Canadian Lawyer InHouse

3 CANADIANLAWYERMAG.COM/INHOUSE MARCH 2018 www.canadianlawyermag.com/inhouse Director/Group Publisher: Karen Lorimer karen.lorimer@thomsonreuters.com Managing Editor: Jennifer Brown jen.brown@thomsonreuters.com Copy Editor: Patricia Cancilla Art Director: Steve Maver Account Co-ordinator: Catherine Giles Sales and Business Development Business Development Consultant: Ivan Ivanovitch ivan.ivanovitch@tr.com 416-887-4300 Account Manager: Kimberlee Pascoe kimberlee.pascoe@tr.com 416-996-1739 Account Executive: Steffanie Munroe steffanie.munroe@tr.com 416-315-5879 Canadian Lawyer InHouse is published 6 times a year by Thomson Reuters Canada Ltd., One Corporate Plaza 2075 Kennedy Rd., Toronto ON. M1T 3V4 (416) 298-5141. Fax : 416-649-7870 Web: www.canadianlawyermag.com/inhouse LinkedIn: www.linkedin.com/groups/3380194 Twitter: @CLInHouse Editorial advisory board: Sanjeev Dhawan, Hydro One Networks Inc.; Jonathan Lau, Alcohol and Gaming Commission of Ontario; Fernando Garcia, Nissan Canada; Joe Bradford, Bradford Professional Corp; Dorothy Quann, Xerox Canada. All rights reserved. Contents may not be reprinted without written permission. The opinions expressed in articles are not necessarily those of the publisher. Information presented is compiled from sources believed to be accurate, however, the publisher assumes no responsibility for errors or omissions. Canadian Lawyer InHouse disclaims any warranty as to the accuracy, completeness or currency of the contents of this publication and disclaims all liability in respect of the results of any action taken or not taken in reliance upon information in this publication. Publications Mail Agreement #40766500 ISSN 1921-9563 Copyright © 2018 H.S.T. Registration #R121349799 To subscribe or change addresses Call (416) 649-9585 Fax (416) 649-7870 or e-mail Keith Fulford at keith.fulford@thomsonreuters.com RETURN UNDELIVERABLE CANADIAN ADDRESS TO: CIRCULATION DEPARTMENT One Corporate Plaza 2075 Kennedy Rd., Toronto ON. M1T 3V4 By Jennifer Brown Editor's Box SEND YOUR news AND story ideas TO jen.brown@thomsonreuters.com Change is being driven in-house and externally F or the most part, when I talk to general counsel in Canada for stories and at events, they say the majority of the work they send out is still going to a traditional law firm model where lawyers charge by the hour or they have agreed on some special fee arrangements. In part, the death of the billable hour may have been delayed in the last few years as the big law firms have worked to provide their own alternative services model at lower cost, achieved either by staffing work differently or sending to other offices in Canada outside Toronto. And it would seem the work the firms have done to try and reinvent themselves a little is paying off. In early February, Thomson Reuters released its 2018 State of Corporate Law Departments Report that showed that legal departments are seeing greater value from their outside counsel. The report analyzed data from Thomson Reuters Legal Tracker (note: this magazine is published by Thomson Reuters), Acritas and the Corporate Legal Operations Consortium. The average satisfaction rating of outside counsel based on value has increased nine per cent over the last five years, showing improvements across all areas of service delivery, according to the report. This shouldn't be a huge surprise as many national law firms have been making announcements about creating their own alternative services delivery models and partnering with ediscovery services firms and others to try and fill in the gaps their clients say they want closed. Good timing, since predictions from ALM Intelligence indicate clients are moving to reduce their law firm panel numbers. The report showed that 53 per cent of legal departments have reduced their roster of outside firms over the last four years, working with a median of 16 firms. At the same time, 43 per cent have grown their outside counsel ranks, with a median of 17 firms. Controlling outside costs is the top priority for in-house departments and, as a result, they are moving more work inside and turning to technology and legal operations to drive efficiency. The report also showed legal departments increased the allocation of their legal budget to in- house legal work to 43 per cent, on average, in 2017, up from 37 per cent in 2013. Conversely, they spent 57 per cent on outside counsel, down from 63 per cent in 2013. Increasingly, data is showing that in-house counsel are open to buying legal services from a widening range of providers in the push to deliver the greatest possible value for their organizations. As a new group of legal department decision-makers moves in-house, it will be interesting to watch how they hire both internally and externally. The other question being floated is what will happen in the next downturn? On the in-house side, will the internal ranks be thinned in favour of outsourcing to ASPs or other models? The demographics are changing in-house — the average age of a Fortune 500 GC is 45 years old — and as general counsel get younger, they will no doubt be making different choices. IH

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