Generating good RFPs and building a basic law firm panel

In-house counsel’s selection of outside lawyers now often includes the use of requests for proposals (RFPs) to search out and find the best firms for the problem at hand or to create a panel of “go-to” law firms. Unfortunately, many in-house lawyers aren’t particularly good at this process among other essential skills. If done right, an RFP process can deliver tremendous value to the legal department and the company.

Below are some tips on how to create an RFP process for building a panel of firms:

What is an RFP? 

An RFP is a process where an in-house legal department requests a number of outside law firms to submit proposals to obtain legal work from the company. The proposals are in writing, usually following a template sent by the in-house team.

One common use of an RFP process is to identify panel counsel, that is, a panel of preferred law firms that can handle most — if not all — of the company’s outside legal work. Once selected, panel counsel is on the panel for several years and, if done right, becomes deeply integrated with the in-house team.

What does the RFP process look like? 

RFP paperwork can take on several different forms. The most typical is a Word document or Excel spreadsheet. Some in-house departments use portals or special software that not only formats the RFP document but collates the responses into a report.

There is generally an introduction that lays out the goals of the process. Good RFPs provide some background about the company and the industry it competes in; be sure to include page and word limits too.

Whom to invite 

If you’re just looking to reduce the number of firms you already use, then you send the proposal to all your current firms. If you want a panel that might include new firms, then you need to identify other firms to contact. It is important that you have enough firms involved to make the process work by generating quality proposals that give you value and real choice. 

Ask around for recommendations from your team or other in-house lawyers on whom to invite to bid — you can also do some research online as well. Always include smaller, regional/different geography firms or boutique law firms in your list as they can provide tremendous value with the same — or better — level of quality.

Question to include 

The heart of any RFP is the questions that you ask outside counsel to respond to. Limit the number of questions so you are not overwhelmed with information and you’re not wasting the time of outside counsel. Prepare questions that get useful information versus generic marketing.

Ask these four core questions:

Experience of the team 

What is the experience of the team that will actually be working on your matters? Exclude copies of the lawyers’ firm bios; those generally contain very little information that matters. Ask for a two-paragraph summary of why they are right for the team and what they bring to the table.

Legal strategy 

What is the firm’s legal strategy for handling your matters? You are looking for relevant experience, but also their general philosophy, creative ways they have handled legal matters, their track record, etc. 

Staffing strategy 

You want to know why the people on the team were selected, what they will be doing, and whether the firm be using contract lawyers or alternative service providers to perform any part of the work. How will the firm ensure that partners aren’t doing work that associates should do, etc.? In short, are you getting the “A” team for your company?

Project management strategy 

How will they manage legal projects; how often do they provide updates, status, and strategy calls; how are lawyers brought on or off; how do they track important dates and manage documents and depositions; etc. Ask for examples of what they do and the reports they prepare. 

Customer service 

How the law firm will treat your team is important. The RFP process can lay the groundwork by asking a few key questions:

• Who will be the relationship manager? 
• What technology will you use to reduce my costs and do my work more efficiently? 
• What is your data security program? 
• How will you learn my business? 
• How will you handle conflicts? 
• What are your diversity efforts? 
• What do I get for free? For example, a set amount per month of free phone calls, CLE training, etc. 

Price 

To price outside counsel services properly, you need data about your legal spend over the past several years, along with data about what’s “market” for your types of matters or for your geography. Here are some things to look for:

• Fixed price: This is nirvana for in-house counsel because you get certainty around cost. You should expect to provide a lot of information to the firms so they can correctly price the work. Ask what happens if the law firm guesses incorrectly. The firm should stand by its pricing unless you have agreed in advance on assumptions and a process to change the price if those assumptions are wrong.
• Blended rates: Be careful that you understand how projects will be staffed and how much work will be pushed down to lower-cost attorneys who may not have the experience to do a good job — or do it efficiently. 
• Discounted rates: You want discounts from the regular rates of the people working on your matter and not a firm average or rack rates that no one pays. You will need data on your average hourly spend in the past and market data on what hourly rates others are paying. Get a freeze on rates by attorney for the duration of the panel. 

Selecting the panel 

Ensure you give the law firms sufficient time to complete the request for proposal. Next, leave yourself enough time to evaluate the responses, down select to the firms you are most interested in, conduct interviews, and then make your selections. It will take longer than you think! The ideal process flows like this:

1.  Gather the responses and compile the information into a format that allows you to compare the firms in a head-to-head manner. 
2.  Set up one-hour interviews with the firms you are most interested in. Here you get to look them in the eye, ask hard questions about their responses, and get to brass tacks about price. Be sure that the review team is part of every interview, so everyone involved in making the decision sees each firm.
3.  Make the decision, usually at a meeting of the internal team where you have asked everyone to rank their favorites and why. 
4.  Document your deal like you would any other contract. Don’t leave anything you agreed to out, because if it’s not in writing it’s not part of the deal.
5.  Do the right thing and contact all of the firms you did not select either by phone call or in an email offering a phone call.

After you have selected your panel, plan on inviting all of them to a kick-off meeting to discuss the company and its legal needs in more detail, answer questions, and develop bonds.

All in-house legal departments should develop a repeatable RFP process and use it as often as possible for selecting outside counsel. You’ll most certainly get better pricing and services if this process is done correctly. In-house counsel with access to Practical Law will have an array of RFP-related resources to do the task correctly every time.

Thomson Reuters originally published this article on October 10, 2022.