Canadian Lawyer InHouse

29 CANADIANLAWYERMAG.COM/INHOUSE SEPTEMBER 2016 BMO Financial Group's Legal, Corporate and Compliance Group has adopted a new approach when hiring external counsel with the ultimate goal of matching the value of legal services to the fees paid to the law fi rm. This approach has the secondary goal of rationalizing the cost of external legal spend. As a result, the legal group has trans- formed the way it engages in discussions with external counsel about the value of ad- vice, not just on one project but by looking at the overall relationship with its chosen legal service providers. The BMO legal group has become an avid supporter of preferred external counsel who incorporate technology and alterna- tive resourcing models into their delivery of legal services. It seeks to create a culture that encourages thinking about the delivery of legal services in new ways, including the use of project management and value-based billing models and ongoing work with the legal group's business partners to develop an appropriate price for each legal matter. As part of this initiative, the asset man- agement legal team within the legal group set a target of 40 per cent appropriate fee ar- rangements with its external counsel during 2015, with the goal of reaching 100 per cent in the next few years. BMO worked closely with Borden Lad- ner Gervais LLP, one of its preferred exter- nal counsel to move toward this goal. The transition has resulted in a variety of AFAs between BMO and BLG, including fl at fee arrangements, capped fee arrange- ments and fi xed retainer arrangements, for all aspects of its business involving securi- ties regulatory advice to the various areas of business that the asset management legal team supports. For example, BMO has more than 100 mutual funds that must be prospectus- qualifi ed every year. Through discussing all aspects of the renewal project with BLG, a project that takes a number of months each year, the asset management legal team was able to determine the areas where it as- signed value to external counsel providing services and those areas where the tasks and processes would be better undertaken within BMO. "We saw that there were areas we abso- lutely needed support of external counsel, but there are other tasks that we're better able to do ourselves," says Chris Javornik, associate general counsel and managing di- rector, BMO Financial Group. "We thought it was important to sit down with our exter- nal counsel and map out who should be do- ing what. Once we did that, we were able to come up with a plan and ascribe value to the tasks external counsel were going to do and agree on a price for those services before we embarked on the project." The legal team then negotiated AFAs with BLG. The lawyers from BLG who worked with BMO on the initiative included Kath- ryn Fuller and Francesca Smirnakis for the prospectus renewal project and many other projects, plus John Hall, Rebecca Cowdery and Carol Derk for various AFAs with the asset management legal team. BMO initiated the change, based upon its new vision of how the relationship with law fi rms should work. BLG has been an active partner in supporting the legal group's de- sire to change to a value-based billing mod- el and has extensive experience, both with BMO and with other clients, in arriving at billing arrangements that move away from the billable hour model and satisfy the needs of both parties. Using AFAs for the majority of projects between BMO's asset management legal team and BLG's investment management group has led to greater alignment between the price paid for, and the value received from, BLG's advice. During 2015, the asset management legal team negotiated AFAs on 47 different matters with BLG, representing 67 per cent of all matters for which the team has engaged BLG. The overall price paid by BMO to BLG for the prospectus work related to its retail mutual funds was reduced by 50 per cent from 2013 to 2015, while supporting approx- imately the same number of mutual funds. "It's been very successful for us and I think it's been successful for the law fi rm. It's one thing for organizations to say they support these alternative fee arrangements and pric- ing things before the work is commenced, but it really depends on the individuals working on those tasks and working togeth- er to have goodwill and trust each other and learn from each other," says Javornik. IH h h l l d h h b d BMO asset management legal team works with BLG for improved AFAs By Jennifer Brown Back Row – L to R – Angela Nikolakakos, Kathryn Fuller (BLG), Chris Javornik, Carol Derk (BLG), Rosaleen Piluso, Mark Pratt. Front Row – L to R – Valerie Lockerbie, Victoria Bergie, Laurel Turchin, Francesca Smirnakis (BLG) Missing: John Hall (BLG). CATEGORY: Working with external counsel DEPARTMENT SIZE: Large COMPANY: BMO Financial Group

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