Law: The tender trap of the beauty parade: Neasa MacErlean reports on the increasing use of a formal process when submitting for new business which is shaking up the profession

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The Independent Online
Company lawyers are taking revenge on their better-paid colleagues in law firms, according to John de Forte, a marketing consultant and author.

The current trend for large companies to submit their external legal advisers to a 'beauty parade' is only partly attributable to cost-cutting aims, he believes. 'Some people love putting professionals through hoops.

'You could say the whole process is a kind of collective revenge on professional advisers by managers - people who were paid much less than their advisers in the past. And in the past, in these relationships, the power lay with the supplier rather than the customer. The managers have now decided they are not going to be baffled by science any more.'

Solicitors are now being asked to go through a formal tender process for new business. Five years ago, 'beauty parades' were rare events in the legal world. Now they are commonplace for assignments where the final fee is likely to be more than pounds 20,000.

Many lawyers, however, are baffled by the process, perform badly in their written and oral submissions - but believe they have performed well - and do not understand why they have won or lost the work.

The Allied Lyons 'beauty parade' earlier this year was a difficult, but probably representative affair. The food and drinks group discovered that it had used 178 different law firms during the course of a year. Its profit improvement unit decided to reduce and to control the company's pounds 6m legal bill by using a beauty parade to cut down the number of firms it used.

Earlier this year Andrew Gibb - in charge of the process at Allied Lyons - outraged the legal community by saying how 'almost totally underwhelmed' he and his colleagues had been by the presentations they had witnessed. 'We received barely one exciting, imaginative, novel or innovative idea,' he told a conference on marketing.

He continued: 'There is certainly an impression that the billing of fees is a black art, employing elements of expediency and seat-of-the-pants judgements about customer tolerance or ignorance, rather than any mathematical accuracy. I have to say that my feeling is that the cosy, gentlemanly relationship which has existed, where nice chaps do not question other nice chaps about money or quality of service, is coming to an end.'

At Allied Lyons, non-lawyers were being brought in to evaluate the proposals from the solicitors' firms - fellow lawyers may be kinder in their judgement. Procter & Gamble, for example, has not used the 'beauty parade' for its external legal work. Bob Downey, the company's legal head, is a former chairman of the Law Society's commerce and industry group. 'Price is only one part of the equation and not necessarily the most important one. It's important to have a good working relationship with the people you are dealing with,' he says.

The Prudential is another organisation that has rationalised the number of law practices it deals with. The company's central legal team has produced a list of 30 firms that its branches are authorised to use for general insurance work. Price and billing arrangements have been discussed with each of the firms by the in-house legal department. According to Prudential's legal head, Derek Councell: 'If you're not careful you end up paying too much. But there's much more openness now in terms of the billing arrangements of firms.'

Mr de Forte, however, believes that law firms have a long way to go in terms of understanding the tender process. He has seen submissions that he says were 'semi- literate'. 'Lawyers are not very good at this,' he says. 'They define themselves by their technical skills. It is extremely rare to see a proposal where the lawyers give a buyer any real steer on why they should use their firm.'

The most common mistake, he says, is for the lawyers to concentrate on presenting themselves while hardly making a mention of the clients' needs. They also repeat themselves, include irrelevant information, make unsupported claims about user- friendliness and neglect important issues such as fees and are unable to prove the value of their services to the client. Many lawyers, Mr de Forte believes, are scared of the process and often turn down opportunities to talk to the client before the formal presentations.

From the client's point of view price is frequently not the overriding concern. While fee cuts of 30 per cent are common in the auditing profession as a result of beauty parades, cuts in the legal world tend to be much smaller - around 10 per cent.

The issue of control is often of more importance to the client than cost, Mr de Forte says. 'What clients are worried about, above all, is how to get a measure of the cost-effectiveness of the legal services they buy. In a world where advice can cost more than the problem, how can they stop over-lawyering?'

Mr Gibb may not be particularly popular with the legal profession, but he has played a very significant role in pointing out that a revolution is taking place. Now that clients will no longer be submissive, will the legal world ever be the same?

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