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 A p r I L 2 0 1 5 43 ntense pressure on companies to rein in their legal spend has offered new opportunities to providers whose services supplement those from the big, established law firms and forced many law firms to re-examine their own business models in an increas- ingly competitive market. While outside counsel remain the go-to model for complicated issues, or decisions at board level, surveys show that many clients are boosting the size of in-house law departments or switching, in part at least, to services from special- ist providers or accounting/professional services firms. Fewer chief legal officers are planning to increase their spend on outside counsel than in the past, and almost half of those surveyed by inter- national law firm Allen & Overy plan to decrease that spend. A separate survey from legal consul- tants Altman Weil shows only four per cent of in-house counsel are happy with the traditional legal service model and a majority are using their purchasing power to try to drive down legal costs. Forty-three percent plan to increase their in-house lawyer workforce in the coming year, while just under one third will add paralegals, and one fih will boost support staff. "Certainly since the financial crisis there has been a quite a lot of focus on productivity and cost constraints, par- ticularly in a regulated industry like ours where we do have a lot of scrutiny by the regulators and a lot of increased regulatory expectations," says Jolie Lin, deputy general counsel at Bank of Mon- treal. "ere was a dramatic flip of the switch in 2008, but the pressure has just continued throughout, and I think with the oil-price change we are into an- other dip right now. It's an entire shi in terms of management philosophy, it's very, very focused on risk management as a top priority but recognizing that the times are not going to suddenly get bet- ter, so everybody is just tightening their belts." BMO responded to the pressure with what Lin describes as a "wholesale re- fresh" of its external counsel program, stressing the need to seek preferred re- lationships with its vendors, working with firms with lower-cost offshore or nearshore options and doing more work internally. "ere is absolutely a drive to use more internal resources for a lot of different reasons," she says. "ere is quite a lot of focus on our legal spend, and we are . . . trying to do our best to reduce that number." It's a development that few expect to go away, and one that has prompted a range of responses from law firms fear- ing a shrinking market for their costly, specialized services. "ere's a structural L E g A L r E p o rt \ L E g A L p r o C E s s o u t s o u r C I N g PieRRe-Paul PaRiseau Trusted adviser no more Are law firms losing ground to non-law competitors in terms of governance, risk, and compliance matters? By Janet Guttsman I

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