In-House Counsel Barometer 2009

Transcription

1 In-House Counsel Barometer 2009

2 Table of Contents Study Introduction and Highlights of Findings Current Economic Climate Being In-House Counsel Litigation The Role of General Counsel Managing the Relationship with Outside Counsel Innovative Business Practices i

3 Study Introduction and Highlights of Findings

4 About the Organizations Involved Canadian Corporate Counsel Association (CCCA) CCCA provides a national forum for corporate counsel to advance the development of their practice of law, professional skills and careers as corporate counsel. To advance this Mission, the Board of Directors focuses CCCA resources on the following six Strategic Objectives: Developing Our Community Fostering Professional Excellence Enabling Career Development Advancing the Practice Being the Association of Choice Supporting Our Chapters CCCA now has over 10,200 regular and associate members and 12 regional chapters across Canada. Davies Ward Phillips & Vineberg LLP In-House Counsel Barometer Davies Ward Phillips & Vineberg LLP is focused on business law and is consistently ranked by independent rating agencies as a market leader in each of the firm's core practice areas. With more than 250 lawyers, the firm practises nationally and internationally from offices in Toronto, Montréal, New York, and an affiliate in Paris. Davies is consistently at the heart of the largest and most complex commercial and financial matters, regardless of borders. The 2009 LEXPERT/American Lawyer Guide to the Leading 500 Lawyers in Canada ranks Davies' Toronto office as the leader in corporate transactions. Davies is also recognized as the leading firm for corporate transactions in Montréal, relative to firm size. Ipsos Reid Ipsos Reid is Canada's market intelligence leader and the country s foremost provider of public opinion research. With operations in eight cities, Ipsos Reid employs more than 500 research professionals and support staff in Canada. The company has the biggest network of telephone call centres in Canada, as well as the largest pre-recruited household and on-line panels. Ipsos Reid s Canadian marketing research, advertising, loyalty, media and public affairs practices are staffed with seasoned research consultants with extensive industry-specific backgrounds, offering the premier suite of research vehicles in Canada - including the Ipsos Trend Report Canada Online, the leading source of public opinion in the country. the Study

5 The Purpose of the Study In 2005, Davies Ward Phillips & Vineberg LLP initiated a joint project with the CCCA to create, supervise and disseminate a survey of CCCA members attitudes and opinions regarding topics of interest and importance to them, called In-house counsel Barometer, presented at the annual Spring conference of CCCA. The study provided a wealth of interesting and useful information for our members. We were pleased to repeat the study in 2006, 2007 and 2008, and are once again pleased to do so this year. Some questions have been repeated to develop trend information, and new questions have been added to provide insight on other areas. New questions throughout the report are indicated by NEW. Methodology For this survey, 500 in-house counsel members completed an on-line questionnaire. Given the finite CCCA membership population, the total sample can be considered accurate to within ±4.4 percentage points, 19 times out of 20, of what it would have been had this entire population been polled. The margin of error will be larger within regions and for other sub-groupings of the survey population. Changes vs. Previous Years Highlights of Study Findings In 2009, the In-house counsel Barometer identified some noticeable differences from previous years, including: Since 2008, less in-house counsel indicated that they are satisfied with their job today. The number of in-house counsel that stated employment and labour is one of the most challenging areas of law has increased significantly from 2008, while environment as a challenging area of law has decreased. In-house counsel are less likely to expect the size of their legal department to increase over the next two years. This is a significant decrease following a steady directional increase since With that said, more are likely to expect things to stay the same. Among those that have faced litigation over the past year, less report exposure to class action litigation specifically. Despite the fact that manage or champion projects and initiatives that have legal components or ramifications is still seen as the most important skill in fulfilling the management role, less in-house counsel seem to think so in 2009 than in previous years. Less say that their budget for in-house legal counsel has increased over the past two years from previous years. Although the level of communication and responsiveness remains the number one consideration when choosing an outside law firm, its importance has declined since The percentage of respondents that expect spending on outside counsel to increase in the next two years has declined significantly since 2005 and has increased for those that expect spending on outside counsel to decrease. The percentage of in-house counsel that say they are working with more outside counsel has decreased from 2008, while more say they are working with about the same number of outside firms. Study Introduction and Highlights of Findings 3

6 New Topics for 2009 In-House Counsel Barometer A number of new topics and questions have been introduced in 2009, including: Current economic climate o The majority of in-house counsel indicated that the current economic situation has had some sort of an impact on their in-house legal department. This impact includes less staff, more work, less outside service and tighter budgets. o In-house counsel were also asked what steps their in-house legal department has taken in reaction to the current economic situation. Most frequently mentioned include limiting the amount of funding available for corporate events, decreasing the amount of work sent to outside legal counsel, decreasing or eliminating funding for conferences or continuing legal education and implementing a hiring freeze. o Most agree that their legal department has developed a relationship with the organization and therefore do not foresee fundamental changes to their department due to the current economic situation. They also agree that they have actually been called upon more for legal advice due to the current economic situation. Only a small number agree that they have experienced pressure to cut costs by sending more work to external law firms. o Overall, many say their legal department is conducting more work compared to 6 months ago. Some say that the amount of work has stayed the same and only a few say that they are now conducting less work. o Respondents were asked how long they expect the current economic downturn to last. Half say they expect it to last about 2 years, some say it will last 1 year or less and a few say more than 2 years. Conflict situation when hiring external counsel o Respondents were asked if their organization has dealt with a conflict situation when hiring external counsel in the past 12 months. Half say that indeed they had dealt with this type of situation. o Those that had dealt with a conflict situation were asked what type. Many say that it has been a conflict of duty and duty as well as conflict of duty and relationship. A few say they have dealt with a conflict of duty and self-interest. o Conflict situations were managed mainly by changing firms and finding alternative counsel. Preferred alternative billing structure o Respondents were asked what type of alternative billing structure they prefer. Most say they prefer either capped fees or fixed fees. Consistent with Previous Years The 2009 In-house counsel Barometer also offers a consistent perspective on several tracking measures: Similar to 2008, eight-in-ten are likely to recommend becoming an in-house counsel to their family and friends, citing the work, business setting and quality of life as reasons. The majority of in-house counsel state that their organization values the work that they do. Furthermore, six-in-ten in-house counsel continue to say that the number of hours they work each week has stayed the same over the past 2 years.

