Canadian Lawyer InHouse

6.1% By Jennifer Brown I n-house counsel are expecting to take on more work internally next year to handle growth in their companies, but the management of their external law firm spending remains an ongoing challenge they wrestle with in an attempt to find value and meet budgets. Responses to the 2013 Canadian Lawyer Corporate Counsel Survey indicate there is some traction being made in different ways of negotiating billing arrangements with law firms, but the billable hour remains No. 1. The fact 55.2 per cent selected hourly billing as their arrangement of choice doesn't surprise Steven Trumper, vice president and general counsel at Build Toronto Inc. He defends the choice and says it can be applied in a variety of ways that bring value and doesn't have to mean an expensive or ineffective outcome. "I agree with the survey — most matters are billed out on an hourly basis now. My business is very transaction-oriented so it's hard to do fixed-fee arrangements because there are so many twists and turns. It's not commodity work; it's very specialized," he says. The prominence of hourly billing is a systemic issue says Terrie-Lynne Devonish, chief counsel with Aon Consulting Inc. Canada. "Law firms are designed around a time and materials formula for billing and most in-house counsel come from firms who use this billing model, so it is not a surprise that we all still use this model. I think we all need to be more proactive and creative in experimenting with and using [alternative fee arrangements],"says Devonish. "I would like to see law firms be more proactive in offering AFAs to their clients and I always appreciate it when a law firm is flexible about their billing model." This year, just under 300 law department leaders from Canadian corporations and government participated in the Canadian Lawyer survey. The balance of respondents indicated they use a combination of billable hours plus flat fees (36.3 per cent); RFPs (5.4 per cent); and alternative arrangements (2.7 per cent). Trumper, who works for a public-private entity (Build Toronto is owned by the City of Toronto), says he uses a selection of big Bay Street firms and specialist boutiques depending on the project at hand. "The billing rates vary dramatically," he says, but he factors in the efficiency of the lawyers he chooses for a file. "If a lawyer at $500 an hour takes twice as long to do something than one at $1,000 an 19.2% Non-profit 9.4% Government Technology 11.8% (municipal, regional, provincial, federal, and First Nations – including boards and tribunals) What sector is your company/ organization in? Service 10.8% Professional services 21.9% Resource-based 14.8% Industry/ manufacturing What was the external legal spend for the Canadian legal department last fiscal year? 6.1% Financial $100,000 or less 12.1% 26.3% $501,000 to $1 million 15.2% $1.1 million to $3 million 25.3% $3.1 million to $5 million 5.7% $5.1 million to $10 million 6.1% More than $10 million 9.1% $101,000 to $500,000 5.4% 2.7% Alternative arrangements RFP process on large projects 55.2% Billable hours 36.3% Combination of billable hours plus flat fees 0.4% What type of billing arrangement do you have with your primary law firm? Flat fees

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