Throughout the month of June, I had several dozen meetings with
corporate and government law departments, law firms, and
alternative service and technology providers working in the legal
space across the country. A condensed time frame and enough
meetings was a good way to understand the range of challenges and
opportunities for big law, for start-up law firms, tech providers,
alternative service organizations and, of course, for corporate and
institutional law departments.
The relationship between a law firm and its most significant
clients are strategic, professional and economic. A recent study of
General Counsel found that expertise and relationships still trump
cost when selecting counsel The median rating (out of 10) for
significance of the selection factors were: understanding the
business (9); referrals and recommendations (8); personal contact
(6); and expertise (6). Cost ranked lower than ay of these
No surprise then that 14 out of 15 successful responses to
Requests for Proposals for Legal Services are from
existing providers, despite the fact that only 17 % of Chief
Legal Officers believe that their lead law firm is significantly
more competitive than its closest competitor. While banks,
utilities, insurers, pharma, and some manufacturing are forcing
change in the business arrangements with their law firms, there is
little evidence of cost reduction pressure for law departments.
Everyone wants a bigger discount and to believe that they enjoy a
"most-favored nation" status for their legal fees. But
ultimately, it seems to be enough to live within approved budgets
and to have predictability on what individual matters will cost,
even if that means paying 15% more than they would with a more
rigorous approach to retaining external counsel.
Companies have far to go to link fees to performance by their
law firms. CLOs do not prefer structured processes and requests for
proposals to secure legal services. They seldom have the
methodologies, the discipline, and the patience to embrace
procurement and strategic sourcing for legal services. Law firms
have now seen the opportunity this represents to expand market
share. Many U.S. and some Canadian law firms have hired Directors
of Pricing and Legal Project Management with expertise in
alternative fee arrangements and responding to RFPs. These roles
are the natural counterparts to corporate procurement and sourcing
officers – something that makes sense for a law firm to have
when you consider that 20 % of the specialists in legal
services procurement are lawyers and most of the others have
A law firm would do well to act pre-emptively to secure
long-term arrangements with its top 25 clients, even if the work
does not result from a successful response to a formal request for
services. Many corporate initiatives to request proposals for
external counsel are rudimentary at best, especially when it comes
to alternative fee arrangements and to making longer term
commitments for work volumes to fewer firms. Many GCs are still
convinced that they "hire the lawyer, and not the firm,"
rather than "the lawyer and the firm." That
begins to explain why a recent review of web sites of Canada's
20 largest law firms found that only four firms made more than a
passing mention of their interest and capabilities in non-hourly
The reality is that most RFPs reveal very little about the
client's selection criteria and work allocation processes.
Robust LPM is rarely applied to complex work. And Chief Litigation
Officers are not at the cutting edge of sourcing and alternative
fee arrangements. Jose Pariente, the former Chief Strategic
Sourcing and Procurement officer at White & Case, llp suggested
that the effectiveness of RFPs can be improved if they ask the
On experience: "How does your firm envisage
capitalizing the knowledge and experience already acquired by
supplying services to us to ensure a constantly diminishing
On people and relationships: "What is your
firm's experience, if any, in preferred supplier relationships
with clients? What have you found works well and what does
On fees: "Briefly describe anything we could do
differently to help the firm drive efficiency."
On value-added services: "Please provide three
examples of value-added services which you offer to other clients
and that you do not currently offer us."
On performance: "Describe how your firm tracks
and measures quality and service performance."
The very best law firms receive requests for proposals on a
weekly basis. The scope and quality varies greatly. All law firms
should be able to re-think, adjust, and deliver the additional
value they offer to their clients. They have the opportunity, the
motivation and the means to do so.
Originally published in Lexpert, September 2015
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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