Avoiding RFP Mistakes to Win More Business with Matthew Pinn, Principal of RFP Advisory Group [PODCAST]
Sharon: Welcome to the Law Firm Marketing Catalyst podcast. Today, my guest is Matthew Pinn, Principal of RFP Advisory Group, a consulting company that specializes in managing requests for proposals, RFPs, in the legal industry. Matthew and his company work with law firms in their response to RFPs as well as with corporate counsel who want to use the RFP process to better manage their legal span. Matthew will share some of his experience in this area with us today. Matthew, welcome to the program.
Matthew: Hello, thanks for having me.
Sharon: So glad to have you. So, can you tell us a little bit about your background and your career path?
Matthew: Sure, I have a little bit of a unique career path as do most in the legal marketing industry. I actually started my career after graduating from Boston College. My first job was at a talent agent in Hollywood. Yeah, so I worked with a talent agency where we were pitching actors and actresses for film and television roles. So it was kind of an interesting first job. One of the nice things about the talent agency industry, it was a very fast-paced, high-pressure environment and after I had worked there for a few years, it was a really good transition to move from selling actors and actresses over to selling lawyers and law firms. So yeah, it really was. It was a great training ground as my first job, but it really set me up nicely to move into the legal marketing area because I was used to working with some unique personalities in some challenging instances, but my first career in the legal industry was at Latham & Watkins, one of the large global firms based out of California.
So after kind of cutting my teeth a little bit at Latham & Watkins, I then moved back to the East Coast, where I worked under Beth Cuzzone at Goulston & Storrs, a mid-size regional firm in Boston, and I just thought that was great for my career progression. I really got to wear a lot of different hats, but after a few years there, I worked at another mid-size firm, Robinson+Cole, before moving over to what is now K&L Gates. When I first went there, it was a mid-size firm of about 600 lawyers in eight offices, but in the 12 years that I worked there, it grew to a firm that’s one of the largest in the world that ended up—when I left it, it had 48 offices on five continents and nearly 2,000 lawyers. So it was a career path that I think started a little unique in that I didn’t go straight into the legal industry, but once I got in, I did have a lot of experience at different-size law firms.
Sharon: When you were with law firms, you were in marketing and business development, and you had quite an extensive career it sounds like. What made you decide to focus solely on RFPs?
Matthew: So I think the main reason was I saw a real demand in the industry for people with a certain type of expertise. One of the projects that I worked on when I was at K&L Gates was, we revamped our entire RFP response process globally. So when you have such a large firm like that and you’re responding to nearly 200 RFPs a year, you really need to have a formal process installed in the firm to make that you’re making the most of these opportunities, and as I took a deeper dive into that industry, it timed well with the advent of legal operations and legal procurement.
What we saw was just a tremendous growth in the volume of RFPs that we were receiving and we really needed to quickly identify best practices in order to use this to drive revenue. What I found was I got a lot more involved with both the legal operations and legal procurement side to really learn where their industry was going. I did some presentations with the buy-in legal counsel, where I talked to legal procurement and legal operations folks about how they improved their RFPs from the law firm’s perspective—and how they could ask smarter questions to get better answers from the law firm. So what I realized was that I had developed a strong set of skills based on how to negotiate with corporate counsel and how to respond to put together a winning RFP response.
What I saw in the market though was more and more companies issuing RFPs, but not just the Fortune 100 or Fortune 200 companies. We saw the same process trickling down to smaller companies and I had a lot of general counsel call me while I was in the law firm saying, “Hey, we’d like to do an RFP. We’re hearing about all the great results they’re getting, but I’m not quite sure how to manage it. Do you have a template? I’m really just trying to learn about how to do something like that.” And so what I realized was I think there was an opportunity for someone like me to work with these companies who might not have a full-time legal operations staff, but who were still interested in using an RFP and then I would also be able to help them manage the process because RFPs can often be time-consuming, and why a lot of general counsel put them off is they just feel like they’re stretched so thin that they don’t have the time and resources to manage the process.
Sharon: So I think you said it when you said that some legal marketers and lawyers, law firms hear the word “RFP” and they think, “Oh that only applies to large firms. It doesn’t apply to my firm,” if they’re a smaller firm, but you’re seeing something different in the marketplace. Can you tell us a little bit about the work you do on both sides of the desk?
