Canadian Lawyer

w w w . C A N A D I A N L a w y e r m a g . c o m J U L Y 2 0 1 7 21 insurance defence, litigation — especially in-house and standard corporate work — are receiving multiple offers and a boost in compensation beyond the typical three to five per cent standard of living increases. Lutecki says she has also noticed cor- porate legal departments relying increas- ingly upon in-house lawyers and building up that capacity, although much of it, she adds, is contract work instead of straight out hiring. In fact, when outside legal work reaches a certain level, Coca-Cola in Canada will consider bringing another lawyer aboard, says Scott Kirkpatrick, vice president and general counsel. In addition to potential cost efficiencies, the advantage to having that work done in-house is the built-in familiarity with the business as well as the related pressures and constraints. "I call it my 500 rule: Any time you send more than 500 hours of work out in any single area on an annual basis, that business would likely be better to hire someone in-house," he says. Kirkpatrick says there is further poten- tial that Coca-Cola, which currently has three lawyers as well as a secondment stu- dent on loan from a law firm, may add to its legal department this year as the compa- ny does some restructuring that could see the single legal department split into two. Kirkpatrick sees increasing advantag- es for lawyers working for corporations and their in-house legal departments. The expectation for lawyers as they launched into their careers at law firms during the last several years was to anticipate more modest salaries and there was a downward slide in the median pay for more experi- enced associates. "There [at in-house legal departments] is continually a trend upward, which, of course, is contrasted by what we've seen at large Bay Street firms where effectively over the last 10 to 15 years associate salaries have been very much locked in," he says. "At the very least, businesses are keeping up with inflationary measures." And the added advantage compa- nies have over firms is long-term career opportunities, pensions, annual and long- term incentives as well as car allowances. Indeed, the survey showed that 80 per cent of legal departments offer some kind of perk, although, for nearly half, their value represents one per cent or less of the lawyer's compensation. But 64 per cent of respondents said they have a company pension plan and another 67 per cent said bonuses, representing at least five per cent of their compensation, are part of the equation as well. The survey showed that 66 per cent of law firms also pay bonuses to associates. For 33 per cent of those, it represented less than five per cent of salaries. Benefits were offered at 57 per cent of the responding firms and 58 per cent offered perks. No matter which way salaries swing, however, both legal departments and law firms seeking to recruit top talent need to remain competitive and ensure that what they're offering both associates and part- ners remains enticing. So they're trying to maintain that balance of ensuring profit- ability while offering good compensation. That competition is very evident in Calgary where lawyer salaries have been, historically, second only to those in Toron- to, observes McLeod Law LLP's managing partner Robin Lokhorst. Calgary is also home to international, national, regional and local law firms. "It raises the bar for all of us for the available talent," says Lokhorst. "One of the reasons for that is having the national and international players here and we're competing for the same talent in many cases. We all have to pay more in order to get that person in the door. They have expectations in terms of ongoing sal- ary and compensation." And even though the economy in the resource-rich Canadian Prairies has been hard hit by plunging oil prices, McLeod continues to build its two Calgary offices with its current total of 49 lawyers. Between attrition and growth, Lokhorst expects the firm to add four or five associates over the next 12 months. McLeod's decision to stay out of the oil patch has also allowed it to continue to increase its compensation to new hires, defying the recent trend to keep salaries flat. The firm has concentrated on areas of law such as litigation, real estate, corporate and commercial. "Our clientele has not been impacted as much as say a firm that's specialized in oil and gas," he says. Aaron Munro's observations as account- ing manager at Robertson Stromberg LLP in Saskatoon are quite different. He describes the Saskatchewan market as hav- ing been in something of a bubble as much of the rest of the country experienced an economic slowdown around 2008. It has only been during the past couple of years as mining and the natural resources sector experienced a sudden decline that things have slowed down. "The appetite to hire isn't as great. I would say generally in the last six years — somewhere between 2010 and 2013 — we saw quite an increase in associate salaries throughout the province. There was a lot of competition between firms for associates and that has really slowed down in the last year or two. I'd say we're not quite as opti- mistic in Saskatchewan as what it appears people are in the rest of Canada right now," says Munro. "It strikes me as very odd that Saskatchewan seems to be experiencing things in an inverse fashion from everyone else." But no matter what the geography, Ste- phen Mabey says law firms are all under pressure to do more with less. Costs are increasing, with technology expected to become the law firm's second highest expense after salaries. And the revenue line is flat or being squeezed downward. Mabey, a chartered professional accountant and the managing director of Applied Strategies Inc., servicing law firms, doesn't expect that to change. "So most firms who aren't innovative or finding ways to deliver legal services cheaper, faster, quicker, better are just going to see their profits eroding," says Mabey. "Good lawyers with good books of clients are going to gravitate toward firms that could deliver legal services in the best cost- effective manner to clients and services clients and works with their clients." Mabey expects more reliance on tech- nology, such as document review pro- grams, to help firms save money. But that does require a lawyer adept at technology to oversee the process and ensure its accu- racy and understand possible weaknesses. Today's lawyers, he says, definitely have more on their plates than they would have had a decade ago. Indeed, there is more of a focus on prof- itability at firms, says Derek Schutz, prod- uct manager at Atlanta-based technology services provider Aderant, where he helps firms with 20-plus partners. "In North America, I think people are looking at their law firm as a business and, therefore, profit- ability has a much higher sway," he says.

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