7 Similar to previous years, eight-in-ten agree that it is important to have law firm experience before becoming an in-house counsel. Half of in-house counsel continue to be undecided about whether they are losing touch with the practice of law. Regulatory compliance continues to remain the area of law that is most challenging for in-house counsel. As a cost saving measure, legal departments continue to bring in more in-house counsel and therefore require less service from outside counsel. Eight-in-ten respondents report having at least one legal dispute filed against their organization over the past year. Nearly half expect the amount of litigation that their organization will face over the next 5 years to increase, similar to The most important role for general counsels continues to be an advisory role (vs. management or legal). Furthermore, the ability to perform as a business lawyer continues to be the most important skill for this particular role. Regulatory compliance and enterprise-wide risk management continue as top issues for general counsel. The vast majority of in-house counsel continue to view the services supplied by outside counsel have stayed the same and have demonstrated value for money to themselves and their organization. The majority continue to agree that outside counsel have not developed and implemented any innovative business practices over the past five years. Four-in-ten in-house counsel continue to say that they or their organization has had experience with alternative billing structures other than hourly billing. Among those that have had experience, fixed fees are the most likely to be cited, followed by capped fees. Detailed findings are presented in the following pages under the headings Being Corporate Counsel, Litigation, The Role of General Counsel, Managing the Relationship with Outside Counsel, and Innovative Business Practices. Study Introduction and Highlights of Findings 5

8 Current Economic Climate

9 NEW Majority report that the current economic situation has had at least some impact In 2009, in-house counsel were asked their opinions regarding the current economic situation. Two-inthree (66%) say that the economic situation has had some sort of impact on their in-house legal department. One-in-five (20%) say that it has had a very strong impact, while nearly half (46%) say that it has had a little bit of an impact. One-in-three (34%) feel that the current economic situation has had no impact at all on their in-house legal department. 1. Impact of Current Economic Situation Question: What kind of an impact has the current economic situation had on your in-house legal department? Base: All respondents n=500 Question: What kind of an impact has the current economic situation had on your in-house legal department? Base: All respondents who answered A very strong impact" at Q7 n=102 In-house counsel working for an organization with annual revenue of over $300 million are more likely to indicate that the current economic situation has had a very strong impact on their in-house legal department (25%). On the other hand, those working for an organization with annual revenue of $300 million or less are more likely to report that the downturn has had no impact at all (42%).which is the same for those working for an organization employing only one lawyer (45%) or for those working in the government sector (48%). Considering the type of organizations in-house counsel work for, those working for a wholly owned subsidiary of a public company are more likely to say the current economic situation has had a very strong impact (43%), while lawyers working for government (45%) or privately owned (41%) organization are more likely to say that it has had no impact at all. Furthermore, in-house counsel working in Manitoba and Saskatchewan (50%) are the most likely to feel that the current economic situation has had no impact at all on their in-house legal department. Current Economic Climate 7

10 NEW Impact includes less staff, more work, less outside service and tighter budgets Among those in-house counsel that report the current economic situation has had a very strong impact on their legal department, one-in-three say that as a result they have decreased the size and number of staff (32%). Furthermore, they have more work (21%), depend less on outside legal services (21%) and have a tighter and more scrutinized budget (18%). Those that feel the economic situation has had a little bit of an impact on their legal department say that as a result they have a tighter and more scrutinized budget (21%), reduction in costs and expenses (21%) and depend less on outside legal services (17%). NEW Organizations are limiting funds for extra events and decreasing hiring Overall, three-in-four (75%) in-house counsel say their legal departments have taken some sort of steps in reaction to the current economic situation. Most commonly, departments have limited the amount of funding available for corporate events (39%), decreased the amount of work sent to outside legal counsel (38%), decreased or eliminated funding for conferences or Continuing Legal Education (36%) and implemented a hiring freeze (35%). One-in-five (22%) say no steps have been taken and another 7% say cost saving measures have only been implemented in other departments. 2. Steps Taken In Reaction To The Current Economic Situation ) In-House Counsel Barometer 2009 Question: What (if any) steps has your in-house legal department taken in reaction to the current economic situation? Base: All respondents n=500 8 Limiting the amount of funding available for corporate events is more common at organizations with annual revenue of over $2 billion (51%), a wholly owned subsidiary of a public company (60%) and publicly traded organization (44%), firms in Ontario (49%) and the services sector (50%). A similar trend is seen in terms of decreasing or eliminating funding for conferences or Continuing Legal Education.

