Cover Story - Second annual corporate counsel roundtable

What’s your strategy for keeping on top of both legal developments and industry-specific developments? Do you find you have the time to keep up to date?

DELBIANCO:
I find it very difficult to keep up. I have a wide network of firms and we get the bulletins from the law firms, which I find very helpful because as soon as there’s a development or a change in the law, you get an e-mail. But even with all those resources, I still find it difficult to keep up, particularly in the last couple of years with Sarbanes-Oxley. Does anyone else find that?

BELAICHE:
It’s perpetually challenging to keep up. Health care is a heavily regulated industry and we’re a landlord, a provider of health-care services, we’re a purchaser of legal services. . . . I think it is really critical to build and maintain a network of colleagues and monitor firm bulletins, because they are quite helpful. We have recently developed a great [informal] network of my counterparts at other academic health-science centres in Toronto and that is an incredibly useful, helpful, informative forum to share information.

LECK: I find the same thing . . . . It’s next to impossible to be really thoroughly on top of everything. There’s just so much information in the day-to-day work that we’re doing. I have a lot of administrative/management duties that just seem to be expanding all of the time. What I find helpful apart from things like the legal magazines, the newspapers — where you can get a quick understanding about something without having to read a case — is just the networking. Within our office, the lawyers will e-mail something around of significance so you quickly have an understanding of something that’s breaking. We have monthly lawyer meetings where the same thing happens. I find, quite frankly, that my Ontario Reports start to pile up. They’re sitting there and once there’s seven or eight of them, and same with some of the newspapers and magazines, I set aside an hour or so and just plow through them, but it’s certainly a challenge.

DHAWAN:
Being in-house counsel, the focus is certainly on your industry, but if there are changes in non-industry-specific law, then you’re often learning on the fly and I find that the internet is a great equalizer in that respect. You can quickly do your research on the fly and you don’t have to necessarily ask an articling student or another lawyer. You’re expected to know a lot more today, I think, than a few years ago, but the internet helps.

WONG:
With that expectation of broader knowledge, there’s also an understanding that it’s not as deep. There’s not the expectation of the depth of law that you had in private practice. I was a corporate securities lawyer, so my understanding of corporate securities was very deep, but the broad knowledge of law wasn’t there. Now it’s flipped on its side, where the expectation is a broad view of knowledge but not as deep. It harkens back to the ‘50s and ‘60s: you had very good general practitioners who knew a lot about everything and, really, their clients came in for good, common-sense advice. I think that’s really what a GC does in this environment and in these industries, which is provide that good, practical business sense.

LECK:
I would agree with that completely. I think there’s an expectation as in-house counsel that you’re part of the management team and inevitably you’re going into assessing business risk and just applying common sense to a lot of issues. Things that require intricate research, for example a tax issue, I don’t take it on, we don’t do it in-house, I’ll go outside because I think that’s faster and better through a consultant than trying to become an expert myself.

Being part of the management team and giving this common-sense advice, do you feel integrated with the management team or are you sometimes still seen as the roadblock? Do you think you get the respect you deserve?

DELBIANCO:
I definitely feel that we do, certainly within my company, and I think the others will agree that the role of the legal department has evolved over time. I think many years ago the lawyers were seen as blockers, the people who always say “no.” My job very much is to enable business and identify problems and the risk involved and find a way around those problems.

DHAWAN:
I think we’re now expected to go hand-in-hand with the rest of the business units or the operational units, and in order to not be seen as a hindrance, you want to be at the table when decisions are being made at the earliest stage. Instead of just saying “no,” it’s much better if you problem solve with the business units, and once they’ve seen how you add value to problem solving, they’re going to come back to you time and again. That ultimately helps your organization.

During those times you do send work out, what are you looking for in external counsel? What do you need them to bring to the table?

DELBIANCO:
Expertise in a particular area, obviously. But also availability and a good relationship. You have to have a good relationship with someone in order to feel very comfortable.

