These days there are a lot of in-house lawyers looking for potential alternatives to their current counsel relationships.  And, there are a lot of law firms wondering if their client relationships are safe.  More than ever, law firms expect competition, and companies are willing to make firms compete for their work.  How often and how intense that competition may be tends to vary, however, based on the type of engagement(s) at issue.  So when is an engagement most likely to be subjected to an RFP?  There are, essentially, four types of relationships:

1. Marriage Matters

This relationship entails matters where an in-depth knowledge of a client’s business, historical knowledge of its files or sound relationships with key outside parties such as regulators is critical to providing ongoing service.  Examples of engagements in this class of relationship might include patent or trademark prosecution or highly repeatable regulatory work.  Clients are less likely to conduct RFPs for this work because there is significant cost and effort associated with new counsel gaining the requisite knowledge to provide good and efficient service.  However, when RFPs are conducted for this type of work, significant long-term workflows are often at stake and competition to secure an engagement intense.

2. Why Would I Leave You?

This relationship may be the least likely to be subjected to an RFP.  The engagement entailed does not produce enough billings to justify considering a switch so long as the incumbent law firm does good work at reasonable rates.  I.e. I have no reason to leave you.  For instance, SEC reporting work requires strong expertise, but for many companies the annual level of spend is not significant and does not justify an RFP process.  The company does the majority of the work in-house and may use outside counsel for a single pass through the document and to consult on a handful of unique disclosure issues that might arise in any year.

3. It’s Not You, It’s Me

The law firm may do a fine job, but the matters do not require any particular in-depth knowledge of the company’s business and the level of overall spend is significant.  These engagements are prone to RFP processes.  Examples of work flows likely to fall within this category are routine M&A transactions, common commercial litigation and other one off projects where the stakes are not “bet the company” in nature and a wide range of law firms could do the work competently.

4. I Need a Safe Date (AKA – My Board is watching closely)

High profile matters where the outcome may have a significant impact on the company or its prospects fall into this category.  Whether these engagements are subjected to an RFP process is likely contingent on whether the in-house lawyer or the Board feels it has a “go to” attorney or firm for the engagement when it arises.  If so, an RFP process is unlikely.  If not, a high-stakes RFP may be undertaken.

About the author – Dave Sampsell is a 20-year lawyer with extensive experience managing large, complex legal engagements 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