Blog/Podcast: Consider This Before Responding to Your Next RFP
Once reserved for large law firms, requests for proposals (RFPs) are now common at firms of all sizes. Their ubiquity, however, doesn’t make the process of issuing and responding to RFPs any easier or less time-consuming. That’s why Matthew Prinn founded RFP Advisory Group, a consulting firm that advises corporate counsel and law firms on how to best respond to RFPs. He shared some of his best insights for firms responding to RFPs on the Law Firm Marketing Catalyst podcast, and we’ve rounded them up here.
The Five Biggest Mistakes Law Firms Make During the RFP Process
- They don’t have an evaluation process. When a partner receives an RFP, their first thought oftentimes is, “This could make me more money. Let’s give it a shot.” Which makes sense from a revenue standpoint, but one partner pulling in more dollars shouldn’t be the only factor in deciding whether to respond to an RFP. In reality, it should be a firm decision and there should be a formalized, efficient “go or no-go” process that multiple people are involved in.
- They don’t communicate internally. Without sharing the right information with the right people, a firm may go after a bad opportunity at the expense of good ones. Too often, firms agree to conditions for a small piece of work, only to find out later that the same agreement impacts work in a completely different practice area. These problems can be avoided with a simple communication plan.
- They don’t collect the right information from lawyers. All firms have a list of their representative matters, but corporate counsel aren’t just looking for a case outcome; they really want to know what sets one firm apart from another. Firms often don’t have this information handy because it still lives in the heads of lawyers. Firms must have a formalized process for obtaining and managing this data, so marketers aren’t chasing it down every time an RFP comes along.
- They don’t have a pricing system. RFPs can create tension between relationship partners, who want to offer large discounts to score the business, and firm management, who are focused on maintaining profit margins. Even without discount disagreements, there is often the classic RFP pricing scramble, when the firm realizes at the last minute, they don’t have enough information to provide a competitive fee estimate. Bringing a pricing director into the conversation sooner rather than later can help quell these issues.
- They don’t know what makes them different. According to Matt, 50 percent of lawyers don’t feel like they can clearly and distinctively pitch their firm’s competitive advantage. This is a huge problem when it comes to RFPs because that’s the core of the information that buyers of legal services want to know. Firms must have an answer to “What makes you different?” This will set them apart from other respondents and satisfy the RFP issuer.
Five Questions Every Law Firm Should Ask Before Responding to an RFP
- How did the opportunity originate? If you don’t know why the prospect is issuing the RFP, it’s unlikely that you’ll be able to find a good solution to the problems noted in it. Gather as much information as possible about the prospect and their situation, and make sure your response won’t simply be used as a price check.
- Are we eligible? Some RFPs will require capabilities and resources that you just don’t have. For example, an RFP from a bank may require specific cybersecurity measures that your firm hasn’t implemented. In other cases, you may be conflicted due to certain types of work. Make sure you’re eligible before you waste a lot of resources gathering information to respond.
- What are our chances of winning? It may seem like a good idea to respond to every RFP that comes through the door, but it doesn’t make sense to spend time on an RFP you just won’t get. For example, if you’ve never worked with a prospect before, your chances of winning their work are slim (although if you already have a relationship, your chances of winning can jump to 80 percent). Think about these factors before responding.
- Does our firm have the bandwidth? Some RFPs may only ask a handful of questions, which you can answer fairly easily between the marketing/business development department and the partner. Others will require a lot of manual time collecting data, talking to lawyers and filling out forms. You have to compare the chances of winning the work to the amount of time required to get it.
- Is the work desirable and profitable? The work you do today will impact the trajectory of your firm tomorrow. If the RFP is for low-level commodity work, is that the work your practice group or firm wants to be doing one year, five years or ten years from now? If the work is desirable, can you negotiate a price where you’ll still make a profit on it? This is the bottom line of any RFP.
5 Trends Changing the RFP Process
- Historically, RFPs have been issued via Word documents, which made it difficult to compare answers from different firms efficiently. New software, however, has made it much easier for general counsel to issue and evaluate RFPs and for firms to respond to them. This means the RFP process is more accessible to small companies and firms that didn’t have the resources to issue or respond to RFPs before.
- Many corporate counsel have realized the cost-saving benefits of using different firms for different types of work, like bet-the-company matters, core legal services and commodity work. This unbundling may impact how you serve clients and respond to RFPs.
- Pricing audits. Matt is seeing more RFPs with a strong price focus, some of which are really more price audits than RFPs. Depending on their needs, some prospects may be more interested in your pricing and billing models than your legal capabilities, which underscores the need to ask yourself: is this work desirable and profitable?
- More negotiations. Traditionally, once a law firm and a company agreed to a working arrangement, the firm would issue terms of engagement with rules the client had to follow. Companies have gotten savvier and legal departments have created their own expectations for billing, team members and other areas. Expect more negotiations in this area going forward.
- More preferred firms. Companies are creating panels of preferred providers, which may include a large global law firm, a boutique and an alternative legal service provider. Rather than automatically sending all work to one favored firm, clients are looking at all their options and choosing the best firm (or combination of firms) for the job.