For those just joining the wonderful world of RFPs and legal procurement (quite wonderful), we wanted to provide a definitive guide. We’re going to give you a 360-degree view of the all-important “RFP” so that you can make the best decisions possible in your legal journey. We’ll start with the RFP as a concept, then move to it in the legal context. Buckle up.
What is an RFP?
An RFP is a “Request for a Proposal.” These are used in several different contexts, including finance and branded services like marketing — but in general, they are a survey that an outside firm or company fills to send back to an inquirer curious about this outside firm or company’s services/performance.
Why would a company use an RFP?
When engaging an external service, it may be in a company’s best interest to “shop around.” Sometimes, there are too many options — so RFPs simplify the screening process to find the best provider of services for the best or lowest possible price. But in other cases, RFPs are optional; companies can simply contact a service provider of preference and order services.
What are the advantages of doing an RFP?
There are a few advantages to doing an RFP:
- When a service provider receives an RFP, that provider understands that the customer is considering multiple options and will act accordingly.
- This will drive competition among receiving providers, and cause other providers to lower their prices lower than they normally might.
- An RFP helps the customer determine the differences between each service provider in terms of quality, performance, customer service, etc.
More details on the RFP as a sourcing type:
- An RFP includes legally binding offers made by suppliers, e.g., pricing.
- An RFP can include contractual terms about the rules of the process, i.e., terms that suppliers must meet in order to participate.
- An RFP may be sent to a smaller number of service providers than other sourcing types.
What are the other sourcing types?
There’s the RFI, which is a “request for information.”
- An RFI is usually used to determine minimum requirements/qualifications rather than absolute requirements/qualifications (to determine a single service provider or group, like an RFP).
- An RFI usually doesn’t include pricing; and if it does, it is standard pricing and not a legally binding offer.
- An RFI usually includes more service providers.
How do RFPs differ when done to hire legal service providers?
- An RFP for legal services involves a client corporation sending out a request to legal providers to provide proposals to do work on behalf of a client corporations’ internal legal team.
- RFPs can be sent to legal service providers including those that provide law firm services (e.g. representing the client in court), eDiscovery services, court reporting, jury consulting, trial graphics, etc.
- Law firm pricing is most often provided in the form of hourly rates. Firms that are large, nationally recognized firms bill at a rate that is often double the rate of small, local firms. Large national firms can provide the same services that smaller firms provide but command higher billing rates, because they are seen to provide superior/premium quality. An RFP can help encourage a large national firm to lower its rates in order to be selected by the client.
- An RFP for legal services may present more challenges because there can be ambiguity in the terms of work that the client requires from a law firm.
What’s typically included in this kind of RFP?
- A preamble/background of services
- Timeline
- Pricing Questions
- Qualitative Questions
- Contractual Terms
- Scope of Work
How long does an RFP take?
RFPs usually take anywhere from 1 week to 3 months depending on the complexity involved. When using PERSUIT, the average length of a RFP for outside legal counsel services is 7 days.
Is an RFP legally binding?
Yes—RFPs typically require that suppliers’ proposals remain legally valid offers for a certain period of time (e.g., 90 days) upon which the client can “accept” such offers and form a valid contract that is often memorialized further in a “Master Services Agreement.”
Do RFPs for legal services only ask for hourly rates, or can I get a fixed fee?
Hourly rates are more common in legal because it is often difficult to determine how long a legal project will last. (For instance, a court case could be dismissed within a month or the case could last multiple years depending on the success of various motions submitted by the parties, in which case, hourly parameters would make sense.) But legal RFPs can come in many forms and can include pricing options that allow firms to propose fixed fees and other “alternative fee arrangements.”
What are some more of the challenges of RFPs?
- Scoping - when asking for proposals from service providers like law firms, consultants and advertisers, it’s difficult to draft all the items and deliverables that the client will need from the provider. A client may ask for more deliverables than originally required after the project starts. This causes providers to take on some level of risk when offering fixed prices, so hourly rates become more commonly used.
- Minimum requirements - clients can do a poor job of telling vendors what their minimum requirements are up front.
- Comparing Proposals - it can be challenging to tell which firm is the best from reading proposals that often come with “marketing fluff.” Customers need to ask data-focused questions in order to truly cross-compare companies.
- Negotiating with providers - providers usually leave some room for negotiation when providing proposals. It's considered ‘standard business’ to negotiate with a supplier or service provider after the initial proposals are submitted. This may require the expertise of a procurement or sourcing professional.
What are some of the opportunities?
RFPs can provide:
- Significant savings
- Improved service
- Better clarify on expectations
- Better contractual terms (e.g., longer payment terms for the client or revised security requirements for service level agreements)
We’ve got more on RFPs for you on the way. Stay tuned.