Legal news and trends for Canadian in-house counsel and c-suite executives
Issue link: https://digital.canadianlawyermag.com/i/52834
LAW DEPARTMENT MANAGEMENT BILLING ISSUE WRESTLING WITH THE As in-house counsel try to get a tight rein on their legal bills, some are looking at adding to their own roster as the solution. By Gretchen Drummie A mechanic pushes his invoice across the table: it's $1,000 over the original estimate. Sure, it's for extra work discovered during the course of the tune-up, but the larger bill wasn't pre-approved. Question: how do you suppose the car owner reacts? Ask Howie Wong, gen- eral counsel for the Toronto Community Housing Corp., whose outside law firm bills regularly mushroom beyond original budgets. Law firms "just don't get it," he says, adding that in "frustration," he devel- oped an internal administrative position to deal with monitoring and tracking the firms' budgets. Wong predicts that change may be coming, pointing to what he sees as the law firms' main competition — in-house counsel themselves, rather than other firms, due to an upswing in the hiring of internal legal muscle. The shift to a bulkier stable of in-house lawyers to do the lifting could trigger positive developments in the current way bills are handled by outside firms, he says. 32 • FEBRUARY 2012 Wong adds that another emerging trend could also be an answer: lawyers putting out boutique shingles at reduced rates. "Outside law firms are pricing themselves out of the market. It's not affordable anymore and we have to find options. I have a budget, too. I can't accept hourly rates that keep going up and up." He thinks law firms don't seem to understand "that when they commit to a fee budget they should not exceed it without speaking to us. They should perform to the fee budget they gave us; it's that simple." Or, at least keep an eye on the budget and when it gets to a red zone, make con- tact, he says. "They never, ever do that," notes Wong, adding the root problem is firms are "still wedded to the hourly rate . . . and when they go over the hours they are not willing to eat the difference and they keep coming back for more and more and more." Wong says another billing burr is that "partners don't manage the file from a financial perspective, they mange it INHOUSE legally, and while most of them do a good job as lawyers, they don't from a business perspective." Gawain Smart, Oxford Properties Group's vice president legal, says while generally, "law firms are great partners and we wouldn't be able to get anything done without their able help," it would be forward-thinking if they'd take a look at what he sees as a hitch in their billing practices: integration. He says many firms have various practice areas that have dif- ferent lawyers all billing separately, and not necessarily knowing what the others are charging. "When you get the bills back you add them all up and say, 'That doesn't make sense given what we thought it would cost.' So I think law firms need to better co-ordinate internally in terms of how the bills are sent to clients and how the time is managed," he says. Smart says law firms may not be as efficient as they should be in terms of who does the work, particularly with smaller practice areas where you don't