailor your RFP in order to save valuable time responding to numerous questions for clarification.
GLOBAL REQUESTS FOR SERVICE: Customize your terminology for the country that is receiving your RFP. For example, 401s and 10Ks are U.S. terminology.
EVALUATION CRITERIA: Provide evaluation criteria and the weighting for responses. This will help law firms understand what is important to you.
FEE QUOTES: When asking for fee quotes, provide information about the scope and volume. Asking for a fixed fee without providing information will not get you the outcome you desire. Ask to speak with the law firm’s “number crunchers” when negotiating fees as you speak the same language.
TEST SOFTWARE AND SPREADSHEETS: Test your software and spreadsheets before sending out the RFP (perhaps test it outside of your company) to make sure it works. This will prevent a last minute panic for your procurement department not to mention the law firms.
PROVIDE A CHECKLIST: Insert a checklist to ensure that the law firm includes all relevant documents. You may lose a great candidate if any mandatory information is omitted.
Nancey Watson is a legal business development and proposal consultant. She strategizes, develops pricing strategies, and writes proposals for law firms – global, national, mid-size and boutique. She is a catalyst for opening the dialogue between procurement and law firms and has created a series of seminars on the topic “How Procurement Impacts Law Firm Selection”. Reach her at 416 436 1375, or firstname.lastname@example.org.