Canadian Lawyer

July 2013

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it makes more sense to settle early or opt for mediation. "If you're not willing to spend 10 hours at the outset of a case charting out the issues, you're not serving your client well," said Marcellus McRae, a partner with the U.S. firm Gibson Dunn and Crutcher LLP, in a recent online seminar on litigation budgeting. If the decision is made to proceed with litigation, McRae says a budget should be prepared by monetizing every step in the process: motions to dismiss, the number of witnesses to be deposed, the volume of documents, the cost of preparing summary judgment motions. Also consider non-lawyer fees such as outside experts, class notification, electronic document retrieval specialists, mediators, and even jury consultants. Budgets fail, and financial surprises await, when lawyers only think "high-level about a case," says McRae. "They're not down in the weeds. You have to get specific. Each module has to be broken up into different outcomes and monetized. It's hard work, and some people have an aversion to it. Also some lawyers know if they do this work [and deliver] a higher budget, the client will get sticker shock and they won't get the job." LaFlair says during her time as in-house counsel for DRI Capital, a Toronto private equity firm, she was astonished to learn many lawyers had "absolutely no sense of their own cost structure. If you asked them, 'What is your typical case in this type of action,' they can't say, 'Oh it's one with five motions and a couple of pleadings.' So they can't give guidance to their clients on budgets, because they aren't aware of the general cost structure of their own practice." That kind of imprecision, plus the constant rise in the billable hour — now being challenged in some quarters by a move to alternative fee structures — have contributed to the current concern over litigation costs and the demand for better budgets. Manitoba Public Insurance tries to address the issue not only with its strict rules on billing in the retainer, but also with a series of provisions, or "philosophies," that are issued to all outside counsel. "We want every task performed at the most cost-efficient staffing level, without compromising quality," says Scaletta. "So if a paralegal can do something, that's who we want doing it. But if it requires a lawyer's input and it doesn't need to be done by a partner, then we'd like it done by the junior." Another provision asks counsel to conclude each case as quickly and inexpensively as possible. "So if you don't needntitled-2 to depose all 15 of the doctors who treated the victim of a traffic accident, don't. If you can get a good picture from deposing three of them, do that. But get us to the conclusion as quickly as you can." Technology is also now being used by clients across North America to assess the validity of legal invoices. One such third-party service, Serengeti Tracker (also a Thomson Reuters business), analyzes one firm's fees by comparing them to invoices for similar services, among a database of anonymous invoices submitted by thousands of Serengeti subscriber corporations and law firms. Outside counsel use the service to check their cost competitiveness. Clients use it to check the fairness of the bills they're asked to pay. Of course, even the most careful, cost-conscious lawyer will come upon surprise developments in litigation that push a budget out of whack. "There's always stuff you can't control as a lawyer," says LaFlair. "If the other party is unbelievably litigious, or they have an unruly counsel that's trying to make things difficult, you can't foresee that. But you learn pretty early in a case if that's going to happen, and that's when you go back to your client and say, 'OK, this is not what we scoped, they're out to make things difficult and that could quadruple the bill. Are you still interested?'" Commercial clients and their in-house counsel also need to remember, says Scaletta, that a good legal relationship is a valuable thing and needs to be nurtured. Excessive pressure for predictable budgets and cost containment — including the use of third-party, computer-driven bill-checking programs — can jeopardize lawyer-client relationships. "It seems to me," he says, "the reason we've hired many of our outside lawyers is because there's an element of personal trust and satisfaction with how they do their work. Amid all the financial pressures, we need to remember why we've been paying them all these years for the work they do." Professional Directory Supreme Court of Canada Counsel and Agency Services Henry S. Brown, QC D. Lynne Watt Graham Ragan Guy Régimbald Matthew Estabrooks With the assistance of: Brian A. Crane, QC Eduard J. Van Bemmel, Law Clerk 160 Elgin Street Suite 2600 Ottawa Ontario K1P 1C3 T 613-233-1781 montréal ottawa toronto hamilton waterloo region calgary vancouver beijing moscow london Announcing CanLNC Experts 1 Case Merit Service: An invaluable early assessment13-01-14 of case facts, issues, players and strength MEDICAL MALPRACTICE PERSONAL INJURY CLASS ACTION TESTIFYING OR CONSULTING PLAINTIFF OR DEFENCE www.CANADIAN The experts you need, The quality you deserve. www.CanLNCExperts.ca 855-278-9273 (toll free) Experts@CanLNCExperts.ca L a w ye r m a g . c o m J u ly 2013 45 2:30 PM

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