A lot of our clients run what is commonly referred to as a Rate Card RFP. The principle is simple: ask the law firms to list staff members and the hourly rates they will charge for work they may be asked to perform. You are not asking them to build a budget for a specific matter. Rather, the firms provide proposed hourly rates for a series of individual staff members. This type of RFP is most commonly deployed for engagements where there is not a transaction or task that needs to be completed, but for which there may be a significant amount of work. For instance, a company may know it will need to consult on various benefit plan issues over the course of the year. The client may provide a range of potential tasks relative to the plans – not certain which ones may or may not come to pass during the course of the engagement.
A Better Rate Card RFP
While getting the list of proposed rates is obviously helpful, and provides the company with a view as to the blended rate associated with a proposal, it does not offer a clear sense as to the average rate it may be charged once work commences and the mix of hours among staff members with different billing rates begins to take shape.
To gain some sense of the average rate they may be charged many of our clients have created a modified rate card. Instead of asking just for a list of rates they will also ask the law firm to presume there will be “X hours of work” during the course of the engagement, give the law firms some sense as to the work or tasks most likely to arise and then ask the law firms to create a pro forma budget that divides the specified number of hours among the staff members on their team.
The client still obtains the proposed hourly rate for each staff member. The added benefit gained by the company is some understanding of what the average rate likely will be based on the pro forma budget that accounts for a mix of hours among the staff members. As always, the company has to judge whether the proposed mix in each proposal appears sensible and can redirect firms based on any initial responses they feel are off base.
Here’s a simple illustration:
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 saves companies time and money through an easy-to-use, private and secure online application for the creation and processing of legal services RFPs. For more information, visit www.BanyanRFP.com