Sponsored by Osler Hoskin & Harcourt LLP, and moderated by Canadian Lawyer editorial director Gail Cohen, the fifth annual roundtable was held in May. This year’s roundtable dealt with some of the most important topics affecting in-house counsel and their relationship with law firms — project management, value billing, technology, and risk management.
• David V. Pathe, senior vice president, general counsel, and corporate secretary, Sherritt
• Daniel Desjardins, senior vice president and general counsel, Bombardier Inc.
• Joseph Agostino, general counsel, Hydro One Inc.
• Simon A. Fish, executive vice president and general counsel, BMO Financial Group
• Anne Fitzgerald, senior vice president, general counsel, and corporate secretary, Cineplex
• Barbara Silverberg, head of Dell Canada Legal, Dell Canada Inc.
• Fred Krebs, president, Association of Corporate Counsel
INHOUSE: What does project management mean to you, and is it part of your legal department? What sort of matters lend themselves best to project management?
JOSEPH AGOSTINO: Project management within our legal department has two focuses: one internal for the company and one external with our external service providers. . . . So I like to have a lawyer involved from Day 1 as part of a team. And we are very oriented in project management within the team. It is an engineering company, because we deliver electricity, so we have a project management system for everything. . . . Some of our programs are new initiatives that are out there, so I like to have the lawyers be part of that team to see how it works and to contribute. It helps them do all the things that are appropriate for the legal perspective. The other part of project management is to co-ordinate working with our external legal service providers. . . . That includes [finding] what we can do in-house to save ourselves some money.
DANIEL DESJARDINS: What we do is large project management. Large dealings are complex, and you want to be efficient, and you want to control costs. If you don’t have strong project management, it’s easy to lose track and go into the details and ultimately not be efficient . . . ultimately not see the big picture. . . . I do quarterly phone calls and a contact meeting once a year. We have a discussion with respect to the quarterly result so everybody sees the big picture.
ANNE FITZGERALD: Lawyers are innately project managers. We’re list people, we’re task people. . . . So as an example, Cineplex is currently going through the transition from 35mm to digital projection, which is a tremendous technology change within our company, and it’s happening internationally. . . . There’s an extraordinary amount of work that goes into that. A lot of which is legal work, and a lot of which is business work. But we do have a task list and identify what departments are responsible for what and who has signing authority on what. You’re just making sure that you’re not missing any steps along the way and that all of the teams are speaking with each other. Ultimately our key competency is going to be: Are we getting results? Are we results-oriented? Are we efficient? I think that the project-management tools we use . . . whether it’s closing checklists or whatever help us really quantify that.
FRED KREBS: One of the challenges again that we’ve noted is . . . people get comfortable doing what they do, and they don’t like to get out of it. . . . [P]roject management, or the Six Sigma type of analysis, forces people to think about that and maybe pushes them out of a comfort zone. . . . [T]here are a couple of things. One is avoiding the silos. Two is addressing a process and trying to avoid repetition. . . . Both firms and companies are trying to access value . . . one of the most important things they can do is just consider [how they do things now, and whether they are doing them the right way.] . . . And project management seems to me to be very much a part of that.
DAVID PATHE: We spend a lot of time to have one person who’s designated as the guy who is going to run [the project management process] and it tends to fall on the legal group to be making sure that the right people in the business unit, wherever they happen to be located, are getting input at the right times and co-ordinating and pulling things together. It’s very important that there is one coherent understanding in the company of where we are in the process of whatever it is we’re trying to achieve.
SIMON FISH: Project management is an effective tool for implementing projects and getting work done where you’re response-constrained either in terms of time or the number of people or costs. So it’s not only the obvious examples of volume or perhaps your litigation or discovery processes, but we use it in particular in relation to implementation of these huge trans programs that we’re constantly having to adopt. [As] new pieces of legislation come out, we have to go through a process of analysis, application, monitoring, and reporting, so putting in place the various tools and processes and policies to get things done is important.
INHOUSE: What types of billing arrangements have you been able to negotiate that work best or are at least an improvement over purely billable hours? Is it useful to have tools like the ACC Value Index?
