Canadian Lawyer InHouse

20 Roundup • A roundup of legal department news and trends BLG, client honoured for cutting costs by 20% A partnership that helped an in-house legal team reduce its external counsel costs by around a fifth has won international recognition. Healthcare Insurance Reciprocal of Canada and Borden Ladner Gervais LLP have been named 2013 Value Champions by the Association of Corporate Counsel. The team is the only Canadian duo on the list which also features firms from the United States, Italy, the United Kingdom, and China. The savings have been "well north of 10 per cent and perhaps 15 to 20 per cent," says Michael Boyce, HIROC's vice president of claims. "That's probably very conservative," adds John Morris, a partner at BLG. With the help of a consulting firm, the two companies introduced value-based pricing, combining a base rate over five years with an added percentage based on performance. Boyce says the change has led to increased efficiencies on both sides, without adversely affecting the quality of the service being provided. "It incentivized BLG to work harder and be more efficient, and encouraged HIROC not to over-use the services," he states. "We realized it's not sufficient just to get the law firm to change their practices," he adds, explaining how HIROC now has a completely paperless office, has reduced the "number of hands touching a file," and relies on phone calls instead of written letters. BLG was able to implement the fee structure partly through using paralegals to a high degree. "That was [already] something we were doing to try to make sure that the right work was being done at the right level," says Morris. But entering into discussions with HIROC provided impetus to go further. "A lot of the efficiencies have come through analyzing what we're doing — the client giving us the licence to ask how we can do the work in different ways," he adds. Although the move was made easier by the two firms' long-standing relationship and HIROC's ability to forecast its budget based on previous patterns, the model "absolutely could be replicated with other clients," Morris believes. The value champions were nominated by ACC members. Announcing the values champions, Catherine Moynihan, the ACC's director of legal management services, said: "The traditional practice of law has been turned on its head by these departments. Gone are the days in which legal practice consisted solely of meetings, memos, and briefs. "In-house counsel are re-engineering the legal function to maximize the strategic value of their work, resulting not only in reduced costs and higher client satisfaction, but also in improved morale among their staff." Other in-house departments named as value champions included British Telecom and Nike. They were recognized for innovations including new ways to share costs in joint litigation, use of legal process outsourcing, switching to greater than 50 per cent alternative fee arrangements, and negotiating long-term relationships. The desire for more predictable costs was a common theme, said Moynihan. — Charlotte Santry Massive change needed for profession to remain viable: CBA C anada's conservative legal industry must overcome an array of "complex and compelling challenges" to remain viable, argues a Canadian Bar Association report. "The Future of Legal Services in Canada: Trends and Issues" sets out the economic factors, technological changes, and client demands forcing the profession to rethink traditional mindsets. It warns: "Because of its relative success in the past, the legal profession in Canada is generally conservative. Psychological studies of lawyers have found that they are generally skeptical, autonomous and not resilient." They will need to be less "rigid" in the future, for example by adopting different billing methods including fixed fees, the report argues. "Emboldened" clients are increasingly questioning firms' "basic value proposition," and also expect to deal with lawyers via quick, electronic communications, it says. The document also highlights the problem of excess legal capacity in certain regions, and an undersupply of lawyers mainly in rural areas. CBA vice president Fred Headon said the report was aimed at providing a Canadian take on the industry and "transforming how legal services are delivered." It has been launched as the CBA enters the consultation phase of its Legal Futures Initiative aimed at stimulating discussion and innovation and has teams examining three key areas of the industry: 1. education; 2. alternative business structures and innovation; and 3. ethics and professional regulation. Allan Fineblit, CEO of the Law Society of Manitoba and another member of the steering committee, stressed the importance of including all members of the profession — large firms, small firms, in-house counsel, the academy, law societies, and other professional organizations — to make change happen because there are "lots of rules regarding law firms that just don't make any sense today." — Charlotte Santry and Gail J. Cohen w w w. c a n a d i a n law y er m a g . c o m / i n h o u s E august 2013 • 7

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