The Singapore Law Gazette

The Invasion of Requests for Proposal

In an ideal world, filling out lengthy requests for proposals (RFPs) to pitch for work is unnecessary. You should rely on your reputation as a lawyer and clients to come to you.

Unfortunately, RFPs are now a constant presence, with law firms having to compete against other law firms in “beauty contests” to vie for new business.

Why the RFP Process?

The dynamics of the business relationship between lawyers and corporate clients are changing, with the rise in demand for matter management transparency from law firms and competition from alternative legal service providers.

The pressure is on corporate legal departments to become more cost efficient and strategic by reducing the number of firms they have on their panels. Law firms must now pitch for work that would previously have gone to their firms with little to no scrutiny.

The inclusion of additional players (beyond the general counsel) such as the procurement department in the law firm engagement process is another reason. Procurement departments in companies do not view law firms as an exception in the purchasing decision for law firm contracts.

A Typical RFP

RFPs are used by corporate legal departments when they need help in managing a specific one-time matter, require expertise in a specialty area or when they need to create or renew panel law firms.

Most RFPs are intimidating documents that are mind-numbingly detailed.

Responding to an RFP is time-consuming. The ability to manage an RFP effectively requires processes, staffing and technology, fundamental elements of Legal Project Management (LPM)¹The following key areas of LPM are adapted from the LSS x LawVision: Legal Project Management e-Learning 2021 course notes:
Develop a thorough understanding of the matter at the outset. This involves beginning each matter with an in-depth analysis, especially from key persons who will affect the direction or approach to the matter, and those affected by the matter (stakeholders).
Communicate with stakeholders and the project team throughout the matter. This is important for defining criteria for success, limitations and budget/cost expectations.
Develop a “scope of work” at the outset of the matter. This enables all stakeholders and project team members to be on the same page and to manage the matter and budget accordingly.
Develop a project plan. This should include a “work breakdown structure,” schedule and timeline, communication plan, risk assessment and budget.
Ongoing monitoring. It is important to monitor actual progress of objectives of the matter, as well as changes in scope or risk.
Conduct an “after action review to identify lessons learned.” This will determine how processes for similar matters can be improved for future efficiencies..

Questions and requirements in a typical RFP:

• Biographical details of lawyers
• Firm insurance coverage
• How the firm’s experience and expertise are relevant to the client’s specific needs
• Client requirements on matter management, fees, disbursements and billing processes
• Submission format and timelines

To RFP Or Not to RFP

Firms face tidal waves of RFPs coming in through partners who are eager to generate work. Most law firms are relatively new to RFPs and it is a challenge getting prepared and responding effectively and efficiently.

RFPs are double edged swords. They can be a source of work (and revenue) but they can also drive down profit margins, commoditise work and in some cases, are a waste of time.

Being selective in responding to RFPs is essential. Determining whether the RFP is a fit for the law firm is the first step.

Questions to Consider Before Responding

1. Conflicts

• Will the firm be conflicted?
• Will winning the RFP put existing client relationships at risk?

2. Competitive landscape

• Does the firm have a competitive advantage or does the client favour a competitor? How many firms are competing?
• Sometimes the client may be using the RFP process to threaten their incumbent firm on fees or level of responsiveness.

3. The prospective client

• Is there any information on the client’s needs and issues?
• What were its frustrations with its current counsel (if there is one)?
• Were the fees out of line?
• Was work not turned around promptly?
• Were there communication issues?
• Were there work product quality issues?

4. Resources required to respond to the RFP

• Does the firm have the bandwidth to respond?
• There are some RFPs with only a handful of questions and a response can easily be done. However, most RFP responses require a lot of time collecting data and filling out details.
• RFPs from financial institutions and some MNCs can be particularly complicated because, even if the firm has the legal capability, it may not have the cybersecurity in place to pass their requirements.

5. Evaluate the work

• Will the fee structure in the RPF make the work unprofitable?
• If it is low-level commodity work, is that the type of work the firm/practice group wants to be known for doing?
• What is the anticipated volume of work and what types of matters are being referred?
• Can the firm handle the volume and is able to do the work without compromising on quality and profit?

