is there for a pit stop that goes on too
long, a part that needs fixing, a pit fire —
or the wheels to fall off and the yellow
caution flag to start waving.
“In my career as a corporate counsel, I
have taken a file away if I think an associate has been billing too much for what
we’re getting,” explains Knox, who previously worked as an in-house lawyer for
two different municipalities.
“If a first- or second-year associate is
billing $500 an hour, that’s outrageous.”
For him, too many status updates are a
warning sign. “If it’s happening multiple
times a week and not much is changing
or happening on the file, they’re just try-
ing to pad the billing on the account.”
Rather than approach the firm’s manag-
ing partner with his concerns, Knox sends
a subtle signal. “They get the message in
an indirect way if I say, ‘thanks, we’ll take
it from here,’ and they should be astute
enough to recognize I’m not happy.”
However, he will go to the top with
complaints. For more than a decade ago,
while serving as a municipal solicitor,
Knox was troubled over a longstanding
relationship between the municipality
and a major national law firm, which had
become “a bit autocratic.”
Most concerning for him was the firm’s
“unwillingness to have a conversation
about volume” in terms of billing.
“What triggered it was that there was
going to be a large amount of litigation
regarding land development on the horizon and they knew we were going to
spend a lot more than our regular annual
budget. We approached them to work
out a deal beyond their standard hourly
rates and they simply said they’re not interested,” Knox recalls.
“It was disappointing. We thought we
had a relationship, which I guess we didn’t.”
The municipality had never looked at
the value it received from the firm. Knox
decided to go to a public tender for outside legal services, which the municipality had never done before.
“It sent a clear message to the senior
partner, who came in for an interview
and was quite shaken with how badly
the relationship had deteriorated,” Knox
said. “We took away 90 per cent of their
work, but the answer we got was, ‘we’re
too big for you and have outgrown you,’
so I guess our spending $300,000 a year
on them wasn’t good enough.
“That wasn’t exactly what we expected
to hear considering they developed their
municipal practice as a result of having
us a client.”
As with Knox’s situation, Fisher keeps
most of the legal work in-house where his
team of four lawyers and nine paralegals
across the country focus on contractual
and intellectual property law.
About 25 per cent of SAP’s annual
legal budget is earmarked for outside
counsel, which Fisher’s shop typically
turns to for litigation. If it involves an
employment-related matter, the work
goes to Heenan Blaikie LLP. If it’s a
customer issue, the enterprise software
maker will either issue a request for proposal or seek specific counsel with expertise in that area.
SAP’s strategy on its external legal
spending reflects the standard approach
taken by Canadian corporate counsel,
according to Fisher, a 16-year veteran
at SAP.
“They will either send all of their le-
gal work to a large firm, which has the
breadth of work they seek, or go to a
boutique firm that has certain expertise,
particularly if they need to keep their
costs under control and don’t need to
have people on Bay Street where over-
head costs are a lot higher.”
The advantage of sticking with one law
firm is that “the more money you spend,
the more attention you’re going to get,”
says Fisher. “The firm is also more likely
to understand your business and there-
fore give you better legal advice.”
owever, Trent’s Knox says
that choosing a large law firm
shouldn’t be the default choice
for corporate counsel.
