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BLG, client honored for cutting costs by 20%

|Written By Charlotte Santry

A partnership that helped an in-house legal team to reduce its external counsel costs by around a fifth has won international recognition.

The pricing deal incentivized the law firm to be more efficient, says HIROC

Healthcare Insurance Reciprocal of Canada and Borden Ladner Gervais LLP have been named 2013 Value Champions by the Association of Corporate Counsel.

The team is the only Canadian duo on the list announced today, which also features firms from the United States, Italy, the United Kingdom, and China.

The savings have been “well north of 10 per cent and perhaps 15 to 20 per cent,” says Michael Boyce, HIROC’s vice president of claims.

“That’s probably very conservative,” adds John Morris, a partner at BLG.

With the help of a consulting firm, the two companies introduced value-based pricing, combining a base rate over five years, with an added percentage based on performance.

Boyce says the change has led to increased efficiencies on both sides, without adversely affecting the quality of the service being provided.

“It incentivized BLG to work harder and be more efficient, and encouraged HIROC not to over-use the services,” he states.

“We realized it’s not sufficient just to get the law firm to change their practices,” he adds, explaining how HIROC now has a completely paperless office, has reduced the “number of hands touching a file.” and relies on phonecalls instead of written letters.

BLG was able to implement the fee structure partly through using paralegals to a high degree.

“That was [already] something we were doing to try to make sure that the right work was being done at the right level,” says Morris.

But entering into discussions with HIROC provided impetus to go further. “A lot of the efficiencies have come through analyzing what we’re doing — the client giving us the licence to ask how we can do the work in different ways,” he adds.

Although the move was made easier by the two firms’ long-standing relationship and HIROC’s ability to forecast its budget based on previous patterns, the model “absolutely could be replicated with other clients,” Morris believes.

The values champions were nominated by ACC members, who are based in 75 different countries. Around a fifth of the nominations came from outside the U.S, up from eight per cent last year.

Announcing the values champions this morning, Catherine Moynihan, the ACC’s director of legal management services, said: “The traditional practice of law has been turned on its head by these departments. Gone are the days in which legal practice consisted solely of meetings, memos, and briefs.

“In-house counsel are re-engineering the legal function to maximize the strategic value of their work, resulting not only in reduced costs and higher client satisfaction, but also in improved morale among their staffs.”

Other in-house departments named as value champions included British Telecom and Nike.

They were recognized for innovations including new ways to share costs in joint litigation, the use of legal process outsourcing, switching to greater than 50 per cent alternative fee arrangements and negotiating long-term relationships.

The desire for more predictable costs was a common theme, said Moynihan.

Update 4:35 pm: Dollar figures removed at the request of the law firm.


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