There has been a recent market uptake in the utilization of RFPs & bids during the pandemic, but how are clients and firms adjusting to this new reality?
There has been a recent market uptake in the utilization of Request for Proposals (RFPs) and bids during the pandemic, and I wanted to find out if this is a global phenomenon or if I could determine what to expect post-pandemic.
Because I consult with in-house legal departments in developing legal services RFPs and pricing templates and assist law firms with their RFP responses, I decided to go right to the sources and speak to those in corporate law departments, legal software providers, and law firms.
In-house legal operations & procurement
By speaking to in-house legal operations & procurement professionals, I gained great insight into the status of bids on a global basis. As can be expected, RFPs for panels — particularly global panels — are mostly on hold at this time.
However, in certain practice areas of law, RFPs are flourishing even though law firms are laying off business development staff and lawyers. Obviously, some areas of litigation are continuing to move ahead, even though a lot of the courts have shut down and are not hearing cases. This area promises to build after the pandemic subsides. In fact, one company I spoke to said that we will see a tsunami of litigation, post-pandemic.
The same is also true for insolvency. Employment and labor is impacted amid travel bans and immigration sanctions, and cases are mounting to protect the health and safety of employees particularly in instances of COVID-19 workplace outbreaks. And of course, everyone is concerned about privacy and cybersecurity due to so many professionals having to work remotely from non-traditional locations with new operational procedures. Within this new environment is a higher risk of information security incidents, such as phishing ransomware and malware attacks.
It goes without saying that COVID-19 has resulted in a massive global domino effect, hitting multiple industries where the sourcing of external legal services is required. The pandemic has impacted specific sectors, interrupted supply chains, and added to the challenges of meeting contractual obligations and funding agreements. Corporate clients, for example, face an increase in legal work related to the rewrite of many commercial contracts as vendors look to refinance existing agreements in favor of more lenient financing arrangements.
Further, the pandemic has forced companies to close and workers to stay home, leading to a significant decline in business activity and consumer spending. Add to all this the massive job loss, event cancellations, business interruption, and bankruptcies around the globe.
As a result, in-house legal departments are ramping up their roster of outside firms in certain practice areas to be better prepared when their panel firms are inundated with RFPs.
RFP software providers
Another source of information I spoke to are RFP software providers. Several vendors and in-house legal departments that have installed RFP software are using it to track fees, as this is a big area for renegotiation during the pandemic. They also confirmed that RFPs are up.
“Running mini-RFPs on a matter-by-matter basis to choose from among their panel firms helps clients select the right firm, at the right price, at that point in time,” says Jim Delkousis, CEO and founder of RFP platform company PERSUIT and a former Big Law partner. “This yields significant savings above and beyond pre-negotiated and discounted hourly rates — and the reason why is law-firm capacity. At different points in the year, law firms often have excess capacity and can provide a more competitive fee arrangement to their clients.”
Beau Wysong, chief marketing officer of RFP software company RFP360, says legal organizations are increasingly seeking technology solutions. “Due to the increase in people working from home, upturn in bid requests, and potential reduction of business development staff, law firms are seeking more efficient ways to respond to incoming RFPs,” Wysong explains. “As a result, firms are beginning to view technology in this area as a part of their big-picture digital transformation initiatives.”
Richard Brzakala, director of Global Legal Services for a large Canadian financial institution, agrees that RFPs are forging a way forward. “COVID-19 will have a massive impact on how legal services are delivered and sourced in the pandemic and post pandemic era,” Brzakala says. “RFP bids will become increasingly important to cost conscious clients looking for greater cost savings and for firms looking to distinguish themselves from their competitors.”
I spoke with many lawyers and business development leaders within law firms, and they agree that RFPs have been increasing during the pandemic in certain sectors such as litigation, employment, and restructuring & bankruptcy. In fact, some firms have noticed a significant increase between March and May this year compared to the same period last year.
I also have noticed an increase in requests for standard content to be written in preparation for an upsurge in proposals once the pandemic has subsided. Some law firms are updating their RFP software systems with new and improved content, while others are updating their internal proposal content databases. Overall, it appears that law firms are preparing for pricing negotiations as COVID-19 creates havoc with many of their key clients.
Once thing is for sure, no one is immune to the ramifications of this deadly global virus, and all legal organizations need to prepare for the short term and the long haul.