The evolution of the external relationship
- Subtitle: Law Department Management
There’s been a lot of talk over the years of the importance of law firms stepping up to offer added value, alternative fee arrangements, and better relationship management to clients.
What’s often left out of that discussion is how law firms and in-house counsel work, over time, to iron out bumps in the road and change up what works for them and their respective business units as the relationship evolves. When it works well, the law firm and in-house counsel develop critical points of contact.
Case in point is the Telus Communications Co. litigation department and its outside firm in Ontario, Lerners LLP. Associate general counsel Alan Dabb has been working with the Lerners team since he joined Telus in 2007. Since then he has come to know many of the lawyers at the firm. While it is one of about half a dozen firms Dabb deals with across the country, Lerners manages files in Ontario ranging from small claims items up to the most significant currently active litigation files.
The relationship building with Lerners and Telus took an unexpected turn in 2008 when Lerners’ senior partner George Glezos died suddenly. Glezos had been the partner who was the main point person on the Telus account. Dabb, who was also relatively new to Telus and based in Burnaby, B.C., realized it was up to him to build new relationships with the lawyers at Lerners in Toronto who would be taking over and he put the wheels in motion immediately.
“I dealt with George on 75 to 85 per cent of the litigation files Telus had with Lerners. There were other lawyers working on them but I dealt with him on updates and getting them assigned,” says Dabb, who was at Fraser Milner Casgrain LLP for 10 years before going in-house at Telus. At the firm he practised claims litigation, corporate-commercial, class action, and intellectual property law.
After Glezos passed away, Dabb went to Toronto and met with members of the Lerners team. “Most of the in-house/external relationship really turns on the individuals and on how well you work with particular people. I had had a really good relationship with George — he was a good lawyer and a great guy. You get worried when that relationship is gone and you worry about your relationship with the other external counsel,” says Dabb.
He met with Lerners partners Lisa Munro and Pino Cianfarani and they began to build new relationships. “When I came out and met with Lisa and Pino everything seemed to fit very well in terms of personalities and the expertise they bring to the table. They made the transition far easier than I would have expected.”
“What worked really well when George was the primary contact was that Telus had an individual who understood the relationship, who knew how Telus worked and what its needs were that Telus could access at the higher level. It was important to continue that and recognize the need for one or two individuals to connect with them and then that developed that into the broader practice,” says Cianfarani.
“I never felt like there was a gap when we went through that process,” says Dabb.
It served everyone involved well when it came time to review the Telus retainer agreement. For the previous three years the telecommunications company had been working on an arrangement in which they were billed by the firm on a blended rate. But when it came time to review its agreement with Lerners, Dabb decided he wanted to take a different approach. He solicited proposals from three firms including Lerners but he ended up staying with Lerners.
He says the decision was based on a combination of considerations. “You look at a number of factors including expertise in terms of subject matter and litigation expertise and what they brought to the table in terms of bench strength and depth and breadth of the department.”
He also looked at cost. “Costs are
driven by two things though,” says Dabb. “If you’re on an hourly rate one is the hourly rate and the other is the amount of time. You have to look at the value you’re getting from the lawyers working on your files. Are they efficient? Are they delivering real value-add to the files you are sending to them?”
Dabb looked at the relationship as a whole and what other aspects Lerners were bringing to the table in terms of value-added items. For example, Lerners has provided presentations for Telus’ legal services on class actions and other topics of importance to the department.
For the first three years of its relationship with Lerners, Telus was billed on a blended hourly rate but moved back to the more traditional hourly rate arrangement after its review. “The blended hourly rate means you are charged one hourly rate for whoever the timekeeper is. It has a place, I think, but really I think it’s more appropriate where there is more commodity-type work going on — where similar work is being done over and over,” says Dabb. “The advantage to the blended rate is where there is a high volume of work and all of it is very similar in nature.”
What Dabb found during its first three-year retainer arrangement with Lerners was that the company didn’t have a lot of that commodity-type work. “We have very unique litigation matters whether it’s a major commercial dispute, major claims litigation matter, class action, whatever it might be, so from my perspective I like to be able to pick the specific lawyer or lawyers working on the file, especially now that I know the team more. The idea behind the blended rate is you cede that option to the law firm and they assign the lawyers.”
Upon review, Dabb realized Telus didn’t have quite the same line of choice with the blended rate option. He also knew the legal team dedicated to the Lerners account — some 15 lawyers — better than when he had started working with them three years before.
“For that reason I now prefer the traditionally hourly rate. From my perspective, viewing the relationship as a partnership, my approach is you want to be paying for the work you’re getting — the hourly rate for the expertise that’s being brought to a particular file.”
It also works because, as Cianfarani points out, Dabb understands what Telus needs from the business perspective. “It’s not often that we have in-house counsel to come up with a strategy on how to deal with a matter, to discuss the practical realties of the client while still understanding how it fits into the litigation world, which I think Alan is very good at doing. He is really good about saying who a file might be appropriate for on the team.”
And while having billing options is important, what may trump everything is whether an external firm relationship has delivered on value.
“It’s great that the relationship can evolve — you’re not stuck in a static relationship,” says Dabb. “There are going to be challenges and it’s how you deal with those challenges and strengthen the relationship that matters.”
Published in Issue Archive