Managing budgets and partnering efficiently with external service providers

Communication between legal departments and their external counsel partners is key to ensuring all parties are on the same page with regard to budgets, deadlines and needs. Managing budgets and demonstrating ROI to other parts of the organization can be challenging for general counsel as they strive to strike the perfect balance between managing matters in-house and turning to outside help when needed.

“External counsel has to have appropriate arrangements set up in the front end, to ensure that when I use them, and however I use them, they meet what our budget needs and expectations are," said Lorne O’Reilly, lead counsel at Dow Canada, who was a panelist in the recent Legal Department Summit hosted by the Canadian Legal Innovation Forum and LawyersInHouse.com. “That's part of a full conversation, to give people a heads up on both timing and cost for items that are coming,” said O’Reilly.

For Catherine Lau, general counsel at outdoor retailer MEC, aligning with business counterparts helps her to prioritize her high-volume workload. She has weekly meetings with the CEO and connects with each department to understand their needs to ensure there is business alignment and that she is focusing on the most urgent items.

Lau’s department uses a zero-based budgeting approach.

“During this fiscal year, we typically only outsource legal work when the matters require specific expertise, or if it's really complex, or we just simply don't have the capacity internally to support,” said Lau during the summit which brought legal leaders together to discuss key challenges their departments face in terms of operations and innovation strategies.

At financial technology company, Mogo, the legal department focused on expanding the legal team to cut down on the volume of work being outsourced.

“If we're constantly sending it out to external counsel, it doesn't make sense from a financial perspective, or an ROI perspective, so that's been really helpful in building that case for getting those additional hires,” said Alice Davidson, chief legal officer at Mogo, who also spoke during the online event. The legal team at Mogo has always been involved in all initiatives and product development from the outset, so Davidson is now focused on empowering a culture of self-service with templates for internal clients which will reduce the dependency on the legal team. 

“We're now kind of on the crossroads where everything comes to us – even things that, quite frankly, shouldn't be coming to us,” said Davidson. Her team is preparing to roll out a  centralized logic software system, through which all requests coming into legal compliance will be triaged to avoid spending time on matters that do not need legal approval or review.  

“I think it's going to be a huge tool for us in terms of just realizing efficiencies, and again, creating a little bit of that self-service environment, and also demonstrating down the line why we do need additional resources, or why we're spending X number of dollars over budget or because we're just under resourced or over exerted,” said Davidson.

Marianne Bolhuis, general counsel and corporate secretary at Canadian Olympic Committee, also shared her thoughts during the summit. Bolhuis said that she advises junior lawyers to use external counsel to help develop their skillset, so eventually they will be equipped to handle more of the work in-house. Lawyers can build credibility with the organization through their choices in picking the appropriate lawyer for the appropriate fee, Bolhuis said.

“I think as an in-house lawyer, legal budgeting is inherently challenging because so much of what we do is difficult to predict,” said Bolhuis.  “Building credibility with your business is less about actually coming up with an ROI because I really don't think that people see investment in legal expenses as a real return on investment.”

Lau added that she finds value in being transparent and having candid conversations with the business teams at MEC to build her credibility.

 “I was able to work alongside the CFO, and the CEO, and they saw me working with other business stakeholders, so I think it was slowly through completing a number of transactions that I helped to build that credibility within the team,” said Lau. Lau said that she explained to the CEO the benefit of legal working alongside business teams, rather than managing legal risks after a decision has been made which will ultimately use more legal resources.

Davidson agreed: “We're business people first, lawyers second,” she said. “Setting that tone from the outset helps get that seat at the table, and that voice to be involved in that decision making process.”

With regard to implementing new technology in the legal department, Davidson recommends examining the existing software structure within other departments in the organization to see if there is an appropriate layer that can be added for the legal team. The product development team at Mogo was already using Jira software for project development, which has a built-in ticketing system and support centre, so the legal team is hoping to make use of the same software, which Davidson says will save money and time.

The discussion was chaired by Christine Holmes, founder and CEO of LawyersInHouse.com.

The summit was part of the Canadian Legal Innovation Forum’s fall webinar series.