Love me tender: The in-house lawyers putting law firms to the test

In an ultra-competitive legal market, law firms are having to work harder to retain and gain clients. Justin Whealing looks at how they can best get their foot in the door during the tender…

Promoted by Lawyers Weekly 08 September 2011 Corporate Counsel
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In an ultra-competitive legal market, law firms are having to work harder to retain and gain clients. Justin Whealing looks at how they can best get their foot in the door during the tender process.

PUT TO THE TEST: As in-house clients reassess their legal needs, they are increasingly relying on the tender process to select law firms -- and law firms are try hard to stand out.
Gai Stephens had an issue.

The general legal and tax counsel, Asia-Pacific, for Luxottica, the world's biggest eyewear company, wanted to use an external law firm to handle legal issues regarding its franchising work. The trouble was, franchising was a new area for Luxottica and Stephens wanted to make sure they got the best firm around. So she put the work out to tender.

"I sat down with our head of procurement who uses a supplier rating tool, and we came up with a set of criteria, with each firm given a score between one to nine against minimum standards we would expect," she says.

Ten firms applied for one position. The criteria by which they were judged included their relevant experience and expertise in franchising, but also the firm's work in associated areas such as leasing, regulatory requirements, media and litigation. The different costing models, performance delivery, overall financial position, diversity policies, commitment to pro bono work and whether the values of those firms matched with Luxottica's corporate values were also compared.

"When you are recruiting a firm, particularly in a specialist area, you want a 'thought leader'," says Stephens. "You want them to bring big ideas to the table, and to be able to offer examples of international work, for instance, and say, 'This is what we are doing for clients in the USA, and we think it could suit you'."

When less is more

When Stephens took up her current position, Luxottica had formal ties with seven firms in New Zealand. She wanted to simplify the relationship her company had with its external legal advisers, so she put the work out to tender in a bid to reduce the number of firms she used to one.

Stephens chose a firm on the strength of its expertise, the ability to offer alternative billing arrangements and its pro bono and diversity policies. That latter point is something she says is becoming increasingly important in choosing to give work to a law firm.

"I use a colleague during the tender process who might play 'bad cop' to my 'good cop'," Stephens says with a chuckle. "She will say to them, 'Why did you bring all male colleagues with you to meet us when we have more females on our side of the table? How many women are in your firm? What does your firm do to promote women to leadership positions?'"

Similar to Stephens, when Austin Carwardine was the general counsel at telecommunications company AAPT between 2007 and July 2011, he was seeking to streamline his use of external legal advisors. He says that a major motivator for a smaller law firm panel was cost.

"The tender process puts a science around your instincts"

Gai Stephens, general legal and tax counsel, Asia-Pacific, Luxottica

"Overall targets were set to reduce our legal spend and by careful management we would often significantly reduce our external legal spend in some years," he says.

Carwardine recently returned to private practice to start his own firm. He says that when he was at AAPT, an important factor in the firms he chose for his then company's legal panel, which included a mixture of top-tier and boutique law firms, was the ability of lawyers below the partner level.

"Due to cost issues, the type of work many companies have is not so complex that it requires a lot of partner attention," he says. "A good senior associate is often at a level where they can really value add. You are not necessarily after star partners."

Sell yourself

Australia's private practice legal market has never been more competitive than it is today. The arrival of global law firms and the continuing trend to rationalise the use of external legal advisers means that law firms need to know their strategy when pitching to potential clients.

Like many law firms, the marketing department at Corrs Chambers Westgarth has become an intrinsic part of its internal processes, including preparing tender submissions.

"For us, the whole tender and procurement process is about clients identifying what they value, and us, as a supplier, determining how we best deliver that value to them," says Wayne Stewart, the director of marketing at Corrs.

"In our experience, it needs to be a balance between the marketing team and the lawyers, and when we get that right, we tend to do pretty well. When we don't get the balance right, we find the tender is not at the peak that we would require it to be at."

In order to "get the balance right", Corrs employs senior partners to look at tender submissions and go through role-play exercises where partners will put their colleagues through the ringer by asking tough questions they might experience during client interviews. Senior Corrs partner Robert Regan says this process is designed to put the client at the centre of any final documentation presented.

"It is making sure we are not taking a brief and directing it to our point of interest, but we are trying to meet the client's brief"

Robert Regan, Corrs Chambers Westgarth

"The first process is to understand what the client's perception of value is," he says. "If we allow ourselves to have tunnel vision, to deliver what we think the client might want, and not deconstruct the brief and stand in the client's shoes, than we can often miss the point with a tender.

While the science and preparation around the tender process has become more sophisticated, the gut instinct of a general counsel about whether they can work well on a personal level with a particular partner is still vitally significant.

Sometimes, it will come down to relationships, pure and simple.

"The tender process puts a science around your instincts," says Stephens. "If you have the science behind your intuition, you feel more confident about your decision making."

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