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NATL61_034-039 03/08/2007 09:43 AM Page 34 Feature Derek Patterson General Counsel & Corp. Secretary, ICBC Jeffrey Carr Vice-President, General Counsel and Secretary, FMC Technologies Inc. In the driver’s seat: Corporate counsel keep legal costs down The high cost of legal services has been a source of friction for years as corporate counsel try to keep fees down and out- side law firms try to maximize their revenues. But are things changing?We speak to in-house lawyers to find out how they control their billing processes. By Ann Macaulay he cost of legal services keeps soaring—as much as 10% Some have also experimented with time-tracking software that a year—as corporate counsel continue to look for ways can help monitor lawyers’ work more accurately. Others have Tto keep them under control. tried outsourcing work to less expensive jurisdictions. General Conflict can arise not only over the amount of money being Electric Corp. reportedly cut costs by millions of dollars by send- billed; there is often a disconnect between in-house law depart- ing legal work to lawyers in India. ments and their outside law firms about how to structure the According to the CCCA In-house Corporate Counsel billing arrangement. Hourly rates might be easy to understand Barometer survey done last year, 38% of in-house lawyers in and calculate, but they rarely deliver the best value. And unlike Canada have had experience with alternative billing structures with other service suppliers, law firms have been reluctant to take a outside law firms. But just how much alternative billing is actually commoditized approach to billing. being done? Corporations’ lawyers are frustrated by outside law firms that “It’s like teenagers talking about sex—lawyers like to talk about don’t understand the tight budget constraints they’re under. As controlling legal costs but nobody’s doing it,” jokes Jeffrey Carr, legal costs and the pressure from their CEOs increase, inside vice-president,general counsel and secretary of FMC Technologies LEFT: GITTINGS, RIGHT: ROBERT KARPA counsel have resorted to a number of alternatives to hourly Inc. in Houston,Texas. “And those that are doing it don’t know billing, including flat fees, results-based fees, shared risk, contin- what they’re doing.” gency fees, blended rates and a bonus structure based on results. Carr estimates the amount of all fees paid by corporations on 34 CCCA Canadian Corporate Counsel Association MARCH 2007