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CCCA_V7No3_Dept-Performance-FIN_CCCA 13-09-23 2:52 PM Page 10 Performance in the Law Department difficult for the legal department to secure · the robust use of legal project plans hourly rate for the department should not proper recognition for its contribution to and budgets for all matters exceeding exceed 45 per cent of the hourly rate of the company. Increased internal and exter- 25 hours; external counsel for the same type of work nal legal spend act as an effective sunblock · migration away from hourly-paid in the same reference market. Adjustments in a business environment that has no work to value-based fees tied to results to workflows and a range of productivity established practice of reporting qualitative on matters; improvements can reduce the initial hourly and strategic contributions to the company. · reliance on partner firms to manage rate/unit cost of the department by at least It takes only one exceptional piece of workflow, quality and costs of secondary 15 per cent. litigation, regulatory matter or transaction law firms. The second way to measure the cost of to throw the budget into significant vari- The costs of internal counsel can best be internal counsel is by the overall budget of ance. The legal department must demon- measured in two ways. The first is unit cost, the department, minus the costs of exter- strate that it rigorously uses the full range calculated as the fully-loaded hourly rate nal counsel. The approved budget may of measures to mitigate the costs of exter- for the department. The legal department change each year. Once locked in, then a nal counsel by up to 20 per cent over a budget, including all performance pay, but negative variance exceeding five per cent three-year period. These measures include minus the cost of external counsel, is sup- should be considered poor performance. · detailed demand forecasting of its plemented with indirect costs such as rent, requirements by type of work, volumes/ depreciation, IT costs and the employer’s Client Satisfaction hours, jurisdiction, and complexity; share of benefits. The result is divided by Most legal departments do not conduct · a formal process to source legal services the total number of lawyer hours worked annual satisfaction surveys with their clients. on a competitive basis to better leverage in the department, excluding administra- Informal walkabouts are the norm, as is pricing and secure stable legal teams; tive and practice management time. The reacting promptly to issues and complaints We litigate Affleck Greene McMurtry LLP 365 Bay Street, Suite 200 Excellence in Commercial Litigation agmlawyers.com Toronto, Canada M5H 2V1 and Competition Law thelitigator.ca T 416.360.2800 10 CCCA Canadian Corporate Counsel Association FALL 2013