The Request for Proposal (RFP) process is gaining strength as a means for in-house corporate counsel to look for new law firms or procure routine legal services. As the corporate mentality of doing ‘more with less’ spills into the legal realm, the RFP has laid the groundwork for increasing competition in an already competitive legal market.
An illuminating survey by BTI Consulting Group supports this notion. It found that 45 percent of corporate counsels issued RFPs for law firms in 2014. In 2015, that number increased to 56 percent. More clients (over half) have used RFPs in 2015 than at any point over the past 15 years, BTI reported.
Why all this sudden buzz surrounding RFPs? Understanding why businesses are now bidding out for their legal work will help law firms retain current clients and seek out new areas that may benefit their business strategy.
In a recent Bloomberg BNA article, “Companies Pressure Law Firms with Procurement Process,” Amar Sarwal, Vice President & Chief Legal Strategist for the Association of Corporate Counsel; Kathy Heafey, President of Banyan RFP; and Michael Rynowecer, BTI Consulting President, said there are several market forces driving the RFP movement including:
- Large companies consolidating their number of law firms
- Legal departments being more conservative in their bottom lines, reining in unnecessary costs
- Corporations’ perceived poor client service from their current law firms
- Considerable turnover at the general counsel level affecting long-term relationships between companies and their law firms
- More in-house groups operating like a business—looking for the best price for the type of work required
- The need for legal departments to streamline inefficiencies
- The need to get fresh and innovative legal perspectives
Because it does not appear the call for RFPs are going to fall by the wayside anytime soon, positioning this process as an opportunity instead of a drawback can give law firms a distinct advantage. It gives firms the chance to review their current level of client service and beef up lagging areas so that clients are less likely to search for new firms in the first place.
It also gives firms the chance to review their strategic plan to determine if there is entry into new markets or types of additional business.
Finally, the process can make law firms more efficient, knowledgeable and prepared. Chances are an RFP will be required at some point, and having a response at the ready can lead to a winning bid over other firms who have not been as well-equipped for the process.
Insurance defense law firms will want to identify and stay in touch with corporate general counsel, insurance panel managers, and self-insured entities that go out for bid periodically. More about RFPs and a general outline of its sections can be found in a previous Insurance Defense Marketing post here.