Matthew: Yes, absolutely. We’re seeing a definite change in the market, not only in the volume of RFPs, but also the complexity and the sophistication of them because the people who are issuing RFPs have really progressed in their jobs. So what originally started as procurement at moving in and you had people procuring these RFPs who didn’t understand the legal industry. They might have used procurement to purchase raw materials or other services in a company, but the legal department had always been kind of closed to the procurement group. But what we saw happening was more and more companies were saying, “Why can’t we use the same procurement method in purchasing legal services?”
So one of the changes that we saw originally was really these Fortune 100 and Fortune 200 companies who had massive outside counsel spend budgets. If you have $100 million that you spend on outside counsel, you have a lot of leverage with law firms in pushing these RFPs and it really gives these companies a good chance to not only compare the law firms to one another, but also to really negotiate the prices against each other a bit. When we saw that happening with the large companies, it then trickled down more to the smaller companies, but we saw an added technology that I think has made the evolution a little easier, and what I mean by that is, historically, a lot of RFPs were issued via a Word document and if you’re receiving them and grading them, you were doing it manually and the whole process was time-consuming and not very easy to compare the answers from different law firms. But what happened was there have been companies that have created software that has made it a lot easier for general counsel and legal operations to issue RFPs. There are three companies in particular that have taken over a large part of the legal market—Pursue It, BanyanRFP and RFP360 are three that I see a lot out there. These software programs really allow general counsel or legal operations to much more efficiently issue the RFP because it’s all done through the software program and then when they’re comparing the answers, you literally can see how each different firm answered the same question and they can have multiple people score them and the whole process. The data that’s collected is then already all collected in your software program and that can be used for benchmarking down the line.
The whole process has really evolved with the technology and I think the more and more that technology progresses, the more and more smaller companies will be issuing RFPs, which is why I think you’ll see more and more smaller law firms who didn’t think that they were going to be impacted by the RFP process will now really have to come up with a strategy and plan how to use them. And one other thing on that, the thing I’ve noticed too, is because of the unbundling of legal services—and this is going to impact the solo law firms or the boutique and mid-size ones in competing for working against the larger law firm—is a lot of corporate counsel and legal operations have unbundled their work. So they’ve categorized their work, for example, in categories such as complex bet-the-company matters, core legal services and commodity work, and what they’re realizing is they can use different law firms for different types of work to save money and create cost efficiencies. If they’ve categorized a certain type of their work as commodity work that you don’t need a $1,000 an hour lawyer to work on, historically they might have felt it was easier to just use the same firm for a lot of this work. Now, they’re often using an RFP to compare other options and some of those options are smaller law firms or mid-size law firms or alternative legal service providers. They’re now kind of comparing that work to say, “O.K., we know we’re going to use this Am Law 100 firm for our bet-the-company litigation, but for our filings and for some of the lower-level work, are there other options that are more cost-effective where the value and service will still be up to par?"
You asked me how I’m working with each of the different types, law firms and corporate counsel. So for corporate counsel, I work with them when, for example, they might not have a legal operations or legal procurement team and they might be a legal department of one to ten people, and they just don’t understand the RFP process and they want to have someone come in and manage them and guide them through it. But I also work with, for example, some companies that have no general counsel and one of my clients is that right now where they have no general counsel, but they’re not happy with their current firm and so they’ve said, “Hey, what are our other options,” and because they don’t know the legal industry and the RFP process as well, I basically help them set the table and then help them make the decision as to what might be the best new legal strategy for them. And then for the larger, companies, I’ll work with them more on consulting on specific initiatives that they might have.
For a lot of the larger companies, we’re seeing the convergence method as the number one reason for an RFP. They’ll be using 100 law firms and they’re spending $10 million a year on all 100 firms and they say, “We want to reduce the number of firms we use down to 20 law firms and in that same time, we’re going to try to reduce that $10 million spent to $8 million,” and they typically do that by trading a higher volume of work to get a better price or create more efficiencies.
So, those are kind of the three levels of corporate clients, how they would use my tech service and then for law firms, it’s really just two ways. There are some law firms who will come in and say, “Hey, we want to install an RFP response process. So from the minute the RFP hits the lawyer’s inbox to even after it’s been submitted and you’re collecting feedback, we want to install a formal process so that all the lawyers understand what these opportunities are, what the best practices are and how to kind of manage it as law firm.” And as part of that, I’ll often work with firms on presentations about the latest trends or if they have a specific RFP opportunity—it might be one of their top clients and they don’t want to take any chances.
Sharon: I suppose that part of that process that you have offered is just helping them decide which ones not to respond to also.
