International companies often balance the use of local and international law firms, but when InterContinental Hotels Group's number of law firms for its Americas region hit 60, the U.K.-based company knew it was time to reorganize.
"We wanted to reduce the number of law firms we had across the globe, in the U.S. It was just unwieldy," says Steven W. Smith, senior vice president and general counsel, Americas. "We wanted to reinforce overall relationships with law firms on such issues as cost, quality and value-added services. It made sense to consider firms on a global basis and not in a vacuum."
IHG has more than 4,500 hotels around the globe, including more than 3,500 in the United States, where its brands include Holiday Inn, Crowne Plaza, Staybridge Suites and others. Its Americas headquarters is in Atlanta, where it has a 12-lawyer legal department.
In 2010 the legal department began working with George Turner, IHG's executive vice president and general counsel, and spent close to eight months writing an RFP that involved extensive written submissions from law firms, in-person team presentations and a scoring process. Through this process, IHG assessed firms in various categories the company deemed important, including business acumen and efficiency, global positioning, experience representing hotel companies, proposed billing arrangements and value-added service.
IHG believes that its RFP selection, counsel approval process and counsel review process are substantial innovations, resulting in more focused outside counsel representation, clearer communication, greater efficiencies and, ultimately, better representation from counsel.
"We challenged the firms to get creative," says Smith. "It was intense and lengthy. I believe in more, not less. We wanted to know how their areas of expertise meshed with us, our hotel business and our franchising business. We wanted to know about their global footprint. It was also important to us to see their willingness to learn our business and devote resources to them. How much were they willing to invest in order to form a strategic alliance?"
The RFP was a "scary process," according to Paul Huang, a vice president and associate general counsel who was intricately involved in the process. "This potentially could be the RFP of the decade. We wanted to see how self-aware they were. We pushed them to be introspective."
The RFP process shed light on how much the firms wanted IHG's business. "Some obviously just handed it over to their marketing team who cut and pasted their answers," says Smith. "We read every line that every firm wrote, and it was obvious who treated this as an incredible opportunity and painted a canvas of what they could offer, their capabilities. And some said they didn't have all that we asked for, and we appreciated the honesty. Good for them. We wanted the utmost integrity in their answers."
Rupert Barkoff, a partner with Kilpatrick Townsend & Stockton, remembers the RFP as being long and detailed. "It made me look into all the areas of our firm, and I found some resources I wasn't even familiar with. We had a creative fee structure and brought some added value to the table as well.
"Is this the new normal? I don't think there is a new normal. I think some law firms use the hourly fee in the same way car dealers have the suggested manufactured retail price. No one is paying the sticker price these days."