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CCCA_V4No3_ManagingCosts-FIN.qxd:CCCA_V1No1_DriversSeat-FIN.qxd 9/2/10 12:36 PM Page 25 Feature unrecoverable costs.” He notes, however, that in-house counsel “You need to have an open dialogue with your service provider. properly overseeing an external counsel file,“still requires lots of Clearly say,‘Here is the situation, here are the restrictions I have, time and commitment on the in-house side. the parameters I am working on ..can we find some solution?’” “The time an in-house counsel spends staying up-to-date on For some repetitive “commodity” work sent to external coun- internal drivers allows him or her to effectively manage external sel, fixed fees can provide a way to control costs.“We have nego- counsel when it’s necessary to go outside.This is just as valuable as tiated fixed fees arrangements, for example, on some [routine] creating a deliverable.” immigration matters,” says Vanasse, noting that its employees doing maintenance and repair of airplanes, for example, need to Hire very good people obtain U.S. work permits. One technique for managing external counsel costs is simply “to It’s more difficult to negotiate fixed fees on more substantial hire very good in-house counsel,” says Stanford. and material matters. A lot of very talented people are choosing to become in-house “It’s difficult because every file is so different and very often, counsel, he says, suggesting that the extra time spend in the hiring it’s not the file that is costing $1,000 that you want to fix, it’s the process will pay dividends down the line.“If you have team mem- [type of] file that is costing a few million dollars every time. But, bers who you trust to do their share of the lifting and do it well,any- with these types of files —– an M&A, public offering, litigation thing that can get done internally is 100 per cent savings,” he says. — the problem is that it’s so difficult to predict exactly [what Stanford also sees a possible trend in hiring in-house counsel twists and turns it will take].” who are more generalists.Given that there is much more pressure As an further example of controlling costs, when Aveos had a on budgets,“we may see a move toward a more generalist type of new credit agreement which required new schedules, Vanasse in-house counsel who can cover a few more of the bases.” assigned the bulk of the work to an in-house paralegal.The les- son: don’t automatically send work outside;utilize external coun- Systematic controls sel for their very specific expertise At Aveos Fleet Performance Inc. in Montreal, the legal depart- Discounts, rebates for early payment of invoices, limited use of ment has become “more systematic in the way we manage work fixed fee arrangements, are all options for in-house/external with our external counsel; more frequently applying basic ven- counsel discussion. dor management techniques, project planning and budget and “To be fair,” saysVanasse,“put yourself in the shoes of the law results tracking,” says Nicolas Vanasse, vice-president, chief legal firm. If you want them to offer something that is meaningful [in “In order to reach the next generation of cost management, you have to have a plan for all kinds of demands …” Richard Stock, Catalyst Consulting officer and corporate secretary. terms of billing], you need to commit that you will be there for A billing and staffing policy is sent to all of the company’s out- a long time, to commit to a long-term relationship.” side counsel.The policy defines roles and responsibilities for staffing and budgeting,fees and billing practices, what expenses are agreed Increase internal capacity upon and how a bill should be presented.These systemic changes According to Richard Stock, one of the key components to reflect the growing emphasis among many legal departments, such managing external counsel costs, is to anticipate and plan for as at Aveos, for ensuring that external counsel provide [added] legal costs in some detail. value, saysVanasse, who heads a five lawyer in-house team. Yet, says Stock, a partner with Catalyst Consulting,“very few At the same time, he says, there is much more emphasis on legal departments do that outside of their annual budget cycle; open dialogue concerning costs between legal departments and they budget fees maybe, not always, for external counsel and they their external counsel. budget their own costs, typically only their direct costs, but they AUTOMNE 2010 CCCA Canadian Corporate Counsel Association 25