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Nashville companies shopping for legal services

Premium content from Nashville Business Journal - by Annie Johnson, Staff Writer

Date: Friday, February 25, 2011, 5:00am CST

If your business is still looking for ways to trim costs, now may be an opportune time to review legal expenses.

Local law firms are seeing an increase in the use of requests for proposals, or RFPs, from companies shopping for legal services. And the firms are responding — to attract new business but also to keep associates active during slower times.

“Gone are the days that you can serve that client and never worry about that client leaving you,” said Todd Presnell, vice chairman of the litigation department at Miller Martin PLLC. “Which means you better be at the top of your game.”

A portion of the Nashville uptick can be attributed to firms looking to keep busy despite a slowdown in business, said Stephen French, managing partner of Brentwood-based Legalbill.

“It’s not that the RFPs weren’t floating about and corporations were not using them to solicit project work. ... It’s just that law firms weren’t inclined to respond to them with the same urgency that they face today,” French said.

Tea Hoffmann, chief business development officer at Baker Donelson Bearman Caldwell & Berkowitz, said the process is much like participating in a beauty contest: a law firm catalogs its best and brightest and then shows them off.

“Clients are smart to use RFPs as a tool for themselves, and I think for law firms that want to get the depth and breadth of their experience known ... it’s a very wise thing for them to respond,” she said.

Still, it’s not an easy process.

Responses can often cost between $5,000 and $10,000 in terms of resources and time, depending on whether businesses are asking for help on a particular project or more complex long-term legal matters.

French said RFPs can help reduce the gross operating margins in the industry, which can be as much as 50 percent, although that’s not the single motivating factor for companies sending out proposals.

The reasons for submitting RFPs vary, from slimming legal budgets, to finding the best expertise, to creating a bargaining tool for existing relationships.

“We are seeing more and more of it in litigation but also in general ... representation,” said Ed Lanquist, managing partner at Waddey & Patterson in Nashville. “Companies are looking closer at the ‘how much?’ but also at the ‘how?’ and the ‘who?’ ”

That doesn’t mean firms are responding to every request, as some companies use the process to negotiate fees with existing firms. Stuart Campbell, a member of Stites & Harbison’s management committee, said the firm has seen more RFPs, and many are from companies the firm doesn’t know well or that the firm believes are fishing for rates.

One dead giveaway of rate shopping: if the RFP comes from a company’s purchasing department, added Mark Greene, chief business development officer at Waller Lansden Dortch & Davis.