Controlling costs is part of lawyers’ mandate

In-house and external counsel have duty to clients to keep costs down, says Fernando Garcia

Fernando Garcia

Two keys to success for an in-house counsel are knowing your business, and constantly striving to do more for less. The latter is a daily challenge and struggle. While the profession has moved toward becoming strategic advisors, in many ways, we are still seen by our CEO and CFO colleagues as cost-centres. Consequently, every dollar we are able to save is a dollar that goes directly back to the bottom line of the company.

But there is a balance to strike. While we must always strive for efficiencies, we also need to ensure that proper compliance and risk mitigation strategies are in place.

This quest for cost efficiencies is not a pressure experienced only by in-house counsel; external counsel also feel the constant pressure to be more competitive. Clients are increasingly sensitive to expenses and aware of what competitors charge for the same services. It is a given that any additional charges added to the client’s bill will be scrutinized and challenged.

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The focus here is on that 10 to 15 per cent of the low-complexity, labour-intensive work that cannot be sustained or performed efficiently by law firms. Not only is this work the most likely to be usurped by legal technology, but there are also service providers that can and should be doing this work instead of the law firms. As a lawyer practising in Ontario, I am reminded by Ontario’s Rules of Professional Conduct, s. 3.1-1(e), that a competent lawyer “means a lawyer who … perform[s] all functions conscientiously, diligently, and in a timely and cost- effective manner.” Using an outside-service-provider or legal technology to do the for less money is not just a cost saving but a professional obligation. 

One example is translations. As most in-house counsel are aware, working in a cross-national Canadian operation means having the need to translate and work with bilingual official documents. Failure to do this creates risk, as there is a possibility that certain contracts, documents and communications may be deemed non-compliant unless they are in French or there is a clear consent to communicate entirely in English. This is a challenge especially for smaller legal departments, where there may not be an in-house bilingual resource. However, it is trite to say that relying upon a law firm to translate all documents and communications will quickly become very expensive. The work must be done, but should the law firm be the one doing it?

One product I came across recently is Alexa Translations AI. This tool allows someone, especially where 100-per-cent perfection is not a requirement, to perform the work a human translator would take 15 years to complete, in one hour and with 89-per-cent accuracy. With it, in-house departments can translate their own documents and contracts with enough accuracy to make this a workable option for most of their needs. In circumstances in which a law firm is drafting or dealing with documents in another language for clients, the clients should be offered such a cheaper and faster alternative.  

In seeking cost efficiencies, another low-hanging branch is those small addons in the monthly law firm invoice that make in-house counsel cringe. The 50 cents for faxes and the 25 cents for photocopies included in a bill that is in the thousands of dollars should make the relationship partners and business development department think twice. Several questions arise, such as:  Why are the firms doing this? Can this work be done more cheaply by someone else? If the work is outsourced, what is an appropriate markup? Should the client know the amount of the markup? These are all important questions.

There are essential services that are and will continue to be provided by law firms. Law firms serve a critical purpose in providing specialized legal representation and advice to clients. That being said, they should not be responsible for all elements of the job, especially at a substantial markup.

Where elements of the service can be provided more effectively and efficiently by alternative service providers, it is the law firm and their lawyers’ professional responsibility to utilize these services, or to allow the client the right to provide informed consent as to their interest in using these alternative sources. As tools and technology also develop, law firms must act as strategic partners and advisers to let their clients know of these alternatives, and to let them decide at what point and to what extent they should be utilized.    

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