“56% of corporate counsel issued RFPs for law firms in 2015, up from 45% in 2014,” wrote Michael B. Rynowecer noting the majority of clients have turned to RFPs for law firm hiring.
At face value, this could sound like an indication the legal business is picking up, but there’s a cautionary tale for professionals in law firm business development (BD), says James Paterson, vice president, LexisNexis Large Law Practice Management Solutions.
Conversations with large law clients at the LegalTech NY tradeshow, he says boiled down to three common themes:
1. Client dissatisfaction the driving force
Corporate counsel is dissatisfied with the level of law firm client service. Mr. Paterson, and the large law marketers he spoke with point to the BTI Consulting data, which also found the increase in RFPs “is due directly to the rock-like drop in client service performance clients are experiencing.”
Just one-third “of corporate counsel recommend their primary law firm to a peer” which is down roughly seven percentage points from the same survey a year earlier. It’s also one of the biggest drops in client satisfaction in 15 years.
“[Mr.] Sarwar said large companies are trying to use fewer law firms for their legal work, and sourcing the firms through the RFP process. RFPs are a useful means for a corporate in-house department to drive change with its law firm, he added.”
Indeed, a pilot program in the IP shop at one global industrial technology company went from 200 outside law firms to just 30 in six months, with a net-savings of $100k annually. The project served as an example that may well lead to more.
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2. RFPs are inherently reactive
An AmLaw 200 law firm fields 200 RFPs a year and has a win rate of one in three. This sounds pretty good until Mr. Paterson points out, law firms are “chasing business on the back-end of an RFP.” It’s reactive rather than proactive and it’s nearly impossible for law firms to align its business development resources in one cohesive sales motion.
A better alternative is building relationships in advance. It’s a shift some law firms report making towards a focused BD effort, such as identifying a list of 15 people that can make or break a firm.
“The chances of winning a blind RFP out of the blue are far lower than one you’ve been working for six to 12 months,” says Mr. Paterson. “In the case of the latter, you’ve helped the client think about the RFP before it was even issued.”
3. Clear need for better BD data
Law firms need better visibility into BD data to drive better decisions. Most firms have it, but until recently, haven’t had the technology tools to tie all the pieces together for decision making.
The result is BD decisions made on anecdotal information and intuition: a law firm randomly invites people to an event, a corporate lawyer attends the seminar, sends an RFP afterward and the law firm wins the business. The firm concludes the event was effective and begins to produce more.
“You’re right back in the reactive state, winning one in three RFPs, where the investment could be made far more effectively,” says Mr. Paterson.
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