One of the most dreaded situations a lawyer can face is when a longstanding client asks you to re-tender. If you have a good relationship with the client and are regularly seeking feedback on your performance through independent client service reviews, such re-tendering situations rarely come out of the blue to catch you by surprise.

It is a common misperception that most tenders result from poor performance by the incumbent lawyers. In many organisations, particularly those from the public sector, regular market testing of suppliers is the norm, and you will have become accustomed to having to pitch every two to four years or so in order to retain the client. Another common reason for tender situations is the arrival of new personnel at the client, particularly new in-house counsel. They will have worked with other law firms in the past, will have their favourites, and will be suspicious of the law firms that they inherit, particularly if they do not know the firms and the lawyers concerned.

This is why, after a year or so, new in-house counsel often conduct a tendering exercise for legal services, so they can bring in their favoured lawyers.

If the organisation re-tendering their legal services is one of a firm's major clients, the situation is more serious, particularly for smaller firms where the fee income from the client may be a significant slice of the firm's total revenue. In this article, I will be focusing on the experiences of a 25-partner firm I helped earlier in the year. One of its largest clients, accounting for nearly 10% of their annual fee income, asked the firm to re-tender for the work in competition with a number of heavyweight City firms. This is the story of how it beat the odds to retain the client.

The client is a major US corporation with significant operations in the UK. The law firm concerned has acted for the company for more than 20 years and has been the preferred counsel in the UK for several years. The tender was driven out of the US by a member of the in-house legal team responsible for the corporation's worldwide preferred counsel programme. We understand that the corporation had identified a number of smaller law firms being used around the world in preferred counsel positions that it felt it had 'outgrown'. All of these firms, including my client, were asked to re-tender for their preferred counsel positions. The significance of my client's success in retaining the work is in the fact that none of the other incumbent firms were successful.

By the time I became involved, the firm had already responded to the corporation's request for proposal. This comprised a questionnaire requesting information on firms' resources, expertise, personnel, proposed billing arrangements and approach to managing conflicts. As is the case with such questionnaires, the opportunity to differentiate your firm's offering from those of the competing firms is somewhat limited. Provided that you can demonstrate the required capability in terms of resources and expertise, and your fees are in the right ballpark, you will generally get through to the next round, which is usually a presentation. This is what my client had achieved.

The key to winning this tender was in developing a strategy to counter the client's view that the firm was not large enough to handle the corporation's growing UK legal services requirements. At this stage, we had also identified the other firms that we were up against, and a key part of the presentation was to exploit their known weaknesses.

The corporation's team at the presentation was to include the US counsel responsible for the worldwide preferred counsel programme and a number of in-house lawyers from the various UK businesses. The complexity and number of the corporation's UK operations meant that no one from the client side, especially the US counsel, really understood the full extent of the corporation's UK external legal requirements. The only ones with this knowledge were the partners from the firm I was helping. This became a key part of the presentation: mapping out in detail to the client their own needs, how the firm had successfully met these over many years and, given the corporation's expansion plans for the UK, how they could do so going forward. On top of this, the team were able to show that their proposition gave the client the best value-for-money solution, even with a heavily partner-led approach. Finally, in terms of conflict management, the team was able to guarantee not to work for the corporation's competitors, something that we knew would be difficult for the larger firms to commit to.

With our strategy worked out, a small team of partners and associates was assembled for the presentation. The structure of the presentation was such that everyone had a role to play and the team rehearsed several times until they were all comfortable with their material and the length of the presentation was within the allotted time. A set of questions and answers were developed to test their ability to respond to anticipated questions from the client.

On being told of their success in winning the tender, the team sought feedback from the client on the reasons for their success. It was satisfying to be told that their presentation had been much better than those of the other firms competing for the work.

This story demonstrates how smaller firms can beat the odds and see off larger firms in tenders. This is generally achieved by working hard to understand a client's needs and being able to demonstrate the benefits of using your firm.

Kevin Wheeler is principal of Wheeler Associates.