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Requests for proposals, known as RFPs, first gained traction in the 1980s with Fortune 100 companies. With advances in technology along with the rise of legal operations and procurement professionals, the RFP has evolved into the go-to tool for comparing law firm attributes, negotiating price and buying legal services.
RFPs are no longer the domain of Fortune 100 legal departments. Increasingly, smaller companies are using RFPs to better manage their outside counsel spend. Technology, including web-based RFP platforms, is making it easier for companies of all sizes to issue RFPs and compare data. All law firms, even solo practices, need to educate themselves on the best way to respond.
Responding to RFPs can be time-consuming and expensive. Deciding whether to respond or pass requires some strategic thinking. It is important to have a formal response process that asks the right questions to evaluate whether an opportunity is worth pursuing.
Here are five questions to ask when an RFP opportunity hits your desk.
Some government agencies, like public pension plans, are required by law to make RFPs publicly available. There are searchable websites that collect and post these opportunities for a monthly subscription fee. But most RFPs are invitation-only, meaning the issuing company reaches out to lawyers and law firms based on their research and contacts in the industry. When evaluating an opportunity, you need to consider things such as:
Law firms have an exponentially higher chance of success if they have already worked for the company or have a strong connection with people inside the company who are part of the decision-making process. Avoid wasting time and resources on RFPs that you have no chance of winning.
Before you start to work on the RFP, ensure you are eligible, based on the requirements posted. Consider these questions:
RFPs typically have a stand-alone questionnaire or portion of the RFP that denotes requirements. Confirm you can meet these thresholds before moving forward with a response strategy.
This is really the most important question and is tied to multiple variables. Some lawyers make the mistake of thinking they should respond to all RFPs, as it can be a way to “brand” the firm to the company even if not selected. That is not a winning strategy and risks watering down your chances of being selected for work you could win.
Before responding, ask:
Firms should focus on RFP opportunities where they have a strong story to tell the buyer as to why they should be selected over peer firms. If you don’t have a good response to that question, it is probably not a great opportunity.
Underestimating the amount of time required to submit a winning response is a common mistake. Consider:
Also, since RFPs often have short lead times, consider whether you have sufficient time and resources to submit a winning proposal.
Legal departments issuing RFPs have become significantly more aggressive in asking for discounts, value-adds, and alternative fee arrangements that shift more risk to the law firm.
Firms should consider:
Everyone loves to win, and being selected for an RFP is a great feeling. But before the price negotiations and terms of engagement are complete, you must ensure that the proposed matter, in its final form, is worth performing for the price. Therefore, it’s often recommended that someone on the firm’s management team sign off on RFP fee proposals to ensure the matter makes sense — not just for the relationship partner leading the bidding, but also for the broader firm.
RFPs have become a tool general counsel at companies large and small use to incorporate data into the decision-making process when buying legal services. Perfecting how you evaluate these opportunities, in addition to your potential response, is a worthwhile investment.
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