Editor’s Note: This story is adapted from ALM’s Mid-Market Report. For more business of law coverage exclusively geared toward midsize firms, sign up for a free trial subscription to ALM’s weekly newsletter, The Mid-Market Report.s.
In an ultra-competitive market for legal services, receiving a request for proposal can feel like getting an invite to an exclusive party. But a midsize firm that RSVPs to an RFP too hastily is likely to end up all dressed up with nowhere to go.
Dawn Sheiker, director of client relations at Morris James in Wilmington, Delaware, said a large portion of RFPs sent out by clients’ procurement departments are not attempts to hire the best firm for specific work, but instead are simply information-gathering exercises that are highly unlikely to lead to additional business for the firms that respond.
In some cases, they’re done for the benefit of the client’s insurer. For example, Sheiker said, with the rise of cybersecurity regulations that hold financial services businesses accountable for the security of their third-party vendors, more and more law firms with insurance and banking industry clients are being sent RFPs to ensure their compliance.
Other RFPs, several business development professionals said, are sent to multiple firms merely as a formality: the client has no intention of giving the work to anyone other than its current outside counsel but is under an internal mandate to circulate the RFP to at least three firms.
Business development professionals also said the objective of some RFPs is to compile competitive pricing information that companies can use as leverage to negotiate lower rates with their existing outside counsel.
“I would say that is happening all the time with certain clients in certain industries—insurance comes to mind,” said Sheiker.
Nancey Watson, president of NL Watson Consulting in Toronto and author of a book called, “The Silver Bullet—How RFPS Are Won,” said she’s even seen companies send out RFPs to competing law firms because they were “ticked off” at their outside counsel for one reason or another and wanted to send a message: everyone’s replaceable.
Clearly, not all RFPs are created equal. But business development professionals said the difference between midsize law firms and their larger counterparts—particularly those in the upper half of the Am Law 100—is that many big firms feel obligated to answer every RFP that comes their way, regardless of whether it’s worthwhile, because it would look bad either internally or externally if they didn’t.
“All the big firms, they can’t not respond to it,” Sheiker said. “They have to respond even if they don’t want the work. That’s where I think midsize firms have an advantage.”
But in order to make the most of that competitive edge, midsize and smaller firms need to realize that, for them, there are really only two types of RFPs: the kind that might net them more work and the kind that definitely won’t.
The key is focusing on the former and letting the latter fall by the wayside.
Watson, who helps professional services organizations, including large and midsize law firms, craft responses to RFPs, said she’s continually struck by how few firms engage in what she calls a “go/no-go” analysis to decide whether bid proposals are worth their time and effort.
“Especially midsize firms, they just want to jump at everything,” Watson said.
Christopher Flaherty, chief business development officer at Nossaman in Los Angeles, said in an email that his firm uses “an 11-question evaluation, completed before the firm commits to preparing a response, to prioritize our efforts.”
“Focusing on the best opportunities helps us be more strategic when asking attorneys to invest hours and also helps allocate limited professional staff resources,” he said.
Not to mention that chasing after every RFP that comes over the transom will inevitably lead to a series of dead ends, which can have a demoralizing effect on the lawyers and staff who pour time and effort into each bid, and make it more difficult to rally the team when a real opportunity presents itself, Watson said.
But knowing when an RFP is worth responding to is, admittedly, not always easy.
“Seeing an RFP, to many lawyers, feels real,” Sheiker said, noting that when it’s unclear whether a request is presenting a legitimate business opportunity, she will sometimes reach out to the client’s or prospective client’s procurement department to try to obtain more information.
But that’s not always possible, and lawyers aren’t always comfortable with the firm making that type of inquiry, she added, so recognizing the early signs of a worthwhile RFP is essential.
Generally, Sheiker said, the RFPs with the most upfront potential are the ones that are targeted to a discrete matter or type of work, and are seeking a firm that can provide a particular service or solve a specific problem—in other words, the ones where it’s clear the sender of the RFP has done a little bit of homework on the recipients and has a real legal services need.
“That’s a warm lead,” Sheiker said. “I’m excited to hear it, they have the details and somebody somewhere along the way said my firm may be well-suited for this.”
And of the many good reasons for midsize firms to be picky about the RFPs they invest time and resources into, the most important is this: smaller firms are in many ways better-equipped than big firms to deliver the types of responses in-house counsel will appreciate if they’re truly looking to award work. Wasted effort is wasted potential.