There’s nothing new about the Request for Proposal (RFP) process, a common way for businesses to procure goods and services. What’s different is the increasing frequency with which law firms are being asked to respond to RFPs from potential clients.
Terry Tomkins, Chief Administrative Officer working out of Parlee McLaws’ Edmonton office has noticed that his firm is receiving more RFPs than in the past. Across the country, Phil Rogers, Chief Administrative Officer for the Atlantic firm Patterson Palmer reports the same trend, noting that RFPs are "spreading throughout the legal world" and are "a regular part of marketing our business".
Mr. Rogers believes more clients are using the RFP process "to get better value for services". "Lots of companies are looking to outsource", observes John Lowman, Senior Counsel with Imperial Oil Limited. "[They’re] shaking their heads at the size of their legal bill … and wondering why rates are so high." And, he adds, they’re finding that they can get the same service at half the price if they stop relying on the King and Bay Toronto firms to meet all their needs.
Clients looking for legal talent through RFPs include banks, insurance companies, other corporate clients, school boards, municipalities, and not-for-profit organizations.
Richard Stock, a partner in Catalyst Consulting, says the Canadian Pacific Railway was the first Canadian client to use an RFP in its search for legal services in the 1990s. He believes that the increasing use of RFPs reflects the "business to business relationship" that is beginning to characterize the purchase of legal services. "We’re moving away from retail purchasing to wholesale purchasing", he says, adding that it is "folklore" to believe that a client retains the lawyer not the firm.
Not everyone agrees. Robert Patzelt, General Counsel for Scotia Investments Ltd., a privately-held east coast company which owns a diversified range of enterprises, says that the wholesale purchase of legal services "isn’t a natural lend". He doesn’t believe in "commoditizing a service". Instead, Mr. Patzelt continues to track down the best legal talent for the job at hand using his research and people skills. "I’ll go out and pick my people".
So does Francine Swanson, Senior Legal Counsel, BP Canada Energy Company. She finds that when she needs to hire outside she needs to do it right away. "I don’t have time [for an RFP]. When I need someone, I need them now." Cold calls, golf games, and "smooze fests" are not how to attract Ms. Swanson’s attention, though. She is much more likely to find legal talent through professional events, such as CBA panel discussions or meetings where lawyers talk about their work and where in-house counsel, like Ms. Swanson, can get a sense of their areas of expertise.
While some clients may prefer to stick with lawyers they know and trust, it seems that more and more clients are looking at RFPs as an opportunity to do some price comparisons and see which law firm will offer them the best value for their legal services dollars. Boutique law firms and mid-sized law firms providing a broad range of core services are likely recipients of RFPs.
The RFPs are often for on-going and perhaps mundane legal tasks - collecting overdue mortgage accounts, advising on human resources matters, managing routine insurance litigation, handling real estate closings when a business re-locates a significant portion of its employees. Therefore, clients are not necessarily looking for the firm’s legal stars to headline the proposal. Clients want to see that their legal work will be appropriately managed, with experienced (and expensive) counsel available for consultations and supervision and with senior associates, junior associates, and para-legals taking care of most of the work.
"You don’t need someone who is the top expert in the area of harassment, who can charge what they want, to deal with general [employment law] questions", says Ms. Swanson. Mr. Stock, who often prepares and advises on RFPs for clients, agrees. He says that as "experience levels go up, the complexity of the work doesn’t" and that clients are looking for a "better match of work complexity with the experience of the people in the firm." Clients, he suggests, want to see appropriate delegation of tasks and more team work.
They also want quick access to their lawyer. Mary Recoskie is part of the in-house counsel team at Sun Life Assurance Company of Canada. She finds that smaller law firms are better providers of legal services based on price and accessibility. "Service is better," she says. "You don’t have to go through a string of juniors."
"Add-ons" or "valued-addeds" are another possible feature in a firm’s response to an RFP. Peter Israel, an employment law specialist with Israel Foulon LLP, may include a number of employee training sessions as part of his firm’s proposal for employment law services. Mr. Rogers says that showing how his firm’s billing system can be integrated with a client’s accounts payable software may be a selling point. Some firms may undertake to keep a client informed about changes in an area of law or provide a newsletter on a regular basis. Others may offer research and library services or technology assistance.
The pitch to a client may include both a paper proposal and, what Peter Israel refers to as a "beauty contest", where lawyers make a presentation to the client in a formal, or less formal, meeting. Mr. Tomkins says sometimes firms will practice first, doing dry runs of their presentation and having marketing specialists coach lawyers on how to present the proposal to the prospective client.
But, in the end, does a client’s choice of proposal all come down to money, a comparison of "rack rates"?
Mr. Patzelt and Mr. Stock both believe that service is more important than price. For Mr. Stock it is "80% about service, 10% about price, and 10% about expertise and experience". Generally, a firm "won’t lose work based on prices", he adds. Mr. Patzelt agrees, "If the value of your service is good, price never comes into it".
What clients seem to want are some creative approaches to billing. Mr. Israel, for example, has retainer agreements with some clients, promising on-call service for a fixed monthly fee for routine human resources and employment law matters. Other firms will agree to eat any budget overruns on the condition that they can keep any profits generated through their service efficiencies. Providing a set fee for a project may be an attractive approach.
Answering an RFP can be time-consuming, without any guarantees of success. There are stories of clients sending out an RFP and then sticking with the law firm they already had or clients going through the process and then never assigning the work. That’s what happened when a client was downsizing and expected a host of unjust dismissal claims. They found a law firm to handle the work through the RFP process but then none of the laid off employees sued. No work materialized.
Spending dozens of non-billable hours to prepare a proposal that goes nowhere is not the kind of investment law firms like to make. Here then are five tips from colleagues about how to succeed when bidding for work.
- Don’t try to be all things to all people. Look at the RFP carefully to determine what the potential client wants and assess your firm’s legal and other resources. If you don’t have the capacity to meet the client’s needs, don’t bother answering the RFP. It may nevertheless be worthwhile to follow up with the client and, perhaps, find out if you could bid on the part of the work that is within your firm’s abilities.
- Talk to the client. Phone the person who has issued the RFP to find out more about what they really want. Do research to get to know the client’s business and corporate culture. Ask around. Become as familiar as you can with the sector and its problems so you can match the people and talent in your firm with the client’s needs.
- Present the talents and experience of all the members of the team that will be working for the client. And, don’t be afraid to talk about your losses as well as your successes. The best learning comes from failures and clients will appreciate the knowledge you may bring as a result.
- Follow the instructions in the RFP. This applies to both the substantive and technical elements. Make sure that you answer all the questions the client raises and that you deliver the proposal as the client requested. If the client wants four copies of a 10-page presentation, that should be what you produce.
- Adjust your attitude. A law firm that projects a "you’d be idiots if you didn’t hire us" image is not looking to the long-term. Ultimately, a client will hire the firm that offers the best service at the best price with the best possibility of a dynamic and positive working relationship.
Requests for Proposals may become a more and more prevalent way for clients to hire lawyers and their law firms. And, while a firm may wonder if all the effort is worth it when a bid is not successful, Mr. Rogers advises viewing the whole process as "an opportunity to expand your penetration in the market".
RFPs are new element on the business side of the practice of law.
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EPIIgram is produced by the Legal and Governmental Affairs Department of the Canadian Bar Association. For further information or to inform us of the latest economic or social trends that are having an impact on your practice, please contact us at EPII@cba.org.
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