Article authored by Phenix Kline, PERSUIT .
The Status Quo. How do corporations actually select outside counsel? As all good lawyers know, it depends. Based on several studies and interviews with corporations in both the United States and United Kingdom, here are some of the most common reasons outside counsel are actually selected: Price, client rapport, recommendations, panels, volume commitments, and first-choice firms being conflicted out (1). These common reasons are certainly valid and reasonable metrics for evaluating which firm is right for the job, but on occasion, these factors are not enough; for example, a low price tag on legal services is no consolation if your corporation loses a high-profile or multi-million dollar case. Or inversely, it might come as a shock when you receive a multi-million dollar invoice for basic or routine legal services. Price is important, but it’s not the bottom line (pardon the pun).
PERSUIT Can Help. Whether you want to standardize outside counsel selection across departments, increase diversity among outside counsel, or avoid hiring someone’s ‘buddy from law school,’ having a centralized platform to evaluate firms can help. PERSUIT templatizes the firm selection process so you’re collecting uniform information from each firm invited to participate; the uniform RFP responses can then be evaluated on a standard scorecard. The scorecard is a consistent framework to evaluate firms that will bring a measure of objectivity to your selections. Additionally, using a scorecard helps eliminate potential biases in selecting firms that might not be right for your matter.
Using the Scorecard. Selecting the right outside counsel means finding the firm that will help you reach your goals and objectives. These following recommendations may be modified to accommodate many decision-making frameworks, but are best employed as a weighted factor analysis.
Step 1 - For most focused results, choose approximately 3-6 key characteristics (“categories”) desirable in outside counsel. Keep your list short -- if all categories are 'important', then essentially none of them are.
Example Scorecard with three factors: Budget, Strategy, & Experience
Step 2 - Allocate weights to your categories by clicking the settings wheel.
The weights allocated to various factors should all add up to 100%.
“Heavier” weights should be applied to the most important factors and “lighter” weights should be applied to less important factors. This is perhaps one of your most important steps! Applying weights to factors helps you determine what is most important to you given your organization’s goals. So perhaps when routine and fungible legal services are needed, price may be more heavily weighted than it would be, perhaps, in a high-stakes litigation case. Expertise or experience is usually the most heavily weighted factor.
Example of Weight Allocation
Step 3 - Click the "Pencil" icon and then grade your firms on a scale of 1-5 (5 being the most favorable) according to how well the firm's responded to each factor under evaluation.
Step 4 - After you’ve graded your firms, the scorecard will multiply the factor weight by the law firm grade. The scorecard will show the final ranking of law firms.
Selecting Factors. Every legal team will have different categories on their scorecard that are most relevant to its organization and to the matter itself. Factors should reflect key priorities. A few suggestions for important categories are found below, but corporations should choose what factors are most relevant to their purpose in retaining outside counsel. * Category weights should all be a percentage that adds up to 100%
Example of a Completed Scorecard:
Categories to Consider for Your Scorecard :
- AFA - Ask if the firm leverages alternative or appropriate fee arrangements. Modifying pricing structures, risk-sharing, and stepping away from the billable hour can be mutually beneficial for you and your outside counsel. In your RFP, ask questions about volume discounts, capped fees, and success fees.
- Diversity - Hiring diverse outside counsel can bring new perspectives and innovative counsel to the table. Diverse teams tend to be more creative and achieve goals more efficiently. Diverse teams are 15 percent more likely to have returns above the industry average mean.
- Experience with the Judge - this could be an important distinguishing factor that can give a firm an edge over those that you may normally prefer handle such a matter.
- Experience with Opposing Counsel - understanding how opposing counsel operates can yield significant value to the client in the form of speedier resolutions and more appropriate fee arrangements (i.e. given the likelihood that opposing counsel will file more motions).
- Firm's Assessment of Key Risks, Key Issues, and Strategies for Success - identifying key risks to the client in the RFP response can shed important insight into the way the firm approaches its work even before it has earned the right to represent the client. These can provide free early insights before the engagement begins.
- Internal Reputation - Check your organization’s internal firm rating system. Sometimes the best recommendation for a firm can come from within your organization. But beware of recommendations that are simply based on whether a firm was “liked” or “disliked.” Look for specific and fact-based reasons why or why not your team would recommend a law firm.
- Practice Area/Industry Expertise - Additionally, without practice area or industry expertise, your outside counsel may waste time and money getting up to speed. If your firm doesn’t regularly work in the right practice area or in your industry, you might be billed for more hours than you expect and your matter objectives may be compromised.
- Price / Rates- Often price is understandably the most heavily weighted factor. While still considering price, be wary of compromising your matter objectives by accepting the lowest bidding firm.
- Responsiveness - When you’re working on a tight deadline, consider how responsive your outside counsel needs to be. While you can certainly establish expectations around communication before, during, and after engagement, some outside counsel will be more responsive than others. Let your firms know if you want high-touch or low-touch communication throughout the matter.
- Relationship - Having a synergistic relationship with your outside counsel may make or break your matter and hiring a panel firm may have benefits as the firm will be more likely to adhere to client's billing guidelines.
- Technology - Is your outside counsel innovative? The best firms properly leverage technology to bring you efficient and effective outside counsel.
- Value Add - What is the firm bringing to the table that other firms don’t have?
A corporation’s bargaining position is never stronger than the moment when the corporation is deciding whether to select the law firm to represent it. Learn more about how to select the right firm at the right price with PERSUIT.
1. Matter-Type Related Experience
2. Venue Experience
3. Judge Experience
4. Opposing Counsel Experience
1. Team Diversity
2. Origination Credits to Diverse Lawyers
|Strategies and Issues||
1. Firm's strategies for this matter
2. Firm's ID of key issues
3. Firm's assessment of key risks
4. Firm's assessment of final disposition
|Rates / Fees||
How does this firm's fees compare to the competitors