11 Organization in Ontario (44%) and those with annual income of over $2 billion (47%) are more likely to decrease the amount of work sent to outside legal counsel. Implementing a hiring freeze is more evident among organizations with annual revenue of over $2 billion (48%), a wholly owned subsidiary of a public company (61%) or publicly traded organization (42%) and organizations in Ontario (46%). NEW Majority have experienced the positive effects of the current economic situation The majority of in-house counsel agree, either strongly or somewhat, that their legal department has developed a relationship with the organization and therefore do not foresee fundamental changes to their department due to the current economic situation (84%). In addition, three-in-four (73%) agree that they have actually been called upon more for legal advice due to the current situation. Only one-in-ten (12%) agree that they have felt pressure to cut costs by sending more work to external law firms. 3. Effects of The Economic Situation Question: Please indicate whether you agree or disagree with the following statements. Base: All respondents n=500 Private companies are more likely to agree that there will be no fundamental changes to their department due to the current economic situation (87%). Wholly owned subsidiaries of a public company are more likely to agree that they are being called upon for more legal advice (83%), but they are also more likely to agree that they feel pressure to cut costs by sending more work to external law firms (18%). This is also the case for organizations with annual revenue of over $300 million, where 78% are called upon more for legal advice and 15% are feeling pressure. Regionally, organizations in Quebec are the most likely to be called upon more for legal advice as a result of the current economic situation (83%). Current Economic Climate 9

12 NEW Six-in-ten in-house counsel say their legal department is conducting more work compared to 6 months ago In-house counsel were asked if their legal department is conducting more, less, or about the same amount of work compared to 6 months ago. Six-in-ten (59%) say they are conducting more work, onein-three (36%) say they are conducting the same amount of work and only 5% say they are conducting less work compared to 6 months ago. Organizations in Ontario are more likely to say they are now conducting more work (64%), as are those employing between 2 and 10 lawyers (65%), while organizations in British Columbia are more likely to say they are conducting less work compared to 6 months ago (12%). The amount of work is more likely to have stayed the same for those working in Alberta (49%) and organizations employing one lawyer (45%). NEW Half expect the economic downturn to last two years Half (54%) of in-house counsel expect the current economic downturn to last two years. One-in-three (32%) expect the downturn to last 12 months or less, while only 13% expect the current economic downturn to last more than two years. 4. Expected Length Of The Economic Downturn In-House Counsel Barometer 2009 Question: How long do you expect the current economic downturn to last? Base: All respondents n= In-house counsel working for a wholly owned subsidiary of a public company are more likely to think that the current economic downturn will last more than two years (24%), as are those working in Manitoba and Saskatchewan (22%) and those working in the government sector (26%). Those working in Quebec are more likely to think the economic downturn will last one year or less (44%).

13 Being In-House Counsel

14 Job satisfaction among in-house counsel has decreased slightly Seven-in-ten in-house counsel (69%) agree that, compared to a year ago, they are more satisfied with their job today (a decrease of 7 points from 2008). Those most likely to agree, either somewhat or strongly, work in a publicly traded (72%) or privately owned (76%) organization. Consistent with 2008 results, recent hires (those who have been with their current employer for three years or less) are considerably more likely to be more satisfied with their job (78% agree) than those who have been with their current employer for a longer period of time. Furthermore, those who have worked as a lawyer for 9 years or less are also more likely to be satisfied with their job (81% agree) compared to those who have worked in that field for a longer period of time. Business-related aspects of their role seen as primary advantage to working as in-house counsel Consistent with previous years, a majority of in-house counsel see several advantages to working inhouse. The highest ratings (an 8, 9 or 10 on a zero to ten advantage scale ) continue to be related specifically to the business environment. These advantages include being an active part of business decisions (75%), applying legal training to a business environment (73%), and enhancement of business skills (68%). 5. Advantages of Working As An In-House Corporate Counsel % of Respondents Who Rated Item In Top 3 Box (Answered 8,9, Or 10) In-House Counsel Barometer Question: Rate each of the following on a scale from 0 to 10, where 0 means it is of no advantage to working as in-house corporate counsel over working in a law firm and 10 means it is a great advantage to working as an in-house corporate counsel over working in a law firm. Base: All respondents n=500

15 In-house counsel working for an organization with annual revenue of over $2 billion are more likely to see the advantages of benefits package (51%), perks (30%) and prestige of the organization (30%), while those working for an organization with annual revenue of $300 million or less are more likely to report that the work hours are a great advantage (55%). Those working for a publicly traded and privately owned organization are more likely to say that being an active part of business decisions (80% for both), applying legal training to a business environment (76% and 80% respectively) and enhancement of business skills (76% and 81% respectively) are great advantages to working as an in-house counsel, whereas those working for a government organization are more likely to state that working for one client (68%) and benefits package (58%) are great advantages. In-house counsel working in the government sector are more likely to say that they think the following are great advantages: benefits package (59%), legal career advancement opportunities (32%), variety of legal work (76%) and working for one client (63%). Regionally, applying legal training to a business environment is more likely seen as a great advantage to those working in Alberta (80%), Quebec (78%) and Ontario (72%). In addition, in-house counsel working in Quebec are more likely to say that work hours (57%) and benefits package (54%) are great advantages. There has also been a significant increase for the advantages of applying legal training to a business environment (increase of 9 points), benefits package (increase of 7 points) and perks (increase of 9 points) since Eight-in-ten recommend becoming corporate counsel Eight-in-ten in-house counsel (77%) are likely to recommend becoming an in-house counsel to their friends and colleagues who are currently in private practice (34% are extremely likely to do so). This year s recommendation is comparable to 2008 s, where 79% were likely to recommend becoming corporate counsel. In-house counsel working in Alberta (81%) and Ontario (79%) are more likely to recommend becoming corporate counsel than those working in other provinces. Furthermore, in-house counsel who have worked in the field for less time are more likely to recommend becoming corporate counsel (84% among those who have been lawyers for less than 9 years) than those who have worked in the field for 10 or more years (71% among those who have worked 10 to 15 years and 77% among those who have worked 16 or more years). Female in-house counsel are also more likely to recommend this line of work to their friends and colleagues than male in-house counsel (83% and 72% respectively). Top reasons for recommending a career as in-house counsel: the type of work, the business setting and better quality of life Being In-House Counsel Respondents were asked why they would recommend becoming an in-house counsel to their friends and colleagues in private practice. We have categorized the wide range of reasons into three categories: the Work (44%), the Business Setting (36%) and Quality of Life (27%). 13

