Admittedly, I have a bias to running RFPs to hire outside counsel. Many an in-house lawyer, however, are not in my camp.  I know they are thinking, “Isn’t it risky?”  The idea of risk is worth exploring:  what exactly are the risks of running an RFP to hire outside counsel? Here are some to consider:

Risk of Having to Pick the Low Bidder

Clients always determine their own decision criteria. There is absolutely no reason a client would be required to pick the low bidder…unless, of course, they determined that criteria themselves. If the client has any reservation about the attorneys that firm has recommended or how long the firm thinks it will take to complete the work (e.g. did they under-bid the hours?), the client is under no obligation to hire that firm.

Risk of Paying Less Than You Do Today

There is a distinct risk of a client paying less than he or she does today. So, is this a risk to worry about? Sometimes clients are afraid of the transparency an RFP brings. A client may learn–and/or others in the department may learn–that he or she has been over-paying their incumbent(s). In these times, however, it seems the bigger risk is leaving money on the table and not minding the bottom line.

Risk of Uncovering Critical Expertise

There is also the risk of uncovering critical expertise. One of our clients, in anticipation of a litigation, uncovered a firm who had spot-on experience: the firm had argued against the same counterparty in front of the very same judge. This client would not have known about this new firm’s expertise if he had simply picked-up the phone and called his incumbent.

Risk of Having to Work with A Firm You Do Not Know or Trust

Clients are always in control of whom they invite to an RFP. If a client is skittish about a certain firm, they should not invite them to participate. If they know there’s a firm that their GC or board will never approve on an important matter, then that firm should not be invited to participate in the RFP.

Risk of Offending Your Law Firms

Especially in these uncertain times, law firms want your work. Law firms understand that RFPs have become a part of doing business. Many firms have proposal managers on staff who respond to RFPs day-in and day-out, 52 weeks a year. Although some in-house teams may find RFPs risky, law firms have come to expect them (Altman Weil Lawyers in Transition 2019).

Risk of Making of an Uncomfortable Phone Call

There may be an uncomfortable phone call or two coming out of an RFP. These conversations are important, nevertheless, and may be overdue. Do you feel like you are paying fair rates today? Have you been looking for an opening to have an honest conversation about how your incumbents’ rates compare to the marketplace? Do your incumbents understand that you respect them and appreciate their work, but that you also have accountability to the bottom line? RFPs provide an easy entree for a data-based discussion about fees and rates.

All told, running an RFP to hire outside counsel is well worth the risks.

Kathy Heafey is the President of BanyanRFP, a consultancy fueled by a cloud-based platform that together make running RFPs to hire outside counsel painless. Prior to leading BanyanRFP, Kathy enjoyed over 20 years in management roles, most recently on margin management and continuous improvement initiatives that enabled $20MM in annual cost savings. She is now helping in-house legal teams save millions of dollars as they find best-fit counsel for their legal work.

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