Canadian Lawyer InHouse

23 canadianlaWyermag.com/inhouse june 2014 law fi rms. Because the Latin American legal market and particularly the Argentine legal market has been quite depressed, we were able to do it very cost effectively with a lot expertise as well. BorBridge: We use two arrangements, one is a fi xed-fee arrangement on certain projects but the tricky thing with those is, the law fi rms certainly review what they think the project is, and they come up with a fi xed fee. The tricky part for the company to know is, is it in fact, good value? Is it any better than we would have seen if we had an hourly billing rate arrangement? It takes enough understanding of the transaction or the piece of work, and the experience to know whether that will actu- ally provide good value. You really have to question whether it will make any difference at the end of the day to the ultimate bill we receive? In the circumstances when I've used it, I think we beat what we would have paid by a little bit, but not by a substantial margin. harding: I think the fi xed fee is not a way of signifi cantly lower- ing the legal bill; it's a certainty. Every other department that deals with outside service pro- viders gets a project, this is our fi xed fee, and they don't understand why the legal profession seems to think they don't have to do that. mclean: Gail, I might say it's certainty, and also an alignment of interests to a cer- tain extent. It's caused us to provide in- structions, and to provide materials more effi ciently because the law fi rm knows that can be a big time waste for them, so they know how to more effectively communicate either through point people in our business or directly to the business people who need to provide them with information. harding: I have been able to get the fi xed fee on corporate transaction matters, but on the litigation, what we fi nd is with the fee they're only prepared to commit stage-by-stage. JacKson: It's realistic. And you don't know how far it's going to go, and you don't know what's going to be discovered — whether there will be a smoking gun or not in the documents. Let's face it, a fi xed-fee arrange- ment is only as good as the assumptions that underlie it — you have to be very focused, and make sure that they are really realistic. inhouse: Would you say a fi xed fee doesn't really get at the core of the issue which is that the law fi rms need to be doing things differently? JacKson: I think it's up to in-house coun- sel to really push for innovation in terms of the way you work with your outside counsel. From my experiences as outside counsel you can spend a lot of time do- ing what really, in ef- fect, is project man- agement; and that's much more effi ciently done in-house. When you're establishing a relationship with your outside counsel you should make it clear you'll gather the infor- mation, you'll distill it, present it in an effi - cient and effective way, and they don't have to worry about project management as much. I think it's about trying to enter into long-term relationships with different out- side counsel so they realize it's worthwhile spending time and effort to learn about the university, or about the service industry that you're in, and to think creatively about how to really deliver value. Of course cost is part of the value equation, but you have to really focus on value — what are you get- ting? Most of us, let's face it, are only going to outside counsel because it's a very dif- fi cult problem we don't have the in-house expertise to deal with, and so we need the very best advice. croFT: More and more we're asking for budgets, something I think we'll probably work on more often than we have in the past, and see where that takes us. We look at it on a staged basis, and it opens the conver- sation, and allows you to have the conversa- tion before the bill comes, before the work is done rather than after. I think that's the only methods I have really found to be actu- ally reducing cost. It's about having really good communication at the outset of what you really are looking for. The other way I found more effective at reducing cost is in-sourcing our core work. Law fi rms have priced themselves out of the market for a lot of the work that's not highly specialized. harding: The problem is the fact most lawyers in private practice believe they are entitled to a minimum fi ve-fi gure jump annually throughout their entire ca- reer. Then there are the overheads and other costs. There's been a huge dis- connect between the cost and the work. Everyone is struggling with what alternative fee ar- rangements to go with. Unless we can fi nd a new model for external counsel beyond the billable hour and this entitlement attitude to a $10,000 plus a year increase, there is going to just be a constant growing discon- nect, and in-house are going to constantly look for ways to use the external less and less and less. JacKson: I think the really large fi rms are getting the message. I think they are searching for ways to adjust. I think large law fi rms are very concerned. The inter- national law fi rms are coming into Canada and Heenan Blaikie failed. These are things causing a lot of concern. I don't think they're not trying to change but change is diffi cult. I don't think law fi rms tradition- ally have been particularly nimble. IH '' '' i think the fi xed fee is not a way of signifi cantly lowering the legal bill; it's a certainty. GAil HArDinG, Canadian Western Bank From my experiences as outside counsel you by a little bit, but not by a substantial margin.

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