50 LEXPERT MAGAZINE
|
JUNE 2017
| OUTSOURCING |
Willis says that, before finalizing the
arrangement, McMillan had discussions
with the Law Society of Upper Canada
about what they were planning to do and
how they were proposing to structure it:
"We wanted to get their input to make
sure McMillan wasn't doing anything that
caused the Law Society concern."
Blessing duly received, Prefix Legal LLP
had to set up accounting, financial man-
agement, marketing and its own web page.
e new subsidiary was officially unveiled
this spring, about 18 months aer that first
lunch, with Peter Willis as its Chief Op-
erating Officer. Will Prefix be looking at
acquiring other types of legal outsourcing
companies or technology in areas such as
e-discovery, document management, con-
tract management or due diligence? "No,
we expect the growth from this point for-
ward to happen organically," Willis says,
"but if something came our way that made
sense, we wouldn't rule it out."
at's kind of the problem. As firms like
McMillan look at ways to bring down costs
and grow revenue, they're finding outsourc-
ers that specialize in one thing and can of-
fer a certain type of work at low cost and
high quality. e question becomes not so
much whether to use them and their plat-
forms, but how.
Dating, going steady, marriage — or
staying single and using the same tools to
build from the ground up?
AT THE START OF THIS YEAR, there
was something of a small revolution at Mc-
Carthy Tétrault LLP, and it speaks volumes
outsourcer it's had a relationship with for
four years. And it's building an in-house
due diligence program with a number of
technology providers for use in mergers
and acquisitions. "We're testing it out on
some deals right now," Peters says. Neither
of these will be made available to other law
firms: they're for McCarthy clients only.
at's important because M&A is frothy
high-end legal work and due diligence is an
essential piece of it. With a growing num-
ber of outsourcers offering due diligence,
Peters says it's a "defensive move" to keep
the work inside the firm.
"We're all competing for this type of
work, and if law firm A can find a way to
drive more value for certain types of litiga-
tion or M&A or whatever, that gives them a
competitive advantage in the market."
IN THE OLD DAYS — just a few years
ago in this fast-moving area — it used to
be that the external legal advisor did every-
thing on a deal. With an increasing num-
ber of in-house counsel coming from the
ranks of big firms, many have found it's a
better value proposition to do a lot of this
work in-house rather than getting a law
firm to do it.
e next natural progression, Peters be-
lieves, would be for in-house law depart-
ments to either go directly to outsourcers
or — far better from a law-firm perspec-
tive — partner with a law firm that can
do the work using the same automation or
about where the legal market is headed
when it comes to outsourcers. e firm ac-
quired Wortzmans, a respected firm with
about 100 contract lawyers that specializes
in litigation support and data governance.
Unlike Prefix Legal and LexLocom, these
firms aren't going steady; this is a marriage.
Wortzmans will remain in its existing of-
fice and retain its own email and document
servers, but founder Susan Wortzman is
now an equity partner at McCarthy. In
Toronto, McCarthy's e-discovery people
moved over to the Wortzmans office at the
start of the year.
Here's where the revolution part comes
in. While Wortzmans, now a division of
McCarthy Tétrault, is maintaining its
brand, it "will absolutely work with and
continue taking mandates from other law
firms and working with clients directly,"
says Matthew Peters, McCarthy's national
innovation leader and a technology part-
ner. Other law firms have been very recep-
tive to the arrangement, he adds.
e financial arrangement? "Susan
Wortzman is a partner at McCarthys and,
while we're keeping it as a separate division
with separate servers, the financials are all
part of McCarthys." In other words, in the
hyper-competitive Canadian legal market-
place, with firms grappling to grow revenue
and market share, some law firms will be
paying McCarthy for things like e-discov-
ery, data searches and data management.
It's a whole new world in terms of the tra-
ditional law firm model.
McCarthy has also built a contract-man-
agement platform with a South African
"[Formal alliances are]
window dressing to some
extent. I think a lot of it is
a rush by firms to look like
they're reacting to changes
in the market. People want
to look like they're being
proactive and minimizing
costs by pushing stuff out
to outsourcers."
SARAH MILLAR
OSLER, HOSKIN & HARCOURT LLP
