The GC role is not getting easier. There is increased regulation, patent trolls, concerns over cyber-security, the impending enforcement of GDPR…not to mention the pressure on GCs to do “more with less” and control their costs. Although demand for legal services is flat, revenue at firms increased by 4% in 2017 to date (Citibank 2017 Client Advisory). Even so, 55% of CLOs believe they don’t have enough buying power to demand better rates from their firms (Altman Weil – 2017 CLO Survey).
Competition Drives Compelling Results
The reality: it is a buyer’s market for legal services and you should be getting best pricing from your firms. Good things happen when you inject competition into how you hire outside counsel. Be it securing better pricing, uncovering expertise, or unlocking value added services…you don’t know what may be possible from your firms unless you ask. A recent process at BanyanRFP makes the power or running an RFP quite clear.
The Client’s Objective:
A multi-national, publicly traded company wanted to select lead counsel (and back-up) for general commercial work. The client was willing make a three-year commitment to the selected firms. Eight (8) firms were invited to participate, including two alternate legal service providers.
The RFP estimated the client’s annual commercial work by type: Commercial Contracts and General Consultation. The client made annual hours estimates for each, which made it clear for the firms how much work was on offer. The client was also specific about what levels of staff they were interested.
With the inclusion of two Alternative Legal Service Providers, the results of the RFP were dramatic. The spread on average hourly rates was (are you sitting): 80%. When comparing traditional law firms only, the spread on average rates was still an impressive 30%. Discounts covered a wide range: from zero to 35% off standard hourly rates. And this was with no compromise in attorney experience as the client specified the expected mix of experience it desired from attorneys assigned to its work.
Even if the client selects a firm with middling rates, they stand to save over $400K vs. what they are paying today.
Remember, you are in the driver’s seat. In many instances, legal work can be done well by a wide array of law firms and other service providers. Asking them to participate in a competitive process will uncover many things including expertise, value-added services, and market pricing. It is all yours for the asking.
About the Author: Kathy Heafey is President of BanyanRFP, a cloud-based RFP platform that helps companies control spend on legal services. She has over 20 years of management experience working with large brands such as Pillsbury, Green Giant and Progresso Soup. A proven leader in Cost Management and Continuous Improvement, she enabled over $20MM in annual cost-savings for General Mills and is now saving in-house legal teams millions of dollars as they find best-fit counsel for their legal work. For more information, visit www.BanyanRFP.com