Recently I went out to dinner with a client who was in town. As we reviewed his use of BanyanRFP, I was struck by his characterization of one particular RFP he’d processed.

“Our focus there was just to understand the market for that type of work,” he said. “And that was certainly accomplished.”

The RFP was for a complex type of transaction that the company knew firms with very high rates had experience completing. They also knew other firms were capable of doing the work, but suspected it would take them more time than the more experienced and costly firms.  Unsure the firms with lower rates would offer lower overall costs, the client invited several firms with different profiles to submit proposals: AmLaw 50 firms with high rates and experience working on this type of transaction; AmLaw 200 firms with lower rates, capable attorneys but less on-point experience; and firms that utilize significant off-shore staff and price using alternative fees.

Generally, here’s how the proposals were positioned:

• All of the firms with higher rates estimated very similar hours to complete the project. In fact, their hours were similar across each phase of the engagement. This gave the client confidence these firms understood the amount of work they’d need to do to complete the engagement.
• The firms with lower rates all estimated many more hours to complete the work than the firms with more experience. And their offers also had more variance in hours.
• The firms with higher rates all estimated significantly lower total costs than the less experienced firms. They also were more willing to offer discounts to their rates – another sign they were confident in the effort it would take to complete the engagement.

When the process was over the client was comfortable that for this type of engagement the firms with more experience and higher rates offered lower total costs and a higher degree of certainty on final spend. Sometimes cheaper isn’t always cheaper.

About the author – Dave Sampsell is a 20-year lawyer with extensive experience managing large, complex legal engagements around the world and overall corporate legal budgets. He presently serves as General Counsel of a NASDAQ-listed company and is a Founder and Principal of BanyanRFP.  BanyanRFP enables better outside counsel selection decisions and save companies time and money through an easy-to-use, private and secure, online platform for the creation and processing of legal services RFPs. For more information, visit www.BanyanRFP.com