BELAICHE:
I would say responsiveness, pragmatism, and reasonableness with respect to fees. One sometimes thinks of external counsel for being a panacea for one’s workload, and I think the reality is far different from that, in that you sometimes have to educate external counsel about your organization and the legal and regulatory landscapes. It ends up being very time consuming and sometimes your external counsel will overwork a file with a very detailed opinion that you then have to translate to business folks in a comprehensible, practical manner.

LECK:
I think consistent to all of those comments is a true sense that the external lawyer understands your business and is putting those interests first. With consultants generally, whether it’s lawyers or not, time is money in the reverse sense and sometimes there’s a sense that external lawyers aren’t wrapping up something as quickly as they might. There is a conflict of interest in the sense that the longer something goes on, if you’re billing on an hourly basis and the more resources they bring to bare on something, the more revenue they generate for the firm. There are lawyers I’ve dealt with who I’ve been skeptical about some of the behaviours I’ve seen. I’m not going to accuse anyone, but there are certainly question marks that have been put out there. Then there’s other firms that at the earliest opportunity if they can do something to resolve an issue, they do it and I trust them.

DHAWAN:
I think most outside counsel can provide you with stock answers. It’s really a matter of understanding your industry and your company and getting that information in light of your company and industry and your tolerances for certain courses of action.

WONG:
What I look for in external counsel is follow-through on their commitments. Sometimes we have multiple projects, sometimes we’ll send out a huge deal every quarter. What they really should do is project based: allocate amongst their departments. Basically, follow your own commitments, tell me what you agreed to, what is the hourly rate, what did you tell me was going to be the fee quote, and in the cover letter match it up to the bill so I don’t have to go over that. I find administering all of that is very difficult. If they can take away that kind of time, it would be very useful.

BELAICHE:
Well, that really requires that frank, open, ongoing communication with external counsel, and make clear what your expectations are and vice versa, so that you have that mutual understanding about what you can do and what your expectations are. On occasion, you end up spending so much time managing external counsel when your time is better spent providing services to your internal clients.

WONG:
Make it easy for us to pay your bill. That kind of stuff comes in and goes to an in basket and it becomes a receivable cost for them. Make it so easy for us to pay you, that’s the key.

Speaking of payments, are you finding more external firms using creative methods of billing?

BELAICHE: 
Tough question. Time is probably the easiest unit to measure. We’ve looked at issuing more mini RFPs to get a better sense of value and different firm quotes on something. Sometimes they’ll say, ‘We’ll discount your fee by two per cent or five per cent,’ and that really doesn’t cut it.

LECK:
It’s very, very hard in litigation because it’s not widgets, it’s not something you can measure with precision or predict with any certainty, but the most creative we’ve got is on a few tax cases where we’ve set up a quasi-contingency arrangement. Something like that in the right case might work but I agree, overall, time is the simplest measure and you can’t always just look at hourly rates either. Someone with a lower hourly rate may take twice as much time.

DELBIANCO:
Certainly it’s a topic that gets a lot of airplay at conferences and whatnot. People say there’s all sorts of different arrangements you can try, but in the end very few of them work and they all go back to the hourly rate.

DHAWAN:
I think in the long term, it’s really value for money, and you mentioned that if someone can do something in five minutes that others will research to death and, even if they’re charging an outrageous hourly fee, the five minutes spent was worth it.

What about your legal budgets? Are you expected to manage more internally?

DELBIANCO: 
I think everyone is under pressure to keep costs in line.

LECK:
We’re increasing our legal budget, although you may be aware of the pressures the City of Toronto is under. My basic approach with these types of issues is you pay now or pay later. I look at budget as a mix of quantity, quality, and costs. If you change two of those, you pay somewhere else. You reduce the cost and you reduce the quantity, the quality deteriorates, and you’re going to pay more for legal mistakes or claims payments. If you want to reduce cost and maintain a high quality, the quantity can’t be the same. Overall, one of my mandates is to increase the number of in-house resources and management believes it is very good value for the money.

Risk management has become a hot topic as of late. Do you see it moving away from the traditional finance function to more of a legal function?

