Canadian Lawyer InHouse

august 2014 22 INHOUSE Introducing: The Health Insurance Reciprocal of Canada em- barked upon a pricing arrangement with Borden Ladner Gervais LLP, for litigation services in the medical malpractice fi eld. The agreement is based on a new confi guration of business fundamentals. These include a volume of work measured by the number of matters for each class of matter rather than by hours, a degree of in-sourcing to the HIROC legal team, rigorous use of legal project management for intermediate to highly complex matters, and a fee arrangement consisting of a base amount together with a mean- ingful amount for performance. HIROC and BLG agreed to use weighted key performance indicators including: Understands ob- jectives/expectations (10 per cent), responsiveness/ communications (10 per cent), effi ciency/process management (10 per cent), predictable cost/budget- ing skills (15 per cent), legal expertise at the appro- priate level (20 per cent), and results delivered/exe- cution (35 per cent). Each KPI has measurements in place. HIROC scores BLG globally (not on every matter) on the fi rst three KPIs every six months, using a three-point scale of exceeds, meets, and did not meet. The last three KPIs are scored on every Class 4 and Class 5 matter every six months. There is a 15 per cent performance fee built into the base fee. Depending on the performance, the performance fee is released if the result is "meets"; doubled and paid if the result is "exceeds"; or sub- tracted from the base fee if the result is "did not meet." A comprehensive performance debrief is conducted every six months. Recently, Catalyst Consulting offered suggestions on how to improve the performance evaluation process which came into effect in 2013. HIROC wanted to have more cost certainty for its legal spend, while ensuring highest quality of the legal services provided. HI- ROC sought a way to link its legal costs to case volumes as opposed to the traditional approach of hours spent. It wanted increased predictability of legal fees and sought a new approach to pricing its work with this objective in mind. The outcomes have been a reduction in legal costs of over 20 per cent, improved budget predict- ability, clarity in the categorization of matters by complexity, and more profi ciency in legal project management. The key results were a reduction in legal costs — a combination of insourcing and pricing for the six-year reference period will save about 23 per cent over the life of the agreement. It will also mean improved budget predictability. HIrOC AnD BLG SCOrE WITH ALTErnATIVE FEE ArrAnGEMEnT BY JENNIFER BROWN the positive business outcomes for the HIROC group have been a reduction in legal costs of over 20 per cent Michael J. Boyce, vice president claims, Health Insurance Reciprocal of Canada (The HIROC Group) John J. Morris, Borden Ladner Gervais LLP, partner and national leader of the health law group catEgory: Working with External Counsel dEpartmEnt siZE: Small company: Health Insurance Reciprocal of Canada saNDRa stRaNgEMORE

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