KREBS: Everyone’s been forced by the economy to look and see how you do business. We started our Value Challenge initiative before the economy went into its downturn. Initially, our thought was that we were going to have to persuade folks to consider these things. Given the way the economy went, we quickly moved with persuasion to trying to talk about . . . [implementation] — to share results as to what people are doing and how they’re doing it. So it’s I guess persuasion and implementation. . . . People are looking at what they do, and how they do it and they’re also looking at how they get value out of their legal spent. One of the things that has happened is a recognition that value is not necessarily achieved. . . . Looking at different value billing mechanisms . . . you see a lot of fixed-fee type of arrangements being proposed. We also see things like just coming up with budgets and living with budgets. The other aspect of the initiative and one that has received a lot of attention is what we call our Value Index, and that’s the opportunity for our members to do a quick evaluation of their law firms with a series of criteria and give them a rating or an evaluation. The good part about that is that this essentially allows our members to use technology to do what they already do.
DESJARDINS: It is time for a change. . . . We are the customers of those firms. . . . And, some firms have good answers, and some don’t. When I do business with a law firm, I expect the partner that takes care of us should have at least once a year, if not twice a year, meetings with the managing partner of that firm. We need to have a sense that my issue, my business, my requirements are important. . . . [W]hen I talk to the managing partners, I say, look at what you’re spending, your marketing dollar for example, and is this the best use? . . . I say is it better to save that partner or that young associate’s cost, let’s say $150,000. Why don’t you second [him or her] for free to your best customer instead of just counting that $150,000 on that glossy marketing material that we don’t even look at. . . . He’s going to be independent, better, working as an in-house lawyer. He’s going to know the people internally. When he comes back to your firm he’s a changed lawyer. Now the people know him, people go to him naturally, and you’ve created a better relationship, a better bond with your key customers than you would ever dream of. And that’s the wise way to spend your money. That’s the wise way to spend your marketing dollars.
AGOSTINO: I think it deals with the issue of service, because we don’t want to compromise service that we obtain from our external legal service providers, and it deals with dollars because that’s very important to us to keep our costs down. . . . I think part of it comes from our own ability to work with our external service providers and do project management, reduce costs, and part of it is maybe work on managing them in terms of saying, “I want you to do this. What do you think it’s going to cost? This is what it’s worth to me.”
FITZGERALD: I think one of the challenges with retaining outside counsel is that we as lawyers are all very well trained in negotiation, and we negotiate business deals on a regular basis. We forget this is a business deal. It’s no different than any other business deal we’re negotiating. They have a perspective from which they need to work, and we have a perspective from which we need to work. . . . So you want to know what’s their high end, what’s their low end. Treat it like any other negotiation you’re dealing with.
BARBARA SILVERBERG: I just don’t think law firms can afford to not be more creative in what they’re doing. I’ve been hearing since I started to practise law, quite some time ago, that billable hours were kind of at risk, and I guess lawyers will be saying, “Well we’ve been hearing that forever, and it has never happened so here we are.” But I just think that’s no longer the reality. As long as 10 years ago, I started doing RFPs for law firm work. Granted at the beginning it was more specific deals but law firms were incredibly resistant. . . . But ultimately some did do it, and those were the ones who were successful in that particular context. Now, come 10 years later, we’re in a recession. We did an enormous initiative in Europe that’s still ongoing . . . in terms of hourly rates we negotiated, across the board, 40- to 50-per-cent reductions in hourly rate numbers. Not only that, we got a secondment of a data-protection lawyer and a secondment of an employment lawyer for six months made in the context you describe. And we’ve got all kinds of agreements in terms of training. It’s revolutionary for our company, and where we’re going, and it won’t stop.
FISH: I liken the business of banking to a manufacturing concept. And after all, I think that what we do is ultimately manufacture and sell contracts. We don’t call them that, we call them deposits and accounts and loans and instruments. Well in that particular example it’s quite possible that the law firm would be rendering services to our client. It may well be on our roster. And so whatever favourable or preferred rates that we may have with them we pass on to the company. Because of course, ultimately we’re competing in a market for financial products and the extent to which we can put those products on the market at competitive prices, we’ll do that and we’ll pay our own in introducing the lower costs to you. So you’ll get the benefit is the short answer. And you’re always in a position because you can always use your own counsel.
AGOSTINO: One of the things that we hear a lot about in this whole discussion is predictability. . . . And one of the things, it seems to me, that it’s reasonable to expect from a firm is that if you go to them because they are an expert in some particular area then they need to do more than say, “Well, we can’t really tell you [how much it will cost]. . . .” We’re coming to you because you do this all the time so you should be able to give us a fair degree of accuracy in predicting your rate.
