Canadian Lawyer

to While 'suicide pricing' hasn't taken hold in Canada, law firms are still often shooting themselves in the foot by slashing fees in an effort to attract the next big client. bo S t BY LUIS MILLÁN the tom ome law firms are so determined to attract new business they will go to lengths that confound even the most seasoned legal observers. Perhaps one of the most extreme examples took place last year when an Am Law 50 firm successfully undercut — by a staggering 80 per cent — a bid made by an similar sized competitor firm, tentatively agreeing after tough negotiations to provide substantial litigation services for a mere US$350,000. The implausible situation prompted Dan DiPietro, chairman of the law firm group at Citi Private Bank, to ask his interlocutor to repeat the numbers to make sure he did not miss a digit. Certain law firms have gone even further, and reportedly submitted bids of zero dollars in auctions to obtain work for insurance giant Marsh & McLennan Companies. The current legal marketplace, characterized by lethargic growth, too many lawyers, and a buyer's market, has driven some law firms to literally conduct fire sales. Offers to work for free are atypical. But seemingly more prevalent are cases where law firms aggressively chase work, offering rates so low they almost certainly will lead to an unprofitable engagement or at best result in a write-down. Legal consultant Bruce MacEwen morbidly but aptly describes it as "suicide pricing." It is a phenomena Edmonton-based legal consultant Patrick McKenna, whose clients are exclusively American law firms, has seen all too often. "There are many firms that are doing it in very limited ways, regrettably in practices they shouldn't be in in the first place because they are not a major player and so try to get some work by being silly about pricing," says McKenna. Though more widespread in the U.S., there are some Canadian law firms engaged in deep discounting. Shahir Guindi recalls seeing on a couple of occasions law firms taking very aggressive and "frankly very ridiculous" positions to land a contract, and it backfired. "It's clear that those relationships or those 'investments' have not borne any fruit," remarks Guindi, managing partner of the Montreal office of Osler Hoskin & Harcourt LLP. www.CANADIAN L a w ye r m a g . c o m June 2013 25

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