16 6. Reasons For Recommending To Become An In-House Counsel Question: Why would you recommend becoming an in-house counsel to your friends/colleagues who are currently in private practice? Base: Extremely/very/somewhat likely to recommend becoming an in-house counsel n=479 In-House Counsel Barometer 2009 In terms of work, about one-in-six respondents (16%) would recommend a career as an in-house counsel because of the variety of work and because of the better working hours, while one-in-ten would recommend doing so because the work is more fulfilling (11%). Thinking about the advantages of working in a business setting, one-in-seven respondents recommend becoming an in-house counsel because they are learning and gaining business experience (14%) and because they are an active part of business decisions (13%). The top reason for making the recommendation to become an in-house counsel that relates to quality of life is a better work and life balance (17%). These findings are consistent with 2008 results. In-house counsel working in the utilities sector (48%) are more likely to recommend a career as an inhouse counsel because of the business setting, as are those working for a wholly owned subsidiary of a public company (44%), privately owned (43%) and publicly traded (39%) organization, and those working in Quebec (44%) and Ontario (42%). In-house counsel working in the services sector (34%) as well as those who have been with their current employer 3 years or less (35%) are more likely to recommend working as in-house counsel because of the quality of life. 14

17 The majority of in-house counsel continue to report that their organization values the work they do Nine-in-ten in-house counsel (90%) agree that their organization values the work they do, and half (51%) say they strongly agree. Those most likely to strongly agree that their work is valued work in British Columbia (60%) and Ontario (57%). The majority of in-house counsel work 50 hours per week or less On average, in-house counsel work 48.4 hours a week, with the majority working 50 hours per week or less (73%). The number of in-house counsel working 50 hours or less has increased by 8 percentage points since last year, while the number working more than 50 hours has decreased by 8 points. 7. Hours Worked Per Week Question: On average, how many hours do you work per week? Base: All respondents n=500 D6. Have the number of hours you work each week: Increased over the past 2 years, Stayed the same over the past 2 years, Decreased over the past 2 years? Base: All respondents n=500 Consistent with 2008 results, in-house counsel in Ontario are most likely to work more hours, on average (50 hours per week). Similarly, those working for organizations that have a greater revenue (above $300 million annually) are more likely to work longer hours (49.9 hours per week), as are those working in the utilities sector (50.4 hours per week). Furthermore, those most likely to work less hours per week, on average, have only one in-house legal counsel (45.5 hours per week), have no support staff (43.4 hours per week) and have worked as a lawyer 9 years or less (45.6 hours per week). Being In-House Counsel 15

18 Number of hours worked compared to past years has remained the same for most Six-in-ten in-house counsel (62%) say that the number of hours they work each week has remained the same over the past 2 years. One-in-four (24%) say the number of hours they work weekly has increased and only one-in-seven (14%) say that it has decreased. These findings are consistent with 2008 results. The importance of having law firm experience continues to remain high Similar to previous years, eight-in-ten in-house counsel (82%) either strongly agree or somewhat agree that it is important to have law firm experience before becoming an in-house counsel. Overall, there has been an increase of 7 percentage points since 2005 on this matter. Such experience is important among in-house counsel working in Alberta (94%) and in the resources sector (91%), and to a lesser extent those working in Quebec (85%) and in the utilities sector (87%). In-house counsel continue to be undecided about whether they are losing touch with the practice of law Half (51%) of in-house counsel report their connection with the practice of law is decreasing, which remains constant throughout the years. However, the other half (49%) disagree (somewhat or strongly disagree) that they are losing touch with the practice of law. Those most likely to report that they are losing touch have no support staff in their department (65%), work in British Columbia (64%) and work for a government organization (58%). In-House Counsel Barometer 2009 Regulatory compliance clearly remains the area of law that is most challenging for in-house counsel When asked to rank the top 3 areas of law that they think will be most challenging, one-in-four (23%) rank "regulatory compliance" first, despite a 7 point decrease from last year. This is significantly higher than the next most common choices: "litigation" (11%) and employment and labour (11%) law. Looking at combined rankings, "regulatory compliance", decreased by only 5 points. Governance has also decreased slightly, while litigation remains stable from Employment and labour as a challenging area of law has increased by 6 points, while environmental law has decreased by 6 points from

