As we reflect on 2014, we are happy to share a success story that illustrates when you are willing to ask your counsel for their best shot to do your work, the savings can add up fast. In five recent one-off processes run at BanyanRFP, it’s likely that over $1MM dollars would have been left on the table if counsel had been hired by simply picking up the phone.  By asking these firms to participate in a competitive selection process, notable cost-savings were the result.

The Data

We pulled this example together for a prospective client about a month ago.  It looks at what were then the five most recent processes for “one off” matters run through BanyanRFP:

• The aggregated high bids from the five processes;
• The aggregated average bids from the five processes; and
• The aggregated low bids from the five processes.

Three of the five processes received only fixed fee bids or bids subject to fee caps.  Each process involved only firms of similar reputation and size.

•  The bids:
  • Aggregate high bids – about $2.5 million
  • Aggregate low bids – about $885 thousand
  • Average bids from each project aggregated – about $1.4 million
• The pro-forma savings associated with picking the lowest priced firm on each engagement was almost $1,615,000 less costly vs. the highest priced firm and was almost $515,000 from the average bid offered on each engagement.
• On the three processes subject to fixed fees and fee caps, the lowest priced firms were about $500,000 less expensive in the aggregate vs. the highest priced firms.

Three of the processes had three bidders and the other two had four bidders.  This means the odds the client, absent an RFP process, would have chosen the low bidder on all five processes would be about 1/5^th of one percent.  I won’t speculate on the odds they’d have received the same pricing offer from that low bidder absent an RFP.

In Sum

The point is simple.  The use of counsel selection processes, on even a periodic basis during the course of a year, can yield a ton of savings.  You may have negotiated rates with a panel already.  You may have a favorite firm for a particular type of work.  But engagement-to-engagement, asking for more than one firm’s “best shot” to win your work is a smart practice.

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