Canadian Lawyer InHouse

35 CANADIANLAWYERMAG.COM/INHOUSE NOVEMBER/DECEMBER 2015 "It's a topic we talk about often when I speak to other general counsel," says Felicis- simo, general counsel at Valnet Inc. "At Val- net we're still using the billable hour with our primary fi rm in Canada — we have a great relationship with them and we've been working with them for eight years." In fact, 46.8 per cent of respondents to the annual Canadian Lawyer Corporate Counsel Survey said the billable hour is still the main arrangement they have with their primary law fi rm, followed by a combina- tion of billable hours and fl at fees at 31 per cent. "I thought I was missing the boat on AFAs but I see it's one of those things that is discussed all the time but has not really caught on yet in a big way — I have a feeling it probably has more with the bigger fi rms and with their bigger clients," he says. This year, 218 law department leaders from Canadian corporations and govern- ment participated in the Corporate Counsel Survey. On the question of what arrange- ments they use in addition to the billable hour, respondents indicated they use AFAs (12.7 per cent), fl at fees (1.9 per cent), and requests for proposals (1.3 per cent), as well as "other" (6.3 per cent) options. Many said they were using a combination of billable hours, RFPs, and fl at fee arrangements. Felicissimo is part of the majority of sur- vey respondents who work in legal depart- ments with less than fi ve lawyers — 56.4 per cent — and perhaps carry a little less budget muscle than, say, the big fi ve banks, which have been the primary drivers of AFAs in- cluding value billing. Of the 12.7 per cent of in-house who said they do use AFAs, 66 per cent said 25 per cent or less of the work they send out falls under an alternative arrangement, while 16 per cent said between 50 and 75 per cent is compensated based on an AFA. Fixed fees for consistent types of work were the most popular AFA with 62 per cent of respon- dents indicating it was the method they used most, followed at 58 per cent by fl at fees for a prescribed phase of work or bundled port- folio of work. Over the last eight years, much of Val- net's work has fallen under the categories of acquisitions and tax as well as fi ling trade- marks and copyright in the United States. For the IP work, Felicissimo has been able to arrange fl at fees with external counsel and that's something the fi rms proposed. "They have fl at fees for trademark fi lings, copyrights, etc.," he says. With the immigration fi rms he works with, charges are fl at fees per fi le. "We're in the process right now of applying to bring someone from Colorado to our offi ce and a mid-size Montreal fi rm is assisting with the matter and all their fees are fl at fees. I really liked that — I've been reaching out often with questions and it's good to know when it's a fl at fee. We try to have monthly caps on certain matters, but I proposed a success fee to a German lawyer and he implied that kind of arrangement is prohibited there," he says. For those in-house counsel using AFAs, 68 per cent say they introduced the idea to their law fi rm, while 28 per cent said they discussed it mutually with their law fi rm partners, and three per cent said their fi rm introduced the idea. FINDING SUCCESS WITH AFAS For large Canadian companies with global operations, the use of AFAs has been more common and going on for a longer period of time. Kerry O'Reilly Wilks, head of legal, North Atlantic & U.K., for Vale Base Metals Busi- ness, says Vale has been looking at AFAs for a number of years. With a team of 10 lawyers in Canada and more than 50 global- ly, Vale is by no means the largest in-house department in the country. "I think it's be- cause we are so global and we're constantly dealing with international fi rms and a lot of American fi rms, and probably because there is such fi erce competition, especially at the higher end of those markets and they are more willing to be creative and think of ways to win your work, even if you are under budgetary restrictions," she says. Vale would prompt its Canadian fi rms to offer a different kind of arrangement. "A number of years ago, it was fairly novel in the Canadian legal arena — they weren't doing it and were not all that open to it. But certainly more recently, it is one of the fi rst conversations we have with fi rms even if we've had a long-standing relationship with them, to have the conversation at the begin- ning of a new matter," she says. Especially in a time when commodity markets are not performing all that well, O'Reilly say it's important for fi rms to be open to negotiations on fees. "It doesn't mean that litigation stops — your project Who introduced the idea of using AFAs? We did 68.2% Our law firm suggested it 3.5% We have mutually discussed AFAs 28.2% If the volume of work is projected to grow, to what do you attribute the growth? projected to grow, to what do you attribute the 17.4 % 14.0 % 81.4 % Company made Company made Company made Company made Company made Company made Company made Company made Company made acquisition acquisition acquisition acquisition acquisition acquisition acquisition acquisition acquisition Company is in Company is in Company is in Company is in Company is in Company is in Company is in Company is in growth mode growth mode growth mode growth mode growth mode growth mode growth mode growth mode growth mode One-time project One-time project One-time project One-time project One-time project One-time project One-time project 56.4% 17.4% 9.6% 4.6% 5.0% 6.9% Less than 5 6 to 15 16 to 30 31 to 50 51 to 100 more than 100 How many lawyers are there in your legal department?

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