INHOUSE: How does technology make your life easier? What is the relationship between the legal and IT departments?
PATHE: We have offices in a number of jurisdictions in different countries, and we do almost all of our business with [local] partners in Japan and Korea, and projects in Madagascar, so I mean we’ve experimented with things. Videoconferencing has been without great success frankly, so we spend a lot of time travelling. We spend a lot of time going to meetings to maintain partner relationships so we’ve become incredibly dependent on the BlackBerry, our laptops, and anything frankly that makes it easier to stay in touch in different time zones. . . . Commercially, communication is vitally important to us. That’s most of our job. . . . It’s just because so much of it is communicating and maintaining a relationship with partners, with lawyers, with different people in the business units and making sure that the right people are talking to one another. That consumes a huge amount of my day regardless of where I am. The technology for the communication is what makes that possible.
DESJARDINS: Everybody accesses everything, so sharing saves time, paper, and co-ordination, because everybody’s got access at the same time to the same type of base documents that are being produced. I think that’s very useful.
SILVERBERG: We’re a big proponent at Dell on telecommuting. It’s finding ways for people to do business no matter where they are. They can access the web; they can access the office. We have so many conferences by web. We use SharePoint for tons of all sorts of marketing reviews and floor exercises for our senior management team meeting. Everything goes on there. I know there are some concerns that technology will never be perfect and there will always be somebody who finds a way around [security measures], but I think that’s a challenge you have whether you’re using IT or whether you’re using old-fashioned ways, and have somebody standing at the door [to protect the room] with a bunch of papers inside.
FISH: We use our knowledge-management platform for everything from communication to training to reporting to document management and so on. And where you have a large number of individual professionals spread in half a dozen or a dozen different offices in different locations in different time zones, it’s an efficient way to get things done and to manage costs and to make sure that generally what one part of the organization is doing, another part is aware of at the right time. We have built up our knowledge-management capability in the last couple of years and it is all based on essentially technology. So we see this as hugely important and of course we have a very strong and important relationship with our IT providers.
INHOUSE: What does risk management mean to you, and where is the main focus for your company? What role can outside counsel play?
AGOSTINO: It might be profitable to have someone who is not in the legal department to be the risk manager of the company. In our company, we do have someone who is our internal auditor and also the risk manager. . . . [H]e’s actually done an excellent job on this subject and meets with senior management at least twice a year and creates risk profiles which are reviewed with our audit finance committee or the board. He’s created such a great program that Harvard [University] is so interested, they’ve come up to look at our project and they’re using our model to teach how to deal with risk management. So I think it’s part of legal in a sense because we understand a lot of legal risks but there are business risks that also have legal components and it could be worthwhile to have, within an organization, someone who’s really focused on those kinds of things and bring them to senior management.
FITZGERALD: We’re structured the same way. It is very effective.
PATHE: It’s one of the more interesting parts of this job frankly. It’s one of the biggest transitions I found from moving from private practice into doing in-house . . . law firms take the approach that risk is something that needs to be avoided at all costs. And you get in-house and you find out that business guys are ready to go and do deals regardless of what you tell them the risks are.
SILVERBERG: I have the same sort of reaction about the value billing . . . but law firms just don’t seem to have evolved their practice over the last 10 or 20 years the way every single in-house counsel has had to. The way I practise law has really no bearing or resemblance to what I did when I started at Torys [LLP] a million years ago in terms of . . . identifying all the risks and sort of telling everybody what they can’t do. You would not last five minutes in-house if that’s the approach you took. And yet you’re paying very generous sums of money to outside counsel to give you that kind of advice still when they know it’s nothing you could use internally and so it’s a constant. I understand where they’re coming from saying they are still trained in a certain way. [Outside counsel] still see their role in a certain way, but I think they have to get a little bit more comfortable with risk because as far as I’m concerned my job is not avoiding risk, my job is identifying and managing it.
FISH: We have a very strong group of professional risk managers who manage risk on an enterprise-wide basis within our various lines of business but also within the corporate fraction. So the legal group, for example, has its own legal risk management framework, a policy document with all sorts of procedures, which is very much a part of this building box for the overall risk management framework. We have just started introducing elements of that in our engagement terms with our outside counsel. . . . And I have to say that the firms are responding very positively about it. They have said to us it’s novel, they’ve never seen it before. . . . It’s all part of the framework and new culture that we now have.
InHouse/ACC roundtable videos: