Canadian Lawyer

"[In] 2008, the shit hit the fan. Now you can't raise your fees without a great deal of client pushback and you can't get any leverage because you are de-equitizing [partners] and there's more lawyers than demand for legal services. So how do you make money?" PATRICK MCKENNA, EDMONTON-BASED LEGAL CONSULTANT specifications about what they need and getting overkill," says Creighton. "Like in any market, that is going to drive more efficient conduct by the supplier." A surefire way for a law firm to lose a client is by making the client feel they were taken advantage of, he says, which in large part explains why Canadian law firms are now scrambling in pursuit of the new Holy Grail of the profession — so-called value billing. Not all are going about it in the same way. Some firms have sought a competitive advantage through consolidation in the belief a comprehensive footprint is needed to serve international clients. It was a popular strategy as there were a record number of 96 cross-border mergers announced last year, including the likes of Norton Rose with Calgary-based MacLeod Dixon; Fasken Martineau with Johannesburg-based Bell Dewar; and announced last year but officially launched a couple of months ago, the creation of Dentons from Salans LLP, Fraser Milner Casgrain LLP, and SNR Denton. Other law firms are putting a lot of effort towards re-thinking their delivery systems to enhance efficiency and service while being able to stare down the pressures of operating in today's business climate. Nearly four years ago, after sensing clients' expectations were shifting, McCarthy Tétrault introduced legal project management at a time when many major North American law firms were just beginning to explore the discipline. Today, it is taking a step further and has just introduced legal service process mapping, a system designed to clearly lay out the steps required over the life of a matter to improve efficiencies by identifying best practices and examining whether others such as paralegals or LPOs could perform the task. "The traditional approach has been to look at discounts but clients are telling us that they are looking at the number of hours spent," explains Peters. "This is a whole issue of efficiency and how services are delivered. If you can examine the number of hours, the staffing profiles, and just how services are delivered, you can actually impact the total bill as well. In many respects, it is a much more effective way because you are not jeopardizing quality and you are dealing with the whole issue of the total bill." A lternative fee arrangements such as fixed fees, flat fees, or performancebased arrangements are supposedly on the uptick, and something many law firms offer. It turns out, however, inhouse counsel are not exactly enamoured with them, according to the 2013 In-House Counsel Barometer Survey conducted by Vision Critical in collaboration with the Canadian Corporate Counsel Association and Davies Ward Phillips & Vineberg LLP. "There is a general lack of knowledge surrounding alternative fee arrangements," admits Creighton. "It might work in certain contexts but in others I don't know how you'd make an alternative fee arrangement work really well if it is a big complicated transaction. I still think the traditional billable hour is appropriate for many more complex matters if you have a good trusting relationship." Other alternatives, such as new law firm models like Cognition LLP, a Toronto-based legal services provider that rents out hired guns, is seemingly gaining growing acceptance from corporate law departments and in-house counsel. Managing and controlling costs of outside counsel is a priority in today's competitive business world, says Jill Schatz, general counsel and vice president law at Primus Telecommunications Canada Inc. "The use of alternative legal service provider models such as the virtual law office practice offered by Cognition is an invaluable tool to help contain costs," says Schatz. Cognition's co-founder Joe Milstone believes the legal services market is on the cusp, "if not already beginning and into it," of fundamental change. "I temper that by saying that the Canadian market is actually even more conservative and slower to respond and, in some ways, lagging other markets such as the U.K. and the U.S." That is a viewpoint shared by legal consultants and "futurists." Kowalski likens the current Canadian marketplace to a monopoly where there is very little incentive to change. Allowing non-lawyers to own an equity interest in law firms, as is the case in Australia and the U.K., would force Canadian law firms to become more innovative. As it stands, says Kowalski, there is a perception among some law firms they have "ridden the storm fairly well so why change." He believes it would be in firms' interest to focus on processes, invest heavily in knowledge and information technology systems to "really help them drive" efficiencies, and provide better client service. "Just drop the billable hour right off the bat and that would force them to be more efficient by having to work on a budget." www.CANADIAN L a w ye r m a g . c o m June 2013 31

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