Written by Karen Lorimer, Director/Group Publisher, Media Solutions, Thomson Reuters.
In-house Counsel as Business Enablers - and how legal service providers can help
The Annual GC Panel was held on October 18th at the Thomson Reuters Customer Centre in Toronto. Jean Cumming, Editor-in-Chief moderated the session.
The three panelists were:
Kathleen Orysiuk, Assistant General Counsel, Corporate Siemens Canada Limited
Richard Stewart, Deputy General Counsel & Chief Operations Officer, BMO Financial Group
Diana Soos, Deputy City Solicitor, Litigation & Administrative Law, City of Brampton
Here were the main takeaways:
Know your client’s risk appetite
- All three panellists agreed that it is the law firm’s job to find out and understand what a client is willing to risk in terms of costs, expected outcomes, etc., and understand that this will differ from matter to matter and business to business
- Knowing this informs many other matters, such as the client’s expectations regarding communication frequency, costs, time spent, etc.
- Kathleen mentioned that her company, Siemens Canada Limited, has a questionnaire the business unit fills out that helps her team identify the risk. (Siemens has 26 different businesses that her legal department supports.)
How should the firm approach pricing and fee structures?
- Kathleen said they send RFPs to a limited number of firms and ask for rate freezes and value adds. She expects that experienced firms should be able to offer standardized fees based on history
- Diana said they send out RFEOI (Request For Expression Of Interest) to firms, and that discounts/special pricing is part of the selection process. They appreciate flat fees or capped fees
- Richard said that moving in-house was a big eye-opener for him – he didn’t appreciate the fact that the senior management wanted cost certainty. He feels there is still a disconnect as a firm will assure him that “they can take care of the work, done it a million times”… but when asked how much it will cost, they say “oh, we can’t possibly tell, we have no idea”
- Message to firms should be – your clients, the in-house legal department, needs to be seen by the business as being cost-efficient and saving the company money. Firms need to show the department this proof
In-house counsel may be motivated to show savings
- Most law firm lawyers don’t realize that their clients may be motivated (i.e., rewarded) for saving money
- Kathleen said at Siemens Canada they are measured on managing their budget
- Diana said it is part of the City of Brampton’s performance indicators to come in on budget
Getting on a law firm panel: is it important?
- Richard said yes, it is very meaningful. Firms have to sign a retainer agreement with BMO, and there is zero tolerance for deviation. But if your firm is on the panel, it means something. BMO is allowed to go “off panel,” but it is discouraged, as it is not fair to the firms on the panel
- Kathleen said they go on and off panel; for instance, Siemens will use a less expensive regional firm if the work doesn’t require a “top biller from Toronto”
- Diana said panels matter; “It’s the first place I go”
Diversity and inclusion: is it part of the RFP or the retainer?
- Richard said they require it and track it. BMO is a leader in this area. 97% of the firms they work with track it – up from 34% when they started. They like to track it across the firm and across the lawyers working on BMO files
- Diana said they require and expect it, but don’t currently track it. They do factor in how the firm approaches this as an ethical component.
- Kathleen said that Siemens has a global diversity policy that has been a big focus in the past year
Threats to big law
- Diana said they are looking to technology and alternative legal service providers, e.g., e-discovery and AI
- Kathleen said they would really like to partner with firms on ways to save costs through technology for due diligence, etc. It’s too expensive for the company to pay for the technology on its own, and it would rather make use of a law firm’s license
- Richard said that competition to traditional law firms is on the rise and it saddens him that suppliers of compliance and regulatory services are coming to BMO directly, rather than these services being offered through law firms. BMO would rather walk through these matters with a subject matter expert, i.e., a lawyer