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You’re Not Just Imagining More RFPs…

Legal marketers and law firms see signs of the current economic climate everywhere—particularly when it comes to developing new business and keeping/expanding client relationships.  The results of a recent LexisNexis survey illustrate the effect that shrinking legal budgets have on the RFP process: more RFPs issued by companies, a greater emphasis on savings and value, and the tenuous nature of client relationships.  In addition, LexisNexis’ findings provide concrete evidence of what legal marketers have been hearing and seeing for years: companies are sending smaller amounts of work to outside counsel,  and the resulting competition is tougher than ever.

According to the LexisNexis RFP Activity Survey

  • 42 percent of law firms have seen an increase in requests for proposals from in-house law departments this year.
  • Larger firms respond to a higher level of solicitations than their small-firm counterparts.
  • Firms respond to an average of five to 16 proposals per month.
  • Fifteen percent—“mostly firms on the higher end in terms of staff”—averaged more than 21 RFPs each month.
  • The largest firms in the survey dedicated 4,800 hours to law department proposals per year.

What This Means for Legal Marketers

  • Evaluation.  The survey results show the importance of  carefully analyzing and evaluating which RFPs are worth the time and effort.  What questions do you ask yourself, firm or team leadership and your attorneys when determining whether or not to respond to a particular RFP?  Will you hurt a relationship by not responding?  Is it worth the time and effort to respond to the RFP?  What does our research show us about the company’s historical legal spend/relationships?  Asking these questions and evaluating the answers consistently throughout the RFP response process are crucial to developing new business that fits with your firm’s strategic and financial goals.
  • Frustration.  Susan Hackett, CEO and chief legal officer at Legal Executive Leadership reminds us of something that many legal marketers already know: the time and effort put into RFP responses may not yield any new work.  (Feel free to raise your hand if you’ve ever heard a lawyer say “Well, we’re probably not going to get the work anyway, so why bother?” when discussing an RFP.)
  • Formalization.  According to Brad Sidwell, senior director of sales at LexisNexis, the survey results reflect the increased use of formal proposals to evaluate, identify and engage outside counsel. This approach is a change from relationship or results-based business development tactics, and pit existing counsel against those hoping for new business to determine which firm can produce a good outcome quickly and cheaply.
  • Commoditization.  Recently, we’ve noticed an increasing number of  RFPs that are issued by procurement departments—the same group responsible for ordering office supplies.  While legal skill and relationships undoubtedly carry weight in the outside counsel selection process, Sidwell explains that companies are increasingly taking a “commodity-driven approach” to selection of outside counsel, and calls it “a wake-up call for law firms.”  According to Corporate Counsel, “even the successful work a firm did for a company in the past might not carry the same weight it once did.” Brad Sidwell puts it even more clearly: “What you did for the corporation yesterday becomes less and less important.”
  • Manipulation.  Susan Hackett has observed abuse of the RFP process, noting that legal “departments [use] the process to keep their existing firms from becoming complacent,”and mentions the practice of in-house departments “shopping for ideas” via the RFP process.  We’ve all seen RFPs that ask outside counsel to provide a detailed approach to a matter or a thorough case strategy.  Are all of these clients simply evaluating attorney plans…or are some looking for free advice?

*As an interesting statistical note, 41 percent of the respondents “could not quantify the level of RFP activity” at their firm. Therefore, the findings are based on answers from the remaining 213 respondents, drawn from 185 different law firms.  Sixty-six percent of respondents came from firms with at least 100 lawyers..

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