Legal news and trends for Canadian in-house counsel and c-suite executives
Issue link: https://digital.canadianlawyermag.com/i/50873
because we don't have the capacity in- house as I think most legal departments find themselves to be very busy," he says. "Because the legal department doesn't generate revenue, there's an interest in trying to be as efficient as possible. So I would say that in-house lawyers have to be very flexible and mindful of their budget although when there is an issue that is beyond their scope of either expertise or time, the only option is to seek an outside lawyer to resolve it while being cognizant of the cost." He agrees that typically, an in-house law department will seek outside advice for legal issues involving specialized areas such as competition law, tax law, and litigation, particularly related to litigation matters that have been initi- ated in a jurisdiction outside of the company's corporate headquarters. But, he adds, "of course, the billable rates for private lawyers are relatively high so you have to assess the value of the project that you are working on, the signifi- cance of the issue, and whether you can in fact handle it inside." In the United States, there are sev- eral law firms that cater specifically to in-house corporate law departments pressed for time and funds, recognizing their limitations regarding both legal issues that arise in specialized areas of the law as well as departmental bud- get constraints. Though the trend is not as developed in Canada, firms like Cognition LLP cater to serving these in-house law departments. Joe Milstone, a co-founder of Cognition, acknowledges that most in-house law departments are under budgetary restraints and must be very selective of which matters need to be outsourced to a private law firm. "Almost all general counsel are on a budget and the vast majority will say it is highly scrutinized, so they continu- ally need to keep their costs down," he says. Most law departments are unable to expand their law staff regardless of the volume of work they have, so for many projects, they do have to turn to an outside law firm to assist. It is also essential to retain outside counsel for specialized areas of law, so ultimately those in-house law depart- ments with tight budgets must be espe- cially selective when determining what matters need to go outside as well as where to send them. In its attempt to assist in-house coun- sel with meeting their budgetary objec- tives and with the help of a unique and minimalist overhead structure, Cognition provides its services for a lower cost than private law firms and essentially functions as an adaptable extension to the in-house department. Most of its 26 lawyers have experience working in-house as well as at major law firms, so they know what corporate counsel are up against in terms of their workload and budgetary constraints, and the practical way in which legal services are expected to be delivered in the business world. "Typically we're contacted to assist with larger transactions such as an IPO, buying or selling a business, or imple- menting a complex corporate reorgani- zation," she says. "When we're contact- ed by general counsel, they're looking for specialized advice, of course, but also horsepower because those types of deals typically need a team of lawyers to get them across the finish line and most companies don't have the inter- nal resources to get that done on their own." As well, she says there are times when the firm is contacted to assist with smaller projects that in-house law departments simply can't handle due to their workload. Kotsalis does a lot of private M&A and corporate work, and recently much Because the legal department doesn't generate revenue, there's an interest in trying to be as effi cient as possible. BRIAN WYLYNKO, Federal Express Canada Ltd. He suggests in-house lawyers not be afraid to ask if a law firm will provide a fixed or alternative fee arrangement in order to stay within the department's budget and move off the billable hour. Prior to seeking outside help, Milstone says in-house counsel should treat the file as a project and break it down into its component parts. "More than ever before, general counsel have a dashboard of options to consider and even combine together in getting their work done with the best value and cost efficiency, and on larger projects those options do not have to be mutually exclusive." Argiro Kotsalis, a partner at Stikeman Elliott LLP in Vancouver, says 50 to 75 per cent of the firm's work in Vancouver involves assisting in-house counsel with major transactions. of her focus has involved a client that is implementing a very complex restruc- turing after hiring its first in-house lawyer. "I've actually had a front-row seat in seeing what work flows outside and what stays internal and with this restruc- turing, external counsel are doing the heavy lifting with the documentation and the in-house lawyer is adding tre- mendous value by supervising the pro- cess and negotiating and reviewing the agreements," she says. Ultimately, it is imperative that an in-house law department establish a close relationship with its outside law firm it has retained to work on a proj- ect to be sure all bases are covered, although finding the time is a con- tinuing challenge for busy in-house counsel. IH INHOUSE APRIL 2011 • 41