“A quote given by a law firm that is well below the market expectation does not instill confidence either in the quality that may be ultimately offered, or the firm’s ability to foresee the potential issues that may arise.” A good quote from the Iberian Lawyer, Jan./Feb. 2010 at 25, it highlights two risks that legal departments perceive from a low-ball bid.
If several law firms of roughly comparable size (aka cost structure) propose to handle something and one of them falls considerably below the other amounts, it may be a reason to worry. The firm’s partners may plan to delegate work to lower cost associates and paralegals, with a risk that too much of that kind of decision will drop the level of service. . Alternatively, ignorance or inexperience could seduce partners into quoting too low a fee; if they can’t see what’s ahead, they can’t price realistically. Either way, in-house lawyers who try to square a very low bid with all the other higher bids might be made nervous
To counteract these risks, a legal department can impose staffing controls and ask piercing questions about a firm’s assumptions, thus blunting both fears.
Yet sometimes a cigar is just a cigar. A low fee may manifest considerable experience, sharp-penciled management, and confident risk taking. A legal department always benefits from aggressive fee proposals.