19 8. Most Challenging Areas of Law % Of Respondents Question: From the list below, rank what you think will be the three most challenging areas of law for you and your legal department over the next one to two years. Rank the three areas of law in order of most challenging for you and your legal department by entering 1 (most challenging), 2 or 3 beside the area of law. Base: All respondents n=500 Looking again at first ranked, regionally, different areas of law are seen as more challenging than others to in-house legal counsel. In Manitoba and Saskatchewan, in-house counsel are more likely to report that intellectual property is the most challenging area (19% compared to 6% nationally), while those working in Ontario are more likely to report that employment and labour are most challenging (16% compared to 11% nationally). Pensions is seen as a most challenging area to those living in Manitoba and Saskatchewan (9%) and Quebec (5%). Litigation is most cited by those working in the manufacturing sector (20%). Respondents working in the service sector (34%) and the resources sector (31%) are more likely to highlight regulatory compliance as the most challenging areas. Those operating in the government sector (17%) and utilities sector (15%) are the most likely to highlight employment and labour as the most challenging area of law. In-house counsel working for a government organization are more likely to find governance to be most challenging (17%), while those working for a wholly owned subsidiary of a public company are more likely to say regulatory compliance (38%). Being In-House Counsel As a cost saving measure, organizations have hired more in-house counsel and therefore require less services from outside counsel As a cost saving measure, legal departments continue to hire more in-house counsel (64%) and therefore require less services from outside counsel (62%). Assigning work to appropriate people was also mentioned by many as a cost saving measure (41%). About two-in-five (17%) indicated reducing the number of internal staff as a cost saving measure, an increase of 10 points since

20 9. Cost Saving Measures % Of Respondents Selecting Each One Question: Which of the following cost-saving measures has your legal department implemented over the past two years to try and keep overall costs down? (Please check all those that apply) Base: All respondents n=500 In-House Counsel Barometer 2009 The following are groups more likely to have in-sourced legal work over the past 2 years in an effort to keep overall costs down: Organizations that employ between 11 and 20 lawyers (84%). Government (70%) and publicly traded (68%) organizations. Organizations with higher annual revenues (over 300 million and 2 billion: 73% and over 2 billion: 67%). On a regional basis, organizations working in Ontario are more likely to have implemented the following cost saving measures: Assign work to the appropriate people (45%). Impose cost restrictions on outside law firms (33%). Alternate fee arrangements with preferred firms (33%). Reduce the size of internal staff (21%). Increased emphasis on RFPs (16%). 18

21 Increasing the number of lawyers in department is not as likely in 2009 Only one-in-four in-house counsel (24%) expect the size of their legal department to increase over the next 2 years, a decrease of 17 points from 2008 is seen following a steady directional increase since Seven-in-ten (69%) feel the number will stay the same, an increase of 14 points since 2008 and 7% expect the number to decrease over the next 2 years. 10. Size of Legal Department Question: Over the next two years, do you think your legal department will increase the number of lawyers in your department, decrease the number, or stay about the same? Base: All respondents n=500 The most frequent organizations to expect an increase in the number of lawyers in their departments over the next 2 years are: Publicly traded (30%) organizations or government (25%), consistent with 2008 results. Organizations which have in-house counsel who work between 51 and 60 hours a week on average (33%), consistent with 2008 results. The utilities sector (32%), government sector (30%) and resources sector (29%). The most frequent organizations to expect a decrease in the number of lawyers in their departments over the next 2 years are: Organizations in British Columbia (14%). Wholly owned subsidiaries of a public company (17%). Organizations that have between 2 and 20 in-house counsel (10%), compared to one in-house counsel (2%) and 20 or more in-house counsel (5%). Being In-House Counsel 19

22 Litigation

23 Eight-in-ten have had at least one legal dispute filed against their organization in the past year Over the past year, 78% of in-house counsel report having at least 1 legal dispute filed against their organization, a slight decrease of 3 percentage points from One-in-three work for organizations that faced 1 to 3 disputes (33%), one-quarter faced 4 to 10 disputes (24%), and one-in-five faced 11 or more disputes (21%). Among those organizations that did face a legal dispute, the average number was 25 disputes, a slight decrease from 2008 findings where organizations faced, on average, 29 legal disputes. 11. Number of Legal Disputes Filed in the Past Year Question: In the past year, how many legal disputes have been filed against your organization? Base: All respondents (excluding those that stated don t know) n=305 Q4. Has your organization been exposed to class action litigation over the past year? Base: Have had at least one legal dispute filed against their organization in past year n=240 The number of legal disputes filed against an organization varies by region and depending on the type and nature of the organization: Litigation In-house legal counsel in Quebec report higher levels of legal disputes filed against their organization (44) than those in the western provinces (13). Publicly traded organizations have had more legal disputes filed against them (42) than those working in a wholly owned subsidiary of a public company (8). 21

24 One-in-seven report that their organization was involved wtih class action litigation Among in-house counsel who report at least one action issued against their organization over the past year, one-in-seven (15%) report the litigation was a class action (a significant decrease of 16 points from the previous year). Class action litigation is significantly more common among organizations: In Ontario (25%). With an annual revenue of over $2 billion (20%). With 11 or more legal disputes filed against them (33%). Half expect the amount of litigation to increase over the next 5 years Half (48%) of in-house counsel expect the amount of litigation that their organization will face over the next 5 years to increase, a slight increase of 4 points from 2008, closely followed by those that expect the amount to remain the same (47%). Only 5% expect the amount of litigation to decrease over the next five years. However, only 35% of in-house counsel have seen an increase in the past five years and most say that it has stayed the same (59%). 12. Amount of Litigation: Past and Future In-House Counsel Barometer Question: Over the past five years, has the amount of litigation your organization faced increased, decreased, or stayed about the same? Base: All respondents n=500 Question: Looking ahead to the next five years, do you expect the amount of litigation that your organization will face to increase, decrease or stay about the same? Base: All respondents n=500

