Canadian Lawyer InHouse

JULY 2015 6 INHOUSE News Roundup BMO recognized for challenging its lawyers to find efficiencies BMO Financial Group has been recognized by the Association of Corporate Counsel for the way it challenged its legal and cor- porate compliance departments to come up with an awards program to find efficiencies and improve processes through its Innova- tive Team Challenge. In its 2015 ACC Value Champions announcement on May 19, the ACC highlighted the efforts of the 12 win- ners chosen from 80 nominations received. BMO was the only Canadian winner. It was in the company of AIG (New York), 3M (St, Paul, Minn.), FedEx Ground Package Sys - tem (Coraopolis, Pa.), Fireman's Fund In- surance Co. with Novus Law, Juniper Net- works (Sunnyvale, Calif.), SSM Health (St. Louis), Heico Corp. with Shook Hardy & Bacon (Chicago and Kansas City), VMware (Palo Alto, Calif.), Xcel Energy (Minneapo- lis), Yazaki North America (Canton, Mich.). Last year, through a town hall announce- ment, BMO's legal and corporate compli- ance team was asked to create teams and come up with projects with an eye to process improvement, finding efficiencies, and ideas around how they could work differently with outside counsel. "We realized we needed to create a more formalized program to try and move this change and not do it on a one-off basis," says Carla Goldstein, associate general counsel, director of strategic initiatives for BMO. There were 40 projects focusing on miti - gation of risk and how to differently price legal services put forward from different teams at the bank. The best ideas resulted in a standardized regulatory compliance review process that eliminated the need for 60 per cent of business reports and, through the use of value-based fees, the department reduced legal spend on employment litiga- tion matters by 30 per cent. "Before the challenge, the employment litigation was handled by a variety of law firms and all on the billable hour," says Goldstein. "They went out to four or five law firms and asked for proposals based on fixed fees. What came back were proposals based on phases, so we were only paying for how far the litigation went, as well not being reliant on the number of hours the law firm was billing, which does not always correlate to the value of the matter at hand." The new process provides better predict - ability for BMO and made the law firms think differently about how they were han- dling matters. BMO has also accelerated progress in its goal to eliminating hourly fees, moving to 40 per cent of legal work on value-based fees over two years. The Innovation Team Challenge at BMO will continue based on the results so far. "We will continue doing this because we are seeing that the change it is providing in the en - tire group has been monumental and exciting to watch and be a part of," says Goldstein. "It all comes down to communication," says Goldstein. "It's getting the in-house lawyers to really think about what they need, what's the value to the company, what's the objective and to communicate that to the supplier." So what is the takeaway for outside law firms? Embrace the "sea change" of the legal industry. "Clients are look - ing at things differ- ently and expecting our outside counsel to be in line with what the clients need," says Goldstein. "That doesn't mean just cheaper, it's more effi- cient, off the billable hour, and starting to think about the needs of the client and not so much inwardly looking as to what they need to do to be profitable. "I do think the billable hour will go away and will be based on a much tighter part - nership between client and the law firm and coming up with fees that make sense for both sides. It's not there yet but I think we're moving in that direction." IH Decision will have 'little bearing' on other cases: Access Copyright T he Copyright Board of Canada has determined Access Copy- right will receive just a fraction of what it was looking for in a new tariff with provincial governments and terri- tories. On May 22, the Copyright Board certified a tariff setting royalty rates appli- cable to provincial and territorial govern- ments outside of Quebec for the copying of books, newspapers, magazines, journals, and other publications by their employees. The royalties set in the tariff will be payable to Access Copyright — the collective that administers the reproduction right in pub- lished books, magazines, journals, and news- papers, for all of Canada, except Quebec. The board held an eight-day hearing dur- ing which it heard expert testimony. Based on the analysis of a study of copying by gov- ernment employees carried out in 2010, the board set the royalty rate at 11.56 cents per employee, per year, for the 2005-09 period, and 49.71 cents per employee, per year, for the 2010-14 period. Access Copyright had been seeking $5.56 and $8.45. The board took several factors into con - sideration in determining those rates. First, the evidence showed about 60 per cent of government employees do not engage in any copying. Second, among the works that are copied by employees of provincial and territorial governments, some are not part of Access Copyright's repertoire. Third, a large portion of copying by government employees does not generate remuneration because the board found this copying was permitted under the fair-dealing provisions of the Copyright Act. This decision does not address the on- going battle Access Copyright has had with Canadian schools and universities. "I think the decision may have a signifi - cant impact on what the value of royalties under that tariff will be," says Mark Bi- ernacki, a partner with Smart & Biggar/ Fetherstonhaugh in Toronto. Biernacki says the decision provides "clarity and more information for the marketplace."

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