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5/5/11 CCCA_V5No2_Dept-Performance-FIN.qxd:CCCA_V1No2_Dept-MgLaw-V1.qxd Performance In The Law Department Risk-sharing and efficiency has been designated 11:34 PM Page 9 Department Services Consulting. It is the Two goals of the retainer program were for by the Canadian Recognized Provider for Legal Department the company and the firm to share risk, Corporate Counsel Consulting designated by the Australian and for the firm to benefit from more busi- Association as Corporate Lawyers Association. Richard ness and greater efficiencies.The design of a Recognized can be contacted at (416) 367-4447 or the fee arrangement manages the effects of Supplier of Law at rstock@catalystlegal.com. significant variances in matter billings and volumes by providing relief to the firm and the company.The company proposed three rules as part of a layered approach to shar- ing risks and rewards: /SGOODES • if the shadow bills for the year are with- 0ROFESSIONAL ,,- in 10 per cent of the planned amount, then no money changes hands. A good number of Canadian clients have such 8SFRPLQJ([HFXWLYHVW\OH3URJUDPV retainer arrangements in place; 6WDUW)DOO • if the actual number of matters is with- !LTERNATIVE $ISPUTE2ESOLUTION!$2 in 25 per cent of the planned volumes, "USINESS ,AW then the company pays 50 per cent of 'ENERAL the fees in excess of the 110 per cent of 3ECURITIES ,AW 4AX,AW the planned fees. The shadow bills are used to measure the variances; 6WDUW:LQWHU !DMINISTRATIVE ,AW • if the actual number of matters varies by "USINESS ,AW more than 25 per cent from the planned #ONSTITUTIONAL ,AW volume, then the first two rules apply #RIMINAL,AW and the fees varying in excess of 25 per 'ENERAL cent are paid or rebated at 100 per cent of fee value. Again the shadow bills are 0LUS NEWCOURSESINCLUDING%NERGY2EGULATION AND )NFRASTRUCTURE$EVELOPMENT used to measure the variances. Benefits k$Q\RQHZKRHYHUVDLGWKDWH[SHULHQFHLVWKHEHVWWHDFKHUQHYHUWRRN The company benefits because it deals with Fj^ff[\Ëj//0 SURJUDP7KHFRPELQDWLRQRISUDFWLFDODQGDFDGHPLF fewer firms, it has predictability in budgets, OHDUQLQJZLOOWDNH\RXUSUDFWLFHWRDQHZOHYHOy and it achieves savings in its external legal 63&)681900-2001192-'-4%00%; %''- 0%;71-8,:%0)6-38)004 spend.The firms receive a larger volume of work, greater revenue and, under the right conditions, higher profitability. Fj^ff[\Gif]\jj`feXc;\m\cfgd\ekRIIHUV The layered approach is unusual, but it H[HFXWLYHVW\OH//0SURJUDPVYLDYLGHRFRQIHUHQFH GLUHFWO\WR\RXUKRPHRURIoFHRULQSHUVRQDWRXU can be persuasive if the data and condi- GRZQWRZQ7RURQWR&RQIHUHQFH&HQWUH tions are in place. Both law firms and 9LVLWZZZRVJRRGHSGFD WROHDUQPRUHDQG companies should consider this innova- WRUHJLVWHUIRUDQ,QIRUPDWLRQ6HVVLRQ tion in financial arrangements. Richard G. Stock, M.A., FCIS, CMC is a partner with Catalyst Consulting.The firm ÉTÉ 2011 CCCA Canadian Corporate Counsel Association 9