25 Expectations for an increase in litigation in the future are high among in-house counsel who work for an organization with annual revenue of over $2 billion (54%), who have seen an increase in their organization in the past 5 years (68%) and who work for a publicly traded (55%) or wholly owned subsidiary of a public company (56%). Expectations for a decrease in litigation in the future are high among in-house counsel who work in the western provinces (8%) and Quebec (7%), compared to Ontario (2%), who work for a privately owned organization (10%) and who work for an organization with annual revenue of 300 million or less (8%). Interestingly, those working in Manitoba and Saskatchewan are most likely to say that they expect the amount of litigation to stay the same (66%). In-house counsel working in British Columbia (44%) are the most likely to have faced an increase in litigation in the past 5 years, as have those who work for an organization with annual revenue of over $300 million (40%). Those who work in the service sector are more likely to have noticed a decrease in the past 5 years (12%). Litigation 23

26 The Role of General Counsel

27 Advisory role continues as most important for general counsel Half (50%) of in-house counsel continue to report that an advisory role is the most important function that general counsel provide to their organizations. Three-in-ten (31%) state that a management role is most important whereas about one-in-five (19%) indicate that a legal role is the most important. 13. Most Important Role for General Counsel Question: Of the following roles which do you feel is the most important one fulfilled by the General Counsel for your organization? Base: All respondents n=500 In-house counsel who are most likely to report a management role as the most important: Work for an organization with annual revenue of over $2 billion (42%). Have had 11 or more legal disputes filed against their organization (39%). Work for an organization that operates in the resources sector (44%). Work for a publicly traded organization (39%). Employ 11 or more lawyers in their organization (43%). Work in Quebec (39%). In-house counsel who are most likely to report a legal role as the most important: Those working for an organization with annual revenue of over $300 million or less (25%). Those that have only one in-house counsel working at their organization (27%). Those working in the government sector (28%). The Role of General Counsel 25

28 Which skill is most important for general counsel to perform an advisory role? The ability to perform as a business lawyer continues to be the most important skill for the general counsel to perform their advisory role, with four-in-ten (41%) reporting that it is the most important skill. In 2009, slightly more respondents reported that general counsel s most important role is to advise on legal issues at hand (29%), while less reported the most important skill is to accomplish business strategies (28%). 14. Skill Most Important For General Counsel When It Comes To Advisory Role In-House Counsel Barometer 2009 Question: In your opinion, what skill is most important for the General Counsel when it comes to performing their advisory/management/legal role? Base: Feel that An advisory role is the most important one fulfilled by the General Counsel n=250 A greater proportion of in-house counsel working for a publicly traded (49%) or a wholly owned subsidiary of a public company (53%) have indicated that the ability to perform as a business lawyer is most important, as have those working less than 4 years with their current employer (47%) or 11 or more years (49%) with their current employer. In-house counsel working in Alberta (47%) are the most likely to state that accomplishing business strategies is the most important skill in an advisory role. Those respondents who have worked as an inhouse counsel for 9 years or less (42%) are the most likely to state that advising on legal issues at hand is the most important skill for an advisory role. 26

29 When it comes to performing a management role Among those who reported that a management role is the most important, half (52%) selected manage or champion projects and initiatives that have legal components or ramifications as the most important skill for this role. Although this skill continues to be seen as the most important, it has experienced a decrease of 9 points from However, the skills listed as manage their law department and other organization departments" (26%) and "manage their law department only" (19%) have both increased in importance since 2008 (7 point increase and 6 point increase respectively). 15. Skill Most Important For General Counsel When It Comes To Management Role Question: In your opinion, what skill is most important for the General Counsel when it comes to performing their advisory/management/legal role? Base: Feel that A management role is the most important one fulfilled by the General Counsel n=152 Respondents working for a publicly traded organization (20%) as well as those working in Quebec (30%) are the most likely to report that the most important skill is to "manage their law department only". The Role of General Counsel 27

30 And performing a legal role Among the in-house counsel that report that a legal role is the most important for general counsel, slightly more than half (54%) continue to state that finding solutions to legal problems is the most important skill. Roles that were less important for general counsel are inform executives about legal issues and analyse organizational legal issues (23% and 20% respectively), while only 3% report that l developing legal and regulatory advantages is the most important skill (a decrease of 5 points from 2008). 16. Skill Most Important For General Counsel When It Comes To Legal Role In-House Counsel Barometer Question: In your opinion, what skill is most important for the General Counsel when it comes to performing their advisory/management/legal role? Base: Feel that A legal role is the most important one fulfilled by the General Counsel n=97*(small base size) Regulatory compliance and enterprise-wide risk management continue as top issues for general counsel When asked which corporate strategic issues involve their organization s general counsel directly, sixin-ten report regulatory compliance (59%) or enterprise-wide risk management (55%). Regulatory compliance continues to decrease in importance (10 points since 2006), but still remains at the top of the list. Half of respondents stated that crisis management (51%) and strategic development (46%) are the top 3 corporate strategic issues for general counsel in their organization. These issues are closely followed by mergers and acquisitions at 32%.

