Canadian Lawyer InHouse

31 cANAdIANlAwyermAg.com/INhouse DECEmBEr 2014 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 % $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 % For those in-house counsel who are using alternative fee arrangements, 73 per cent say they introduced the idea to their law fi rm, while 21 per cent said they discussed it mu- tually with their law fi rm partners, and six per cent said their fi rm introduced the idea. One respondent indicated they retained a third party to negotiate with law fi rms. Interestingly, 75.6 per cent of respon- dents said they would be receptive if anoth- er fi rm 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 fl at 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 litigation, says while it's a good idea for in-house coun- sel to try and fi gure 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 in- centives for effi ciency. That's when I ques- tion 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 encourage anyone to work fewer hours or to fi nd a different, more effi cient 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 effi cient, that really doesn't help me." When considering different fee arrange- ments in-house need to look at what they want their fi rms to do differently. "You can't build a value billing program unless you understand the component parts of what you're asking law fi rms to do. They need to understand how they are supposed to get there and what the ultimate objective is," he says. So are fi rms embracing alternative mod- els for billing? "I think most law fi rms, if not outright resistant, would prefer it be something that just quietly went away," says Gutelius. "I will say that with most big law fi rms, I don't * May add up to more than 100 due to rounding

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