Canadian Lawyer InHouse

33 cANAdIANlAwyermAg.com/INhouse DECEmBEr 2014 know if we have convinced them and they like it, but they are certainly participating in it. I will say the moment clients stop re- quiring it my guess is they will return to the hourly rate." Christine Silversides, director of legal services with the offi ce of the counsel at York University in Toronto says the results of the survey regarding fees are indicative of the challenge that face law fi rms, 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 organizations have been clear to their legal service provid- ers that hourly billing is not a sustainable model. These are tough fi scal times for uni- versity external legal budgets as well as for the budgets of others, including those in the private sector." Silversides says York expects its legal ser- vice providers to take the initiative to bring innovative billing solutions to the table when negotiating fees. "We employ a range of billing models, depending upon the sub- ject matter of the legal work. We are cur- rently 'test-driving' new billing models to see how they work for us, and our external legal service providers are keen to partici- pate with us in those tests." As well as combining alternative fees with "rigorous project management at ev- ery step," Silversides says York has chosen similar, fairly routine fi le matters, and are running each fi le on a different fee arrange- ment, to see which arrangement might be best for those types of fi les. She says the law fi rms it works with are looking for new and inventive solutions to bring down the cost of their existing business models, creating effi ciencies such as outsourcing legal research and project planning from a legal cost perspective. "In the end, the law fi rms can pass on the sav- ings to their clients and thereby retain the clients," she says. Is IT ABouT The lAwyer or The FIrm? This year's Corporate Counsel Survey also asked in-house counsel to indicate how they choose their external law fi rms. The major- ity, at 75.7 per cent, said they choose based on specifi c lawyers, while 72.4 per cent base their choice on practice expertise, followed by law fi rm reputation at 33.8 per cent. While some noted they choose based on parameters set in requests for proposal, one survey respondent summed it up this way: "I choose the lawyer, the fi rm is immate- rial." Some of the comments received on this question emphasized the importance of long-term relationships and some indicated the formula looks a bit like this: "Lawyers with specifi c skill sets, strong relationships, commitment to innovative service delivery, and support of in-house counsel." However, others also noted cost was a signifi cant factor overall, with one respon- dent noting: "All of the above also has to be balanced by cost." While another said: "You can get excellent lawyers in regional fi rms at reasonable rates." Gutelius ranks the person ahead of the fi rm, but adds: "fi rms do matter. I would say the individual lawyer is a big driver and it's often about an identifi cation of a problem in a particular geography and that this person is the right person to go to. The fi rm is also important — then we know they have pres- ence in the industry or region and that they have bench strength, or we have a relation- ship with them in another city." What type of billing arrangement do you have with your primary law firm/external service provider? If you use alternative fee arrangements what percentage of the work you send out falls under an AFA? Combination of billable hours plus flat fees 30.53% Billable hours 47.35% Alternative fee arrangements (AFAs) 7.08% Other 6.19% RFP process on large projects 4.42% Flat fees 4.42% If you use alternative fee 0 - 25 per cent 62.34% 0 - 25 per cent 62.34% 50 - 75 per cent 7.79% 50 - 75 per cent 7.79% 75 per cent + 7.79% 25 - 50 per cent 22.08% 25 - 50 per cent 22.08% 75 per cent + 7.79% Is the volume of legal work carried out by your department and external counsel combined likely to grow 2015? Yes 64.6 % No 35.4 %

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