Canadian Lawyer

Alternative fee arrangements MARC-ANDRÉ BLANCHARD: At McCarthy Tétrault, what we did two years ago is rolled out a vast initiative of project management. So we trained everyone in project management within our firm from our most senior partners to all members of our staff to all of our lawyers, our stu- dents and our articling students as well, and why did we do that? Because we think that the AFAs, the sort of things that we hear more and more about from our cli- ents, it' predictable in the pricing of our work and budgeting of our work — about the issue of what' s all about being able to be more assumptions, what will be the staffing, what will be the budgeting — and then being able to say so to our clients — and make sure that it gets to the relationship with the clients. So it' s the scope of work, what are the ency. It brings out communication at the centre of the relationship. The alternative fee arrangements don't work if there's no trust in the relationship, so that's why there must be completely full s like more transpar- transparency between the law firm and the client, and there has to be constant communication. KAREN MACKAY: It's interesting because I do hear it from both sides — from general counsel and from managing partners, who are trying to cope with all of this — and in so many firms, because general counsel, the client, has grown up in an hourly rate environment, in many cases, they'll come back with an alter- native fee arrangement, it' hourly rate or a lower hourly rate by s just a lower volume. It's very frustrating from both the firm and in- house counsel perspective. I see that. I see clients want- ing project management and wanting methodology that is recognized, and so I see that in terms of that tension around fees. They want faster, better, cheaper. BYRON SONBERG: In some respect, alternate fee arrangements have been around always, and clearly clients are focusing on them more now and strug- gling themselves on it. Often, the alternate fee arrangement that' ent is freeze to last year's rates, which is s suggested by a cli- really no different. The challenge comes in on the nature of the work, the nature of the transaction, and the predictability of the work. It' going to redo your kitchen. If you know what' s no different than if you were s going to happen and you know what's going to go in, you can get a fixed price on it. If you're doing an older home that' going to be tougher to have a fixed fee, and the same thing goes [for] law firms. Depending on law firm transactions or business transactions, depending on the nature of the transaction, it could become more difficult to fix a fee, and there needs to be mechanisms to deal with it. PHILIP MENDES DA COSTA: What typically the law firm is looking at doing is setting the bar somewhere in the mid- dle. You'll win some, you'll lose some. On some files, it'll take more to produce 30 SEPTEMBE R 2012 www.CANAD I AN Lawyermag.com s going to have unforeseen events, it's the work than the fee, but there will be some where it's faster, and it's a law of aver- ages. The difficulty you have is if the client turns around in some of the easier files where [the client says] that didn't take you as long, why should I pay this fixed fee? SANDRA DAWE: We've always done real estate and real estate is one of those areas where, oftentimes, the client wants the fee set at the beginning. Some deals, it' easy to do; some deals are a little trickier. And there, it' s ing the deal up front. More recently, we've taken on our first class action file, and, because we're small and we're nimble, we were able to fairly quickly assess that and make the decision, and so now we've embraced another type of fee arrangement within the firm. What I find with us is that as new things come up or as a client walks in the door and they've got a new idea, because we don't have a lot of structure and we don't have a ton of people, we can assess it for what it is and decide whether or not it works for that particular client and that particular lawyer. s just really a matter of assess- Price versus value of legal services MENDES DA COSTA: The hourly rate came in initially because clients were hav- ing a problem: How do I put a value on these services? That' ber of years, but it doesn't really answer the question anymore for a lot of clients. The issue the client now has is where is the value in the work. I have some clients s worked for a num-

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