31 17. Involvement in Corporate Strategic Issues General Counsel s Issues Question: What are the corporate strategic issues with which the general counsel in your organization is involved directly? Please choose up to three. Base: All respondents n=500 General counsel are more involved in issues associated with regulatory compliance within a wholly owned subsidiary of a public company (75%) and within the services sector (66%). Respondents working in Manitoba and Saskatchewan are the least likely to choose this as an issue (31%). Interestingly, respondents working in Manitoba and Saskatchewan (72%) and Quebec (63%) state that general counsel in their organization are more involved in issues associated with enterprise wide risk management. The type of organization also determines the type of corporate strategic issues that involve general counsel. Publicly traded organizations: General counsel are more involved in mergers and acquisitions (56%) and crisis management (51%) issues. Privately owned organizations: General counsel are more involved in enterprise-wide risk management (66%) issues. A wholly owned subsidiary of a public company: General counsel are more involved in regulatory compliance (75%) and crisis management (56%). Government organizations: General counsel are more involved in crisis management (56%). The Role of General Counsel 29

32 Half report spending has increased for in-house counsel Respondents were asked if their budget for in-house legal counsel has increased over the past 2 years from the years previous. Half (49%) agree that it has increased, down 8 points from 2008 findings. Fourin-ten (40%) report that their budget has remained the same, whereas only 12% state that their budget has decreased over that period. 18. Amount Spent on In-House Counsel Over the Past Two Years In-House Counsel Barometer 2009 Question: Would you say that your budget for inside legal counsel has increased, decreased, or stayed the same in the past two years from the years previous? Base: All respondents n=500 Organizations in western provinces (58%) are the most likely to have increased their spending for inhouse counsel, compared to Ontario (46%) and Quebec (37%), as are those that work in the resources sector (60%), earning over $300 million annually (55%) and those organizations planning to increase their legal staff (64%). 30

33 Managing the Relationship with Outside Counsel

34 Despite a decline, communication and responsiveness remains the number one consideration when choosing an outside law firm The number one consideration when choosing outside counsel continues to be the level of communication and responsiveness of the firm and its lawyers, with seven-in-ten (70%) reporting this consideration is very important in making a decision. Nevertheless, there also continues to be a decline in its importance, with an overall 12 point decrease from Furthermore, the majority of respondents also consider the law firm s specialization and existing relationships and referrals (62% and 60% respectively) to be very important. Note that in 2008 the law firm s reputation replaced media coverage from the 2007 study. 19. Importance in Selecting Outside Counsel % Saying Very Important Consideration in Deciding On An Outside Law Firm In-House Counsel Barometer Question: In making a decision as to which outside law firm to use for your legal needs, how important are each of the following considerations? Base: All respondents n=500 Question: Are there any other characteristics you look for when making a decision as to which outside law firm to use for you legal needs? Base: All respondents n=500 In addition, respondents were asked if there are any other characteristics used to hire external counsel. Several respondents chose expertise and experience (11%). Regionally, in-house counsel in the western provinces and Ontario are more likely to feel the depth of a law firm s prior experience and results (success rate) (52% and 60% respectively) and the level of communication and responsiveness of the firm and its lawyers (77% and 74% respectively) as very important factors. Furthermore, western provinces are also more likely to report existing relationships and referrals (66%) and access to a law firm s premier lawyers (31%) as very important. Respondents

35 working in Quebec are more likely to indicate that the individual lawyer ratings are of greater importance (40% compared to 30% nationally). In-house counsel working in a privately owned or a wholly owned subsidiary of a public company are most likely to report that existing relationships and referrals are very important (67% and 65% respectively). Furthermore, respondents working in a publicly traded or a wholly owned subsidiary of a public company are more likely to indicate that it is very important to consider the depth of a law firm s prior experience and results (success rate) (55% and 58% respectively). In-house counsel working in the resources sector (69%) and the manufacturing sector (68%) are more likely to report that existing relationships and referrals are very important. The level of communication and responsiveness of the firm and its lawyers is most important to those working in the resources sector (80%), while the law firm s reputation is most important to those working in the services sector (21%) as is the depth of a law firm s prior experience and results (success rate) (60%). Organizations that expect to spend more money on outside legal counsel in the next 2 years are more likely to report that the level of communication and responsiveness of the firm and its lawyers is very important (75%). The same is true among those respondents in organizations that report the services supplied by outside law firms over the past year have improved (86%). These findings are consistent with 2008 results. Managing the Relationship with Outside Counsel 33

36 Quality of service supplied by outside legal counsel remains the same Consistently, the vast majority of in-house counsel report the quality of service provided by outside counsel has stayed the same (74%), while 16% have seen improvements and one-in-ten (10%) report that the quality has grown worse over the past year. The trend here is evident: quality of service is now seen as stable after years of being reported as improved. 20. Level of Service Provided by Outside Law Firms In-House Counsel Barometer Question: Thinking generally about the services supplied by outside legal counsel to you or your organization over the last year, would you say that they have improved, stayed the same, or grown worse than they have been in the five years before that? Base: All respondents n=500 Question: Why do you say that services supplied by outside counsel have (insert response from Q17)? Base: Said improved in Q17 n=80; Said grown worse in Q17 n=49 In-house counsel working in Ontario are more likely to have seen improvements in the services provided by outside counsel (19%), while those working in Manitoba and Saskatchewan are more likely to have indicated that service has grown worse (22%). Improved service continues to be driven by greater knowledge of business needs In 2008, respondents cited possible reasons for the level of service received from outside counsel. Among in-house counsel who report that services supplied by outside counsel have improved, the largest proportion consistently report (unaided) outside counsel s greater knowledge of their business needs (40%). Better reaction time and responsiveness (26%), better service (25%) and better ability to work together and have stronger relationships (19%) were also mentioned as factors.