Responding to RFPs

By implementing a formal response process, law firms can maximise the opportunities that RFPs present. Below are some suggestions, adapted from the three main elements of Legal Project Management (LPM) principles, people, process and technology.²The people element involves adopting a structured and proactive approach to communicating with all stakeholders and managing the project team members.The process element involves applying simple processes at every stage of the matter to increase matter team effectiveness and efficiency.Using technology tools can be helpful in managing the work efficiently and in an organised manner.

1. Have a formal evaluation process

The instinctive reaction of most law firm partners is to respond to as many RFPs as possible, with hope of generating some business. Most perceive it as a good way “to get the firm’s name out there”, even where the chances of success are low.

Although not every RFP makes business sense to respond to, it is difficult for the firm, especially the marketing department, to say no to partners.

It is easier to convince partners of the benefits of foregoing an RFP if there is data to support the reasons. This will also minimise any misunderstanding by the partner who originated the opportunity that the firm is trying to limit their ability to get new work.

For example, if the data shows that the firm has been unsuccessful in 100 per cent of oil and gas industry RFPs, then perhaps it makes sense to stop chasing that area of work.

• Put in place a formal mandatory in-take process so that all RFP opportunities are directed to a central point of contact within 24 hours of receipt.
• Where applicable, generate a report that identifies who has billed the client, for what type of matters and under what type of fee structure.
• Identify if the firm currently represents any key competitors that may impact conflicts.
• Share a copy of the RFP with the relevant practice or industry group heads and any relevant staff members who may be asked to contribute to the response.
• It is important that external counsel guidelines are reviewed to ensure which terms the firm is willing to abide by. Have a strategy on items the firm will not agree to and reasons why.

2. Ensure internal communication

When responding to an RFP, ensure the firm does not agree to conditions that will impact other work in the firm. It is common for law firms to agree to certain conditions for a small piece of work and subsequently discover that the same agreement impacts work in a completely different practice area (which generates a lot of revenue).

Put in place a process to ensure all key firm stakeholders are made aware of the opportunity at the outset.

3. Strategic response

Every stakeholder must be on the same page on the firm’s strategy and execution of the response.

The firm’s competitive advantages to be highlighted should be identified early so that the language drafted supports the overall theme of the response.

4. Execution of response

Manage the response schedule. Priority should be given to fee structures. Discuss it early to address any request for discounts or alternative fee arrangements (AFAs).

Very often, firms address the fee component too close to the deadline, not allowing enough time for number crunching. Try to avoid a scramble to management for fee discount approval because there was not enough time to gather information and come up with a considered proposal on fixed fee or a competitive fee against other firms.

5. Presentation of information

How information is presented in RFP responses is important. Law firms need to be compelling in their value proposition. RFP responses need to show what makes a law firm different.

RFP responses usually contain input from a few lawyers. It is important to convert the information into a consistent message that tells a story of why the firm should be selected. That theme should be supported throughout the response with examples and customised answers that proactively promotes the value the firm brings.

6. Create an internal database

It is common for much RFP response time to be spent chasing down information from lawyers about value and key competitive advantages. This often results in a race to beat the deadline with a response that has no cohesive message but is just a data dump.

Create an internal database of information related to past RFPs, including sample responses (since RFPs are often similar). The database should also include awards, authored articles, speaking engagements, media clippings and other accolades of the lawyers and the firm.

Having the above information in a centralised database will speed up the response process.

7. Performance tracking

Have a tracking system that collects information on how RFP opportunities originated, who the competition was, industry, type of work, details on the lawyers involved and the strategy and competitive advantages pitched. This will enable the firm to understand the reasons behind the decision-making processes and learn how to enhance future responses.

Track return on investment (ROI) on pitches and RFP responses, for example, the amount of work and revenue generated.

8. Feedback

If the pitch was unsuccessful, try and contact the client to find out what factors the client liked about the firm and where the firm was weak. This is useful information for future pitches.

RFPs Are Here to Stay

RFPs will not be a passing fad. Confronted with ever tighter budgets, clients, under enormous pressure to control costs, will continue to use RFPs to compare legal services and negotiate fees and service terms. 

Responding to RFPs may eventually become the only way for law firms to pitch for work from corporate clients. Law firms of every size need to be set up to respond to RFPs or face a shrinking range of opportunities.

RFP response will need to be treated as a core competency of business development in law firms.

While the RPF process can seem tedious and responding can be overwhelming, law firms armed with formalised RFP response processes, can be strategic and even thrive in the invasion of RFPs in the business of law.