For several reasons, a law department should include specific historic spending data in its requests for proposals (See my post of Sept. 13, 2006 on the confidentiality of this data.). One reason is that firms that have not worked for the law department know nothing about the department’s spending, so incumbents are favored if there is not equal distribution of information. A second reason is that if firms do not have some sense of your spending, they cannot estimate how large a team they might have to devote to your services.
Third, if the data is combined with the number of new matters per year, dividing the two figures gives some indication of the complexity of matters. Law firms may decide, as the fourth reason to provide data, whether or not to propose on a bundle of work based on the estimated spend. Lastly, it is impossible to propose a fixed fee if there is no reasonable basis to estimate the amount of work to be done.