Public procurement of legal services what is decisive – price or quality?

Providing high quality legal services to the public sector is a challenge. The main criterion in fact is still price. However, the lowest hourly rate does not necessarily mean the lowest overall price for the services provided, and certainly not the top quality, which is demanded by the public sector just as much as by the private sector. So how to choose truly high-quality legal services at a reasonable price?

Theoretically, one might claim that every attorney must be able to draft and win a public construction contract. But can every attorney prepare documentation according to FIDIC standards, define clear and balanced tender terms and conditions for a large construction project, guide the contracting authority through all the building permit procedures, effectively deal with subsequent uncertainties during the construction stage and succeed in all kinds of problem-solving?

It is quite common in the private sector that in order to pursue their interests, clients choose the best lawyers. In principle, this means those who have acquired high-quality education, have not only top legal expertise or the necessary insight with a cross-over into business, but also have the best references and years of experience in the given area of law and business.

The quality of legal services is determined primarily by the team's outstanding legal know-how and references, business insight and practical experience.

If legal services are procured for the public sector, public procurement rules must be observed. For contracting authorities, such procedure is often very demanding in terms of the administration and time spent. To avoid potential disputes with suppliers over the outcome of the evaluation, contracting authorities tend to take (at first sight) the easiest road – hence, bids are evaluated based on the lowest price. However, for legal services, this is absolutely inappropriate. Truly high-quality law firms often do not even participate in such tenders. In practice, tenders then take place among less experienced firms or attorneys, who often engage in price undercutting and offer hourly rates that are completely unrealistic.

To keep a contract at least somewhat profitable, such law firms often deploy junior lawyers to perform the work. However, these lawyers do not have sufficient experience and, if the law firm does not specialise in the given field, they sometimes encounter a certain area of law in practice for the very first time. As a result, they end up spending more hours on the case, which, of course, are then billed to the client. That means that in fact they spend many more hours on the case compared to an experienced legal team. Despite the lower hourly rate, the final cost charged to the client is then higher, which cannot be said about the quality of such advisory.

Broad crossover and insight

Is it more appropriate to evaluate legal services based on the rate (i.e. unit price) or on the total price charged for the given case? Setting a total price may partly prevent companies from charging an unlimited number of hours. However, the total price often cannot be determined in advance. And even if it can, it doesn't solve the situation where a law firm, to remain financially sustainable, assigns the contract to an inexperienced junior team lacking sufficient detail and insight.

If a contracting authority needs legal services for a more complex or multidisciplinary case, it should look for lawyers with a maximum level of expertise. Such lawyers are able to approach the case from all necessary perspectives and achieve the intended outcome. Sufficiently robust law firms offer a broad crossover approach across all areas of law. They can think comprehensively about a case, they can engage their own experts from virtually all fields of law, they have ties with and contacts to consulting companies, technical and other experts, and market leaders in the respective fields.

Set your criteria

If evaluation criteria are set correctly, seemingly advantageous offers can be eliminated. It is not only the price that needs to be evaluated, but above all the quality. First of all, it is necessary to correctly specify what legal services the contracting authority requires. The resulting qualification criteria must then be set accordingly – i.e. the requirement for a legal team of the appropriate size and sufficient number of references. It is usually preferable to require more general references in the qualification, while the evaluation should focus on the specifics of the case in more detail.

The quality of lawyers is assessed mainly based on a criterion that the legal regulations define as the organisation, qualifications or experience of the persons assigned to performing the public contract directly. This means an assessment of the implementation team, i.e. the specific lawyers who are to perform the work for the contracting authority.

The internal rules of a number of contracting authorities stipulate that the tender price must be evaluated with a minimum weight of 60, 70 or even 80%. However, in the case of expert legal services such procedure cannot guarantee the selection of a truly high-quality supplier.

The internal rules of a number of contracting authorities lay down that the weight of the evaluation of the tender price must amount to at least 60, 70 or even 80%. However, in the case of expert legal services, such a procedure cannot guarantee the selection of a truly high-quality supplier. Quite the contrary – for services involving people as the decisive factor, the predominant criterion must apply to the people who provide the services. In the case of legal services, we therefore strongly recommend that quality be assessed with a weight of over 50%. The law even allows the contracting authorities to set a fixed price and to evaluate only the quality offered by the suppliers at that price (which is the same for all). Similarly, it is also possible to set the lowest price threshold for evaluation (i.e. the contracting authority will no longer award extra points to tender prices below a certain threshold).

Another possible method may be to interview members of the implementation team so that the contracting authority has the opportunity to see the lawyers in person and check their skills. However, in the procurement procedure, the contracting authority must specify in advance what it will take into account in such interviews. Needless to say, the course and the outcome of the interviews should be transparently recorded – ideally in writing and as an audio/video recording. It is therefore not quite comparable with the standard selection of a lawyer, where the clients decide independently based on direct contact with the given lawyer whether or not the lawyer suits them.

Reliable partner

Today, there is a growing number of new approaches applied in the public sector, including international FIDIC standards, BIM based design, and taking into account social and environmental aspects. There is also a lot of pressure to computerise and innovate. The current issues affecting the society at large include inflation and material shortages, as well as the impact of the Covid-19 pandemic and the conflict in Ukraine. Contracting authorities are dealing with the difficulties suppliers have with fulfilling contracts and meeting deadlines and performance quality on a daily basis. It is being able to deal with these issues that makes an experienced lawyer a reliable partner.

High-quality attorneys should provide full services to the contracting authority. For example, in the field of public investment projects, they should prepare and legally define the terms and tender requirements taking into account all aspects of all relevant fields of law (including intellectual property law, data protection or tax issues). They will coordinate their activities with technical advisors, navigate the contracting authority through the whole process, including possible defence before inspection and audit authorities in case of subsidies. Subsequently, they will also be able to resolve any ambiguities in interpretation or unforeseeable issues during the project implementation. They not only manage to ensure the proper legal form, but also understand the content and business needs of the contracting authority and are familiar with the conditions and relationships in the market concerned. They are also wellacquainted with the latest trends in both domestic and foreign practice, and can apply them and resolve interpretation issues.