Cities restraining legal budgets even as external counsel costs rise

Toronto and Windsor, Ont., are the biggest legal spenders among municipalities even as cities across that province have shown considerable restraint in their legal budgets, a new report shows.

The report for 2010 by the Ontario Municipal Benchmarking Initiative analyzes several major municipalities’ track records in a number of areas, including legal services. The survey of 12 municipalities shows that the median legal cost per $1,000 in municipal operating and capital expenditures decreased to $2.79 in 2010 from $3.05 in 2008.

Toronto, however, was regularly above its counterparts with a cost of $7.24 per $1,000 in 2008, a number that dropped to $4.21 in 2010. Windsor, meanwhile, spent $4.83 in 2008 but towered over all of the other municipalities measured in 2009 at $8.29. The number fell back to $4.90 in 2010. Barrie, Ont., Durham Region, Niagara Region, and Waterloo Region, all came in well under the median.

Cities’ legal budgets have been in the news a fair bit lately. In Cornwall, Ont., for example, attention has focused on a high-profile whistleblowing case in which the city pleaded guilty to retaliating against an employee who complained about an incident of nursing home abuse.

The employee, Diane Shay, eventually got her job back, but the charges against the city cost thousands of dollars in legal fees, according to the Cornwall Standard Freeholder. Much of the money went to Hicks Morley Hamilton Stewart Storie LLP, the city revealed last week. It also faced legal fees of $67,518 in relation to a human rights case over discrimination against an employee on the basis of disability.

A report in the National Post last week, meanwhile, noted the City of Toronto spends more than 1,400 lawyer days a year at or preparing for Ontario Municipal Board cases.

The benchmarking report notes cities have restrained their in-house legal budgets since 2008. It found that the legal operating costs per in-house lawyer hour fell to $127 last year from $141 in 2008. Toronto, in general, had the highest costs at $222 in 2008 and $146 in 2009, although data for 2010 for that city wasn’t available. The most frugal in-house legal spender last year was Waterloo at $113.

But as for external legal budgets, cities weren’t able to cut costs despite efforts such as the Association of Corporate Counsel’s Value Challenge. The study put the median external legal cost per external lawyer hour at $370 in 2010. That’s up from $346 in 2008. Again, Toronto topped the list at $556 in 2008, a number that rose to $615 in 2009. (That city didn’t have data for 2010.) Despite being one of the province’s biggest cities, Ottawa came out lowest on that score at $247.

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