Matthew: Absolutely, I think that is one of the biggest mistakes law firms make these days is they don’t have an efficient evaluation process or what we call a go or no-go process, and particularly at law firms, you’re dealing with owners of a company and multiple owners of a company, and every time a partner receives an RFP, the first thought in their mind is, “Hey, this could be more compensation for me. I can make more money. Let’s give it a shot.” And you have to really take a step back and evaluate each opportunity as to if it’s a go or a no-go and you really want to have that be a firm decision as opposed to an individual lawyer’s decision because sometimes you can have competing interests.
Sharon: Also, just that RFPs are such a time suck and so intense of time, effort and thought. I mean, you just want to be very judicious about the ones you respond to. So you give a presentation with the five mistakes that law firms make in responding to an RFP and you just said that one of them is just the go or no-go. What are the other mistakes that they make?
Matthew: Sure, like I mentioned, not having a formal process is what I see as the biggest mistake just because too often if you don’t have a formal process—and what I mean by that is actual formal guidelines too, because if you’re the legal marketer, you need some leverage to push back against opportunities that you don’t think make sense and it’s much easier to say, “Hey, these are the firm guidelines.” You don’t want a partner of a law firm thinking that the BD person is trying to limit their ability to get new work.
Next I think would be the failure to communicate the opportunity internally. So when an opportunity comes to the firm, how is that information communicated and who’s it communicated to? Which lawyers in the firm know about the opportunity? What practice chairs or leaders need to know about it? How does it impact other strategy that the firm’s doing? Are we going after work from a competitor where this might not even be a good opportunity, but you wouldn’t know that if the information wasn’t shared properly? A lot of times, you’ll have RFPs coming into a law firm where you might have 20 different points of entry at a firm with a specific client. If you’re responding to an RFP from that company, you want to make sure that all the people who do any work for that company are aware of it. You also want to make sure that you don’t agree to certain conditions that are going to impact other work that you do in the firm which I see happen frequently with law firms, where they’ll agree to something for a small piece of work and then find out that that same agreement impacts the work in a completely different practice area and they’ll end up losing some money in deal. So that’s another issue.
I think the other mistake that law firms make is their knowledge management system as far as what information they are collecting and extracting from their lawyers and firm management and how that information is making its way into the RFP responses. For example, all law firms collect representative matters and you might have a bullet about your corporate practice that says, “We represented Company A in an M&A transaction in China for $200 million.” That’s really just a statement, and what RFPs are now looking for is more examples of what makes you different than other law firms. What they want to know is for that M&A transaction you did, what was it about your service that was better than had another law firm been selected? What is the competitive advantage of the value that the client got? And too often, law firms don’t have this information in the legal marketing departments. A lot of it is still inside the heads of lawyers and getting that information from the lawyers into a formal system in your firm that can be used for different pitches is one of the biggest struggles I think legal marketing departments in particular face. They’ll often tell you a majority of the RFP response time was spent chasing down information, and a lot of lawyers will turn around and say, “Geez, I’ve already given you this information,” or, “I’ve already done this,” and so this becomes kind of a constant battle for firms to really manage that data and then turn it into a weapon to help them compete against other firms.
Pricing is a major part of our piece and I think that’s the fourth mistake when it comes to law firms with their approach to pricing. Very often, an RFP will come in and the party that gets it or the team that’s responding to it, might not get to the pricing section until later on down the line and then they’ll realize, “Geez, we don’t have enough information to even provide a fixed fee or to provide a competitive fee against other firms," and then the Q&A question deadline might already be gone or you’re down to the last 24 hours and you’re kind of scrambling around to see what kind of discount you can get approved from firm management.
The firms that don’t make these mistakes, they’ve either brought in a pricing director who’s usually implemented a system that kind of managed the pricing part of the RFP responses, or even the firms that don’t have that, they often have a committee that approves AFA’s or a committee that will look at the pricing because, oftentimes with pricing, some of the biggest battles we’ll face on the legal marketing side are with the actual relationship partner because they want to give a bigger discount than the firm thinks we should give because that’s that partner’s work and he doesn’t want to lose it, so he or she might say, “Hey, I want to give a 20 percent discount,” and sometimes the firm has to look at that and say, “That’s going to really kill the profit margin on this matter. We think 10 percent is more appropriate.” Those are the types of arguments that we’re seeing in our discussions with law firms. Having a formal system and process in place at least helps you manage those situations a lot more efficiently.
And the last, and probably the most important thing as far as mistakes firms are making is—and there was a survey recently in one of the publications that said 50 percent of lawyers at law firms don’t feel like they can clearly and distinctively pitch their firm’s competitive advantage, and that’s really what RFPs are asking is what is it about your firm that’s better than these other firms, and to a buyer of legal services, law firms look very similar. The questions they get back on RFPs are very similar. Their websites are very similar. We all understand that there are many lawyers who can handle legal expertise and who can handle the legal function of the matter, but in the RFP, they want to know what else makes you different. Is it because of where you’re located? Is it because this is a specialty of the firm? Is it because you know the judge and the courtroom? What is it that we should select you? And I always say the firm should have an answer that when the general counsel gets asked by the president of the company, “Hey, why did you hire ABC law firm,” that’s exactly what your competitive advantage is and that’s got to be clearly defined in the RFP, and too often firms just aren’t compelling with their value proposition.
Sharon: So you’ve talked about the five questions that a law firm should ask before they even respond to an RFP or before they start—I want to say pen to paper or when they put their fingers to the keyboard. What are the five questions that law firms should ask themselves before they even start?
Matthew: Sure, so the five questions I would suggest they ask are, number one, how did the opportunity originate. Just because there’s an RFP opportunity for your firm does not mean it’s worth the time and resources to go after it. You want to look at things like, “Have we previously done work for the company?” If you haven’t, the chances of winning the work are significantly lower. At a lot of firms, it might be in the 10 percent to 20 percent where you’re going to win work, whereas, if it’s a current client, you might be at the 60 percent, 70 percent or 80 percent, so that’s a real strong factor, but you also want to look at the relationships. General counsel moved from the company. Maybe you’ve never done work for the company, but you have worked with that particular general counsel, or you went to law school with a woman who’s now issuing an RFP at a company. So you want to look at pride in their work. You want to look at relationship connections. Are there any contacts in the company? But then you also want to have the ability to understand why they’re issuing the RFP. Are they unhappy with their current counsel? Are they looking to reduce rates? Are they expanding and they want a firm that has more global capabilities? If you don’t know why they’re issuing the RFP, it’s unlikely that you’re going to be able to come up with a good solution to their problems noted in the RFP. So you want to make sure that you at least have access to that information and if you don’t, there are a lot of RFPs that I think are used as stalking horses where they might be happy with their current counsel, but they say, “Hey, let’s issue an RFP and see what other type of information we can learn,” or they’ll use it as a price check and then they’ll go back to their current counsel and say, “Geez, you guys said you could do this matter for $1 million. We think the market rate is closer to $700,000,” and then if they aren’t willing to budge, then maybe you do look at the RFP on the responders, but you want to be careful to make sure you’re not just being used as a stalking horse.
You want to look at, are you eligible? For example, if you’re responding to an RFP from a bank and you’re a small law firm, you might not have the cybersecurity in place to even pass their requirements or you might be conflicted due to certain types of work, so you want to make sure you are even eligible before you waste a lot of resources.
The next one I think is the toughest one to do and that’s, what are our chances of winning? And this again, who’s making the decision as to what our chances of winning are, because if you leave it just to a partner, he or she will often say, “Well, what’s the harm in not responding?” But what you really want to do is say, “What are our chances of winning?” You don’t want a partner who’s going to say, “Well, I want to respond to as many as we can. It’s a good way to get our firm’s name out there.” You really want to know exactly from them, who are our competitors. Is there a realistic chance we’re going to win? Is Nike going to choose a really small firm for their bet-the-company case? Probably not. So you want to have a realistic way to provide feedback so it’s not just from the partner who originated the opportunity, but also either someone on the management committee or practice group chair or the marketing team who might say, “Geez, we’ve responded to 20 RFPs from this company and we’ve never won. Why have we been doing this?”
And that leads to what I think is one of the next things, which is, what resources will be required? There are some RFPs where they might only ask a handful of questions and you can get a response done fairly easily between marketing and the partner, but there are other RFP responses that might require a lot of manual time spent collecting data, filling out forms—some of the government RFPs in particular, you have to fill out a lot of forms and those forms take a lot of time, and does the firm have the bandwidth to spend time on that?
And then, lastly, is the work; if you want it, is it desirable and profitable? Do you think when negotiations are done, that you’re going to be able to come up with a price to do the work where the firm’s still going to make a profit on it and is it the work you want to do? There are evaluation factors when it comes to the type of work. If it’s low-level, commodity work, is that the work that your practice group wants to be known for doing or the firm as a whole, or is it a different type of work? So it’s just something to give consideration as to will this be something down the line that we want to dedicate lawyers in our firm to?
