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Yesterday’s Wall Street Journal included the article, “Pricing Tactic Spooks Lawyers: Companies’ Use of Reverse Auctions to Negotiate Legal Services Is Accelerating”. The article talks about the fact that several large companies have been increasing their use of reverse auctions to pressure law firms to lower prices. The reverse auction is described as pitting “multiple law firms against each other in an online chat room where they anonymously submit quotes for a particular job” with a timed bid-down mechanism. Not surprisingly, law firms do not like the process. What is somewhat surprising is that while some companies obviously find the process useful, others have decided not to use the process and to focus on approaches that rely more on relationships with outside counsel.

At Aliunde, we believe that while pricing is certainly an important element in deciding who to engage, it is only an element and should be neither over- nor under- emphasized. There are undoubtedly some matters that are well suited for reverse auctions. Aliunde provides a convenient platform for seeking and collecting bids on matters that do not merit or would not support reverse auction bidding.

The April 2011 edition of Inside Counsel contains an interesting article by Janice Block, General Counsel of Kaplan Higher Education. The article, “Speed Dating: A few simple steps will get the most out of an expedited RFP process with your law firms,” provides guidelines for using a simplified, accelerated RFP process for legal matters.

Among other things, she notes that:

- Simplified RFPs, which she calls an Expedited Request for Proposal (E-RFP), allow her and her team to make engagement decisions quickly and confidently.

- E-RFPs are well suited for legal matters that require a unique expertise or skill set.

- E-RFPs are most effective when focused on firms appropriate for the matter.

- The content of the E-RFP should be limited and focused to keep responses concise and relevant.

She also provides some thoughtful commentary on evaluating responses, selecting a law firm, and providing feedback to responding firms. She concludes by noting the efficiency of the process and its value in identifying expertise and enhancing relationships with outside counsel.

As you might expect, I found her points well made and remarkably consistent with the Aliunde system. I would add, however, that Aliunde makes the value of an expedited RFP even more compelling because our system simplifies, and thus accelerates, creating RFPs, responding to RFPs, and organizing the overall process. Compared to a manual RFP process, the efficiency of our system makes using legal RFPs sensible for a broader array of matters.

Most sizable businesses routinely face legal matters that require outside counsel. Sometimes, these matters are relatively small and can be quickly addressed by outside lawyers already known to in-house counsel or other corporate decision makers. Matters of this nature rarely merit much effort searching for outside counsel. At the other end of the spectrum, some matters are extraordinarily important. Matters like this, such as bet-the-company litigation or an IPO, typically warrant considerable effort searching for and evaluating potential counsel. In between these two extremes are non-critical matters or projects that are nonetheless large enough to require and support significant involvement by outside counsel.

Rather surprisingly to those who have never had to secure representation for such a project, the search for appropriately skilled and cost-effective outside counsel can be remarkably time consuming. The traditional search method is to “ask around” based on known contacts and referrals. This typically does produce candidates. The candidate pool, however, is usually fairly small. In addition, the staffing and engagement proposals from the various candidates tend to be rather ad hoc and difficult to compare. The follow up required with each candidate is time consuming, and project deadlines usually place practical limits on a client’s ability to seek and evaluate proposals. Historically, the primary alternative to this approach has been to engage in a formal request for proposal (RFP) process. The RFP process can produce highly detailed and comparable proposals but has traditionally been extremely time consuming for both clients and law firms. Most projects do not allow or justify the required time commitment.

Aliunde was founded to fill the gap between informal inquiries and issuing a formal RFP. We use a web-based, simplified RFP system that clients can use to post potential projects and that law firms can use to make proposals. The system was built from the ground up for flexibility, simplicity, and ease of operation by both clients and law firms. It does not result in binding bids. Instead, Aliunde was designed to replicate the kind of information typically exchanged by clients and law firms over the course of an initial conversation and follow up emails, except that Aliunde simplifies and accelerates the process. The system provides clients with organized, easy to compare results from interested law firms that clients can use as the basis for more detailed follow up conversations. For law firms, Aliunde provides a means to present proposals and credentials directly to decision makers. For more details on Aliunde’s operation, please see How It Works.