Canadian Lawyer

40 N o v e m b e r / D e c e m b e r 2 0 1 4 w w w . C A N A D I A N L a w y e r m a g . c o m T he momentum has been growing slowly for years but it seems in-house counsel are ready and want to trade in the billable hour model for something more progressive. Responses to the 2014 Canadian Lawyer Corporate Coun- sel Survey indicate there is a growing interest within the in-house bar to changing the conversation when it comes to negotiating billing options with external law firms. While the billable hour is still No. 1, there was a considerable drop to 47.3 per cent, compared to 55.2 per cent last year, who cite the billable hour as their primary arrangement. "Absolutely, I agree the billable hour is still No.1," says Peter Gutelius, assistant general counsel at RBC. "We're all still working hard to move away from it but it's been around for a long time and covers a large industry and takes a while to move away from it." This year, more than 320 law department leaders from Canadian cor- porations and government participated in the Canadian Lawyer survey. The balance of respondents indicated they use a combination of billable hours plus flat fees (30.5 per cent), alternative fee arrangement (7 per cent), flat fees (4.4 per cent), RFP process on large projects (4.4 per cent), and "other" (6.2 per cent). Many said they have "billable hours, RFPs, and flat fee" arrangements in "varying measures." When asked what measures they put in place in the last year to manage costs, 42.9 per cent said they brought more work inside with 28.3 per cent indicating they came to a new fee arrangement with their outside counsel. For those in-house counsel who are using alternative fee arrange- ments, 73 per cent say they introduced the idea to their law firm, while 21 per cent said they discussed it mutually with their law firm partners, and six per cent said their firm introduced the idea. One respondent indicated they retained a third party to negotiate with law firms. Interestingly, 75.6 per cent of respondents said they would be recep- tive if a firm other than who they are currently working with proposed an alternative fee arrangement. MoRe THAn JuST A diSCounT When asked which AFAs are being used, 56.3 per cent of respondents said discount, followed by flat fee, quoted on a prescribed scope, or phase/bundled portfolio of work. Capped fees, where the client pays the lesser of the actual cost or pre-determined capped fee, was third most popular at 49.6 per cent. Gutelius, who leads RBC's legal team supporting its global commercial The annual Canadian Lawyer Corporate Counsel Survey shows in-house counsel have an open mind to alternative fee arrangements, but do they really know how to get better value? SEEKING alternative arrangements By Jennifer Brown sponsored by:

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