In-House Counsel

In my consulting projects, the first-round proposals in competitive bids for fixed fees to handle significant amounts of legal work have varied by fifty percent or more. Stated differently, comparable firms differ in their proposed amounts by upwards of fifty percent of the lowest amount bid. If that gap holds generally, law departments that do not solicit comparable bids from a group of firm might be as likely to pick a firm on the high end as on the low end of the presumed range. On average, the law department will, therefore, pay 25 percent more than the presumed low bid it never considered because it did not solicit competition.

Now, the low bid may have been unrealistic; the high bid may have been gouging. The point is that a priori mathematics suggests that competitive bids on their own could save 10-15 percent, which has been my experience (See my post of Aug. 15, 2008: competitive bids with 35 references.).