60 LEXPERT MAGAZINE
|
MAY 2018
grounds in finance or economics, but hav-
ing the ability to communicate value gives
them an extra dimension that will help
with a law firm's profitability."
As Johansen readily acknowledges, his
statistics are "imperfect." Most particu-
larly, his methodology's focus on the word
"pricing" in individuals' titles likely under-
estimates the rise of professional pricing
and project management at law firms in
general. "e legal profession, which is gen-
erally slow to adapt, has been slow to adopt
a professional approach to pricing and even
slower to use the word," he says.
By way of example, Bryan Cave, twice
ranked as the world's most innovative law
firm by the International Legal Technol-
ogy Association, includes its pricing pro-
fessionals under the rubric of its "Practice
Economics" team. (At press time, Bryan
Cave had just merged with UK firm Ber-
win Leighton Paisner LLP.)
It's perhaps not surprising, then, that Jo-
hansen has to date failed to turn up a single
individual bearing the "pricing" moniker
at any Canadian law firm: aer all, the
country's legal market has a history of fol-
lowing, rather than leading, in its embrace
of innovation.
Competitive comparisons, aside, however,
pricing professionals, project management
and AFAs are alive and well at Canada's ma-
jor firms. "ere's definitely been growth
in the number of pricing professionals at
law firms in Canada, but it's hard to come
up with specific numbers," Kathuria says.
"What I do know is that most of them are
at the big firms, whereas in medium-sized
firms the pricing professional role tends to
be filled by someone who's more into tradi-
tional finance department functions."
Suzanne Wood joined Norton Rose
Fulbright Canada LLP as a lawyer some 15
years ago. "As an associate, I found that I
spent a lot of my time doing project man-
agement, so I turned my attention to that,"
she says.
At the outset, Wood recalls, it was hard
to get lawyers onboard with the program.
But as requests for proposals (RFPs) be-
came more and more commonplace, it
became obvious that responding to clients
satisfactorily required lawyers to have a
support network. "RFPs are becoming the
predominant method of buying services in
the legal market," Kathuria says.
In particular, consolidation RFPs were a
catalyst. "ere was a very steep rise in cli-
ents moving from using 50 or 60 law firms
to a panel or a handful," Wood says. "To
respond to these types of RFPs, we needed
much more detailed financial analytics fo-
cused on staffing, leverage and rates."
In 2011, Wood was the only legal project
manager at her firm. ere's now a team of
eight analysts and coordinators composed
of former lawyers or paralegals and proj-
ect management professionals. e team
works with a separate pricing group, the
Business Planning and Analytics Team,
composed of a director, four pricing man-
agers and two pricing analysts.
"e project management team does
the scoping that determines how to staff
the file, both internally and externally,"
Wood explains. "When that's done, we
have a separate pricing team that will
analyze alternatives, whether they are
hourly rates or AFAs, and do a profitabil-
ity assessment."
At Gowling, Kathuria has instituted
a more integrated structure. "I don't like
having the project management and pric-
ing teams tagged as separate entities," he
says. "At our firm, they are the same group."
Kathuria reasons that, absent tight inte-
gration with project management, pricing
professionals tend to focus on the makeup
of the legal team and the rates, with per-
haps insufficient focus on the nature of the
work that has to be done.
Gowling's pricing process begins by al-
locating work to the appropriate level of
resource, be it partners, senior associates,
junior associates or paralegals. Next is a his-
torical analysis of the firm's use of resources
for similar tasks in the past. "Nowadays,
we code everything in terms of how much
time is spent on particular tasks," Kathuria
says. "We also look at the historical details
of what resources were required in a proj-
ect, such as the number of witnesses or ex-
pert witnesses."
From the pricing perspective, the firm
has developed a bank of about 80 templates
that list the common assumptions about re-
curring types of work. "We go through the
entire project management plan with the
facts we have, and estimate how long each
phase and task will take," he says. "en we
validate our conclusion by comparing them
against previous matters."
At that point, the firm has established its
cost of doing the work and is ready to deter-
mine what kind of fee arrangement makes
most sense. "If a client is very concerned,
for example, about the cost of a transac-
tion, especially one that may not come to
fruition, they usually want a fee that re-
flects a discount for early termination and
a success fee if the deal goes through," Ka-
thuria says. "For this type of arrangement,
it's important to consult with the lawyers
involved to determine what the chances of
success actually are."
Surprisingly, perhaps, clients can be
an obstacle to creative fee arrangements.
"Some of the procurement folks employed
by companies just want to drive the re-
sponses to RFPs by an Excel spreadsheet,"
says Vancouver-based Matthew Peters,
National Innovation Leader, at McCarthy
Tétrault LLP. "In a working partnership
model, it's possible to have a conversation
about the fees, but not always — which is
too bad, because the spreadsheet is only
half of the equation and what really wins is
| IN-HOUSE ADVISOR: EVOLVING FEE ARRANGEMENTS |
MATTHEW PETERS
>
MCCARTHY TÉTRAULT LLP
In a working partnership
model, it's possible to have
a conversation about the fees,
but not always — which is
too bad, because the
spreadsheet is only half
of the equation and what
really wins is doing something
creative around it.
