With ongoing economic instability in North America, businesses, including law firms, are re-evaluating their traditional practices, including legal fees structure.
Addressing the issue, the Association of Corporate Counsel (ACC) has rolled out the Value Challenge initiative to foster better relations between lawyer and client and increase communication between in-house and outside counsel to improve the value within legal services.
?We are trying to introduce principles and values that are familiar to the business world in the legal services market,? said Amar Sarwal, ACC?s vice-president and chief legal strategist. ?The Value Challenge principle is an ongoing conversation between in-house counsel and clients. The value concept is a win-win strategy because in the long run, more legal services will be delivered.?
The ACC recently held a seminar in Vancouver highlighting this program, which ?is not about asking law firms to lower their hourly rate or discount their bills. The challenge is for law firms to improve the value of what they do, reduce their costs to corporate clients and still maintain strong profitability,? said Joel Guralnick, general counsel for Vision Critical Inc., who has been a member of ACC since 2006.
The ACC Value Challenge focuses on alternate fee structures, diverse staffing options, building relationships, knowledge management and efficiency through technology.
One of the innovative ideas for alternate fee structures is to change the traditional billable hour method, which can be achieved in diverse ways from creating long-term projects to charging flat-fee rates.
According to Lisa Skakun, general counsel for Coast Capital Savings Credit Union, billable-rate or fixed-rate is the ?status quo – it?s been perpetuated because that?s what you know, your expectations are those models, and there hasn?t been a great job of challenging the models.?
She continued by adding, ?The ACC gives you context of challenging that model, as you?re not looking at time spent but at value delivered. It?s an orthodoxy shift for law firms to get their heads around to time spent versus value delivered.?
Skakun was inspired by the Value Challenge and Coast Capital?s innovation strategy of flipping accepted orthodoxies to ask a large law firm to challenge its billing structure and be more creative with it.
She will be working with the firm this fall to produce a new approach to their entire business relationship and plans to pilot it next year. She knows it ?won?t be perfect, but it?s a start? to facilitating a greater strategic and business- partner relationship.
In-house attorneys are not the only ones that are engaging in the ACC Value Challenge initiative; the Royal Bank of Canada approached its external counsel to provide alternative strategies. Lindsay Goldberg, partner at McMillan LLP, is a foreclosure lawyer who represents mortgage lenders, including RBC, in mortgage enforcement matters.
Instead of taking the traditional approach to service delivery with RBC, Goldberg and his firm are working together with the bank to streamline the process in order to deliver services more efficiently, use best practices and reduce the bank?s administrative and legal expenses.
?These developments were designed in partnership with the bank to help the bank manage its default portfolio with greater certainty, predictability and at less cost,? Goldberg said.
Their collaboration has produced alternative win-win strategies, such as charging a flat-fee rate for administrative tasks; a web-based interactive reporting and communication tool, which McMillan exclusively created for the bank; and a revised approach to the traditional billable hour fee to reflect value billing.
?The old way doesn?t make any sense, as the method does not encourage efficiency and is, frankly, counter-productive to value billing. My clients are much better served by finding ways to reduce, not increase, those hours,? added Goldberg.
The ACC Value Challenge has been quite successful in the United States, and the association has heard interest from law firms and businesses in Canada and the rest of the world. Sarwal said in most markets, the provider is the one that comes up with innovation and this is evident, as clients have been the driving force for law firms to change their practices and structures.
Skakun, who is an ACC member, would like the Value Challenge to be taken proactively by firms in Canada, rather then being strictly driven by clients, as it?s an opportunity for firms of all sizes to distinguish themselves. ?Companies are constantly changing to differentiate themselves from the competition; what are law firms doing?? she added.
The ACC serves the professional and business interests of attorneys, more specifically in-house counsel, by providing a range of services, such as diverse legal resources and tools, workshops and networking events, blogs and forum discussions, master classes and think-tank sessions. The ACC has Canadian chapters in Ontario and Quebec with plans to expand in British Columbia and Alberta. ?
