Legal news and trends for Canadian in-house counsel and c-suite executives
Issue link: https://digital.canadianlawyermag.com/i/50875
McMaster explains. Although TransCanada has hired contract law- yers in-house for specific projects, McMaster says that if he finds good lawyers he prefers to bring them in full time, provided he has the steady work- load to support additional staff. The legal department at Hudson's Bay Co., the parent company of the Bay, Zellers, Home Outfitters and Fields, may be small, but it punches above its weight. HBC's legal department has only six full-time lawyers in-house, despite having more than 70,000 employees. Nonetheless, HBC has brought signifi- cant legal work in-house "largely as a cost-saving initiative," according to David Pickwoad, the company's vice president of legal services. HBC's legal department is divided into two groups: corporate/commercial law and real estate/leasing. The depart- ment has recently added an employ- ment/labour lawyer to handle the pre- liminary stages of employment/labour law matters and an additional corpo- rate/commercial lawyer. "In-house counsel at HBC participate in regular business meetings and dis- cussions. We learn the business inside and out and assist on day-to-day mat- ters," Pickwoad says. "We're in the loop. We can provide advice about potential issues at an early stage, before they become more serious." The evolution of the legal depart- ments at RBC, TransCanada and HBC reflect a wider trend. A recent survey of almost 175 chief legal officers in the U.S. by Altman Weil shows that compa- nies are increasingly reliant on in-house counsel. According to the survey con- ducted in September 2010, 63 per cent of chief legal officers indicated that they had increased their internal budgets from 2009 to 2010. Forty-one per cent said they planned to hire new in-house lawyers in the next 12 months. In the same time period, 29 per cent planned to decrease their use of outside counsel. John Ohnjec, division director, Robert Half Legal, a leading recruitment agency, says the hiring boom in cor- porate legal departments south of the border mirrors the situation in Canada. However, he notes in-house depart- ments are increasingly experimenting with alternative staffing arrangements, project-specific lawyers, part-time, and contract lawyers. A number of firms across Canada, including Robert Half Legal, LexLocom, Cognition LLP, and Delegatus Legal Services Inc. now spe- cialize in placing in-house counsel on an as-needed basis. Insourcing isn't the only practice in- house departments have embraced to save money. Scott Ewart, a legal consult- ant at Helix Legal, says that in-house panies have begun to "recognize the strategic value in-house counsel can bring to [the] company." Published in May 2011, a recent study by Deloitte on the expanding role of corporate counsel in Canada globally supports Stock's viewpoint. According to the study, corporate counsel's level of responsibility in Canada has almost doubled over time. Five years ago, only a third (33 per cent) of respondents were involved in strategic development compared to almost two-thirds (62 per cent) today. Similar trends were seen in the Canadian respondents' respon- We can do almost any deal in-house. We always need some external support, but we can do big chunks of major transactions in-house. SEaN MCMaSTEr, TransCanada Corp. departments are increasingly outsourc- ing basic legal work, such as document review, to lower cost legal service pro- viders. "In the U.S. and U.K. much more low-level work is being outsourced, but the trend is catching on here, too. The overall mix for the provision of legal work is changing. Companies are bring- ing some work inside to reduce costs and sending commoditized work to low-cost providers." Insourcing may make sense and save dollars, but not all companies are eager to add in-house lawyers to their payroll. Richard Stock, the founding partner at Catalyst Consulting, which advises law firms and legal departments, says that companies are still reluctant to hire more in-house lawyers. "Companies are not willing to spend money to save money," he says. He notes it only takes bringing inside 600 to 700 hours of legal work to hit the break-even point for adding a lawyer in-house. Stock says the growth of in-house departments is not primarily driven by financial considerations. Rather, com- sibility for ethics and whistleblowing, which rose to 63 per cent from 37 per cent five years ago. As the role of gener- al counsel rises in prominence, the role of external law firms declines. Today, when Canadian companies experience serious regulatory or legal issues, they almost always (97 per cent) consult corporate counsel first, compared to their global counterparts at 81 per cent. Only 72 per cent of corporate counsel believe they were the first point of con- tact five years ago. Despite the trend of insourcing more work, Stock says the pattern of work that is referred outside has not changed significantly. "More than half of all work sent to external counsel is in litigation. The remainder is mostly comprised of big deals and mergers and acquisitions which involve a large number of lawyers for a short period of time and specialty work, which requires expertise in narrow domains." While in-house counsel may be doing more work internally, external counsel aren't out of a job — yet. IH INHOUSE AUGUST 2011 • 35