BELAICHE:
It’s been non-stop. St. Mike’s is starting to work on an enterprise risk management framework and I co-chair that working group. I think it’s actually the first time that a public hospital has undertaken a comprehensive review of all of its operations and assessed the risk. As I’m sure everyone can appreciate, a hospital has to assess on an ongoing basis what its risks are to identify what kinds of operations it ought to undertake to continue to operate.

DHAWAN:
One of the cornerstones of our risk-management policy is health and safety. The work that we do is inherently dangerous and when I look at our company I see we have a very strong culture of safety awareness. Even through the management ranks we have quarterly health and safety meetings. One of our corporate objectives is to continue to improve our safety record.

LECK:
Clearly at the TTC, that is our top priority. We went through a phase back in the early ‘90s where there was this push to expand and there was deferred maintenance, there were a number of issues that developed, and ultimately they all culminated in the [1995] subway crash. That was a real wake-up call to the organization. It really is top of mind.

It might be hard to choose, but what do you feel is your biggest challenge these days?

DELBIANCO:
My challenge is trying to accomplish everything we need to do with the resources that we have.

LECK:
I agree with that. I would just maybe amplify it by saying the challenge is to do everything in the way I’d like to do it. You can settle claims, but we could fight them a little harder to take more cases to trial, for example. But you can’t press people to give up their weekends and their evenings night after night after night endlessly. That’s not the solution, but it’s frustrating at times.

DELBIANCO:
I feel like I’m running 100 miles an hour; I’d like to be able to just think.

DHAWAN: 
Sometimes you want the luxury of having the time to drill down a little bit further into a problem, but you just can’t because you have to move on to the next problem. You provide your advice and then you move on.

WONG: 
The ability for reflection and time to step back and connect the dots and look at different angles is never
there. You just work on a file and then looking back you think, ‘Gee, I should have done that differently,’ but you never have that luxury of time to sit back. As in-house, you should be able to do that; we’re not obliged to docket or anything. You should be able to have an hour and sit back and see what the landscape holds.

BELAICHE:
I think the biggest challenge for me is managing internal clients’ expectations; providing quality, responsive advice. But when you’re dealing with 5,000 staff members, you have to be ruthless in triaging what is really important, what is emergent, what is urgent, and what can wait a little longer. That kind of discipline doesn’t come easy. Initially, I felt like I had to be all things to all people all the time, and over time I realized, in fact, you’ve got to be really selective and use your time and make a difference.

DHAWAN:
I agree. I mean, prioritizing what needs to be done first is based on how it impacts the organization, not necessarily how it impacts somebody in a particular department. But that requires sometimes interrogating those people and finding out, is it really that important that it needs to be dealt with now — today? And you find out it’s all because someone is going on holidays.

LECK: 
And there is this pressure that everything has to be done now. It’s one thing to say, “Skip the figures on this,” but when you ask a lawyer to give an opinion on that, it’s a lot more involved than I think people suspect. With BlackBerrys and e-mails, everyone wants the answer to whatever their concern is immediately, and it does put pressure on lawyers to make snap decisions and judgments.

DHAWAN:
You’re right, you hit a nerve there. I think the expectation is more so now with instant messaging that if you haven’t gotten back to someone within a couple of hours, they’re really worried now. Before the BlackBerry and wireless internet, they might wait a day or two before they got worried. I remember last year I was on a short holiday with my family and my out-of-office e-mail said I was away for these days on holidays. The person got my out- of-office reply, ignored it, and said, “Can you make this meeting? I haven’t heard back from you.”

DELBIANCO:
You know why, though? I don’t even put that out-of-office message anymore, because I look at my e-mail on my BlackBerry constantly, whether I’m on holiday or not. I would find when people do put [the out-of-office message] on, they still respond to your e-mail.

BELAICHE:
You really do have to learn to trust your instincts and trust your gut. You’re going to be on the fly a lot and if people are looking to you for a kind of quick and dirty, you’ve got to be able to rely on your sense of ‘Is this the right thing?’