Clients Cross-Examine Their Professional Services Firms
This article was written by Lucinda Schmidt, Legal Affairs Editor with the Australian Financial Review (AFR). It was published on 25 November 2005.
Already under pressure to prepare complex tender documents for major corporate and government work, law firms are facing client demands for intimate details of the firm's inner workings. Big corporations, mindful of the push for ethical behaviour and community social responsibility, are grilling their external legal service providers on issues such as gender equality, environmental sustainability and flexible work practices.
This year there has been a string of large private and public legal tenders by Westpac, AMP, Suncorp/GIO, Allianz, Department of Defence, workers' compensation schemes in South Australia, Queensland and Victoria and for the legal roles for the full sale of Telstra. But it's no longer a matter of offering top-quality legal skills at a reasonable price. Some companies - especially those employing procurement professionals - are now asking law firms for hypothetical examples of how their work-life balance policies work and what their recycling policies are. Some companies are going even further, demanding sensitive financial information.
In August, legal practice consultant Linda Julian, of Julian Midwinter, helped a law firm respond to a request for tender from one of Australia's biggest insurance companies, for a place on the insurer's recoveries work panel. In a section on "financial capability", the law firm gave a revenue range.
The insurance company's procurement officer asked for more. He wanted annual profit and audited financial records for the past two years, including the revenue breakdown from different service areas.
Julian acknowledges that companies want to make sure their suppliers are solvent, but she criticises the one-size fits all approach taken by some procurement professionals, whether they are sourcing toilet paper, highlighter pens or legal services.
"I question the extent to which the answers really influence purchasing practices. In my experience, corporates want to see it, but it doesn't get any points weighting in the final selection."
Still, law firms have little choice but to answer, in responses that may run to 200 pages, and soak up as many as 200 hours of professional time, plus another 50 to 100 hours of desktop publishing time.
In Britain, an influential independent advisory panel recently recommended that public authorities should invite tenders only from law firms that publish data on the gender and ethnicity of their staff.
Trish Carroll, who helped prepare hundreds of bids during 18 years at Minter Ellison, and who now runs her own legal marketing advisory firm, Galt, sees two trends developing.
Some clients - usually large private companies, small listed companies and Australian subsidiaries of global companies - are paring back the tender process, asking for no more than five pages on capability and price.
But large listed companies, and public sector clients - often with the most to spend - are moving the opposite way, making their tenders more complex and difficult and asking for more information on more areas.
Carroll says the information required is often asked in subtle, indirect ways. "A lot of these tenders are written to see which firms can interpret what the client wants - has the firm thought beyond the obvious?" So, rather than asking a direct question about the firm's female lawyers, the client will ask about the team's structure.
Carroll also says that the questions are cross-referenced to double-check veracity. In one part of the tender, there may be a question about whether the firm offers 24-hour service, then in another there will be a question about work-life balance. Her advice to firms is to think very carefully before jumping in.
Although tenders are now an accepted part of the cost of attracting and retaining business, lawyers certainly don't enjoy it and most marketing professionals don't either.
"They are time consuming, intense and deadline driven. And it can be extremely frustrating to comply with a tight time frame of six weeks and for the results to be announced eight months later."
Sue-Ella Prodonovich, the secretary of the Australasian Professional Services Marketing Association (now called ICON) and a principal of the professional services advisory firm PTB Consulting (now called Prodonovich Advisory), says that smarter firms are having in-depth conversations with clients before they prepare their tender document.
If trends overseas are anything to go by, Australian law firms can expect the tendering process to get even tougher for work from large corporations and government agencies.
3 TIPS ON TENDERS
Do your homework to find out what the client really wants
Have a knowledge bank of information that has already been signed off on, so you can pull together a complicated document quickly
Write your tender document in plain English, keeping it tight, persuasive and entertaining, using stories, graphs, and charts.
Sue-Ella is the Principal of Prodonovich Advisory, a business dedicated to helping professional services firms sharpen their business development practices, and attract and retain good clients.
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