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RFPs
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The Friday Five

Five Questions to Ask Before Responding to an RFP

By Matthew Prinn

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.

The Rise of RFPs

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. 

Respond or Pass on an RFP?

Here are five questions to ask when an RFP opportunity hits your desk.

1. How did the opportunity originate?

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:

  • Have we previously done work for the company?
  • How strong is our relationship and work history?
  • What contacts do we have inside the company?
  • Are they unhappy with current counsel?
  • Are we being used as a stalking horse to force an incumbent to lower fees?
  • What other law firms have been invited to respond?
  • Will we have a chance to ask questions and learn more background about the RFP, or are we limited to the data included in the proposal?

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.

2. Are we eligible?

Before you start to work on the RFP, ensure you are eligible, based on the requirements posted. Consider these questions:

  • Would the firm be conflicted out due to current firm clients?
  • Can the firm meet the cybersecurity requirements noted in the RFP?
  • Are there other thresholds required in the RFP such as diversity, financial, technical, certification or prior experience criteria?

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.

3. What are our chances of winning?

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:

  • Who is the incumbent firm and what is the chance to replace them?
  • Do we have prior work experience in this area?
  • Do we have a strategy to pitch that differentiates us from other firms?
  • Do we have a specific geographic advantage?
  • Would the company be willing to pay our rates?
  • Do we do work for the company in other areas?

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.

4. What resources will be required to execute a response?

Underestimating the amount of time required to submit a winning response is a common mistake. Consider:

  • How much of the response includes questions for which you have ready language in your templates or knowledge base?
  • How much of the response will require lawyer input?
  • Who will need to be involved in crafting pricing strategy for the response?
  • How much time will your marketing team need to dedicate to executing the response?

Also, since RFPs often have short lead times, consider whether you have sufficient time and resources to submit a winning proposal.

5.  Is the work desirable and profitable?

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:

  • Is the type of work up for bid complex high-end work or commodity work?
  • Are we confident we can make a profit on the work based on the estimated discount needed to win the work?
  • If we agree to a fixed or capped fee, are we confident our project management skills will allow us to manage the matter to a profit?
  • What discount level are we prepared to give before it becomes not worth winning?
  • Will the work lead to additional matters if selected?

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.

Illustration ©iStockPhoto.com

More Tips for Preparing Proposals

The Basics of Researching Your Target by Sally Schmidt

Five Insights About the Evolving In-House Counsel Role by Mary Juetten

Your Secret Marketing Weapon by Sally Schmidt

 

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Matt Prinn Matthew Prinn

Matthew Prinn is the principal of RFP Advisory Group, a consulting firm that focuses on RFPs in the legal industry. Matt has nearly 20 years of experience in the legal industry focused in the areas of marketing, business development, pricing and proposal management. 

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