Sharon: I’m sitting here just nodding my head thinking back on my days of doing a lot of RFPs, responding to RFPs, and when you talk about a system, I’m sure everybody remembers that one that came in. I remember when it used to sit on a partner’s desk beneath a stack of others until the day before and they go, “Oh my gosh, I think there’s something due tomorrow,” and everybody would be scrambling around, so a system is a really great idea.
So what are you seeing for the future in RFPs? You mentioned technology and that makes a lot of sense. What else do you see? You’ve said it’s trickling down to just—
Matthew: I also think what we’ve started to see a lot of now—and I think that trend’s going to continue—is what I call almost pricing audits. So it’s an RFP, but it’s not necessarily focused on your legal capabilities. A lot of times, it is focused just on your pricing and your billing models.
For example, I did an RFP recently for a massive company and they owned a lot of sub-entities and they originally had each entity handle their own outside counsel spends. They created their own deals and their own arrangements. So the master company said, “That doesn’t make any sense. We’re going to do a broad panel for all of our sub-companies and they’re going to all have to agree to our terms and conditions and our outside counsel guidelines,” and they’ll put their rules in these guidelines that firms, if they do work for them, are going to have to abide by, and so, for this particular example, if you are negotiating—originally we had all these smaller deals—so you might have been doing $5 million with one company, $2 million with another, $6 million with another. Once they collected all of them, it was $20 million and then they came to the law firms and said, “O.K., we want really good volume discounts. We’re not giving you $2 million; we’re giving you $20 million of work.”
We’re starting to see a lot more RFPs that are going out really with a price focus and the rise of the outside counsel guidelines is going to continue, and what I mean by that is historically when a law firm and a company would agree to a working arrangement, the law firm would issue a terms of engagement, and basically these were the rules that the law firm said is what you have to follow. Companies have gotten a lot smarter and legal departments have created their own guidelines, and so what we’re seeing in these guidelines is, for example, “We don’t want first-year associates working on our matters.” “You can’t bill more than X hours a day on a particular matter,” or “We want a secondment included with work.” So basically, it’s a wish list of what these companies now expect from their law firms. “We want free CLE training,” or whatever their desires are or whatever their complaints are, they’ve worked them into the outside counsel guidelines and they go out to law firms and say, “If you want to do our work, you have to agree to these.” And so what we’ve seen is a lot more negotiation.
For example, I had one recently where the company asked a law firm for 25 or 30 different pieces of the outside counsel as far as what they wanted, and we went back and forth and negotiated with them and it was determined to be millions of dollars and I think you’re going to see more of that in the future because now you have more counterparts. So instead of it just being the general counsel and the partner, you’ve got legal operations and legal procurement who are now acting as the counterparts to the law firm’s pricing director, business development people, and project management people, and so now you’ve got another layer of communication and connections and I think we’re going to see that grow where those two groups of professionals become a lot more involved in the RFP process and become a lot more efficient in how everything works.
And then, lastly, I’d say one trend I’m seeing a lot now that I think will continue is firms that had the preferred panel providers—they would put preferred firms and say, “O.K., you’re one of the firms on our panel,” but what I’m seeing is, let’s say it’s intellectual property work, they’re asking three types of firms to be invited on their panel and they’re selecting a large global law firm, a mid-size or boutique law firm and then maybe an alternative legal service provider, and when a matter comes up, instead of it automatically going to their preferred firm, they’re saying, “O.K., let’s look at our different options. For this particular matter, what’s the best combination? Is this a bet-the company case where we need to win, so we’re going to use the top choice, or is this something where we think it’s not as high a priority. We think the smaller or mid-size firm could handle that work.” And we’re starting to see more of those types of discussions going on.
Sharon: That makes a lot of sense. I want to say the old-fashioned world of RFPs seems to be really changing and catching up, just as law firms are in terms of technology and in terms of leveraging what’s out there today that other industries are already making use of. Matt, thank you so much for sharing this with us today. I think that’s a lot of great food for thought, and to everybody listening, that wraps up another episode of the Law Firm Marketing Catalyst and if you’d like to contact Matt or the RFP Advisory Group, we’ll have the contact information in the show notes, and if you like what you heard and you would like to hear more, you can subscribe at iTunes or wherever you download your podcasts, and please rate us. We’ll be back next time with another thought-provoking guest who can help move your firm forward. Thank you so much for listening.
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