Canadian Lawyer

w w w . C A N A D I A N L a w y e r m a g . c o m N o v e m b e r / D e c e m b e r 2 0 1 4 41 What sector is your company/ organization in? Government (municipal, regional, provincial, federal, and First Nations, including boards and tribunals) 23 % Financial 21 % Industry/ manufacturing 14 % resource based 12 % Service 11 % Non-profit 9 % Technology 6 % Professional Services 5 % litigation, says while it's a good idea for in- house counsel to try and figure out new arrangements, it's important to spend the time in advance to consider what it is you really want from the process. "What some people put in the category of AFA doesn't actually create incentives for efficiency. That's when I question whether they are truly changing the landscape and should they be called AFAs?" he says. "We don't think a volume discount or a blended hourly rate is an AFA. They don't encour- age anyone to work fewer hours or to find a different, more efficient way to complete the work. If I get a 10-per-cent volume discount but my bill is 50-per-cent too high because you're not efficient, that really doesn't help me." When considering different fee arrangements in-house need to look at what they want their firms to do different- ly. "You can't build a value billing program unless you understand the component parts of what you're asking law firms to do. They need to understand how they are supposed to get there and what the ultimate objective is," he says. So are firms embracing alternative models for billing? "I think most law firms, if not outright resistant, would prefer it be something that just quietly went away," says Gutelius. "I will say that with most big law firms, I don't know if we have convinced them and they like it, but they are certainly participating in it. I will say the moment clients stop requiring it my guess is they will return to the hourly rate." Christine Silversides, director of legal services with the office of the counsel at York University in Toronto says the results of the survey regarding fees are indicative of the challenge that face law firms, and by extension, their clients. It is: What is an appropriate and viable alternative to the hourly billing model? "There can be little doubt that the hourly billing model must become less and less common over time," says Silversides. "York University and many in-house units of other orga- nizations have been clear to their legal service providers that hourly billing is not a sustainable model. These are tough fiscal times for university external legal budgets as well as for the budgets of others, includ- ing those in the private sector." Silversides says York expects its legal $100,000 or less . . . . . . . . . . . . . . . . . . . 13.68% $101,000-$500,000 . . . . . . . . . . . . . . . . 25.84% $501,000-$1 million . . . . . . . . . . . . . . . . . 14.59% $1 million to $3 million . . . . . . . . . . . . . . . 23.10% $3.1 million to $5 million . . . . . . . . . . . . . . 6.38% $5.1 million to $10 million . . . . . . . . . . . . . 7.29% More than $10 million . . . . . . . . . . . . . . . . 9.12% What was the external legal spend for the Canadian legal department in your last fiscal year? If external spend changed, why? The business grew bringing more work into the legal department Isolated/one off situation which led to higher fees 20.71 % 29.29 % 40.71 % Sending more work out 9.29 % * May add up to more than 100 due to rounding

• Cover