37 Quality of service and limited access to specialist expertise are the main reasons for declining service Of those in-house counsel who say that services supplied by outside counsel have grown worse over the last year, 47% mentioned simply that the service quality has decreased, while one-in-three (33%) state it is a result of limited access to specialist expertise. Furthermore, less cost effective was mentioned by 29% and that they don t understand their business needs was mentioned by 22%. NOTE: small sample size (49 respondents). A majority continue to see value in outside counsel s services Seven-in-ten in-house counsel agree (70%), either strongly or somewhat, that the services supplied by outside legal counsel over the past year have demonstrated value for money to themselves and their organization.three-in-ten (27%) disagree, either somewhat or strongly. 21. Services Supplied by Outside Counsel Provide Value Question: Do you strongly agree, somewhat agree, somewhat disagree, or strongly disagree with the statement, 'The services supplied by outside legal counsel over the last year have demonstrated value for money to you and you organization? Base: All respondents n=500 Managing the Relationship with Outside Counsel 35

38 In-house counsel expect spending for outside counsel to remain the same, expectations of a decrease more likely than before Over the next two years, four-in-ten (40%) in-house counsel expect that their legal spending will remain the same. The percentage of respondents who expect spending to increase has declined significantly by 10 points since The percentage of respondents who expect spending to decrease has also risen (11 points since 2005). 22. Future Legal Spend for External Counsel In-House Counsel Barometer 2009 Question: Looking ahead to the next two years, do you expect the amount of money your organization spends on outside legal counsel will increase, decrease, or stay the same? Base: All respondents n=500 In-house counsel most likely to expect an increase in their legal spending for external counsel over the next 2 years include respondents: From an organization with only one lawyer (39%). In-house counsel most likely to expect a decrease in legal spending for external counsel over the next 2 years include respondents: In Manitoba and Saskatchewan (41%) and British Columbia (35%). At an organization with 2 or more lawyers (30%). At an organization with between 6 and 20 lawyers (37%). 36

39 One-in-five in-house counsel are working with more outside firms than they were two years ago, a decrease from 2008 Over the past 2 years, one-in-five (19%) in-house counsel are working with more outside firms than 2 years ago, a decrease of 7 points from Six-in-ten (59%) are now working with about the same number of outside firms, an increase of 7 points from The percentage of respondents who indicated that they are working with less outside firms has remained stable at 22%. 23. Number of Outside Law Firms Worked Within Past Two Years Question: And would you say that you are working with more, less, or about the same number of outside law firms today than two years ago? Base: All respondents n=500 In-house counsel working more with outside law firms today include those who: Expect the amount of litigation that their organization will face to increase in the next 5 years (23%). Work at an organization with only one lawyer (27%). Work in the resources sector (29%). Managing the Relationship with Outside Counsel 37

40 NEW Half have faced a conflict situation when hiring external counsel This year, in-housel counsel were asked whether their organization has dealt with a conflict situation when hiring external counsel in the past 12 months. Half (54%) report that indeed they had dealt with a conflict. Respondents more likely to have dealt with a conflict work in Alberta (68%) and Ontario (60%), or work for an organization with 20 or more lawyers (69%), or work for a publicly traded (68%) or a wholly owned subsidiary of a public company (61%) and work in the resources sector (73%), utilities sector (62%) and services sector (60%). NEW Majority have dealt with conflict of duty and duty as well as conflict of duty and relationship Among those that have dealt with a conflict when hiring outside counsel, two-thirds (64%) of in-house counsel report that it has been a conflict of duty and duty. Furthermore, six-in-ten (59%) report they have dealt with a conflict of duty and relationship. Only one-in-ten (9%) in-house counsel have dealt with conflict of duty and self-interest. 24. Kind of Conflict Situation When Hiring External Counsel In-House Counsel Barometer 2009 Question: Has your organization dealt with a conflict situation when hiring external counsel in the past 12 months? Base: All respondents n=500 Question: What kinds of conflict situations have you dealt with? Base: Dealt with conflict situation when hiring external counsel n= In-house counsel working for an organization employing between 2 and 10 lawyers are more likely to have dealt with a conflict of duty and duty (72%), as have respondents working in Ontario (70%) and Alberta (68%).

41 In terms of conflict of duty and relationship, respondents working for an organization with annual revenue of $2 billion or more are more likely to have dealt with this kind of conflict (71%), as have respondents working for an organization employing 11 or more lawyers (78%) and in-house counsel working in the western provinces (65%). Respondents working in Alberta are more likely to have dealt with a conflict of duty and self-interest (21%) than other provinces, as have respondents working in the resources sector (20%). NEW Organizations manage conflict situations by changing firms or finding alternative counsel Among respondents that have dealt with a conflict when hiring external counsel, six-in-ten (60%) report they have managed the conflict by changing firms and finding alternative counsel. Others have dealt with these kinds of situations through discussion and negotiation (18%), and through waiver, consent or full disclosure (15%). 25. Managing Conflict Situations Question: How did your organization manage these situations? Base: Dealt with conflict situation when hiring external counsel n=267 Managing the Relationship with Outside Counsel 39

42 NEW Two-thirds of in-house counsel have changed external law firms due to conflict Among respondents who have dealt with a conflict when hiring external counsel, two-thirds (64%) changed the external law firm. Specifically, the majority (57%) state they changed a file-specific external law firm. Interestingly, one-in-three (33%) in-house counsel state they did not change the external law firm because of a conflict. 26. Change External Law Firm Because of Conflict In-House Counsel Barometer 2009 Question: Has your organization dealt with a conflict situation when hiring external counsel in the past 12 months? Base: All respondents n=500 Question: Has your organization changed an external law firm due to any of these conflict situations? Base: Dealt with conflict situation when hiring external counsel n=267 In-house counsel more likely to have changed a file-specific external law firm as a result of a conflict are in: Manufacturing sector (71%) and government (73%). Western provinces (61%). 40

43 Innovative Business Practices

44 The majority agree that outside counsel has not developed and implemented innovative business practices Only one-in-ten respondents (11%) reported innovative and appealing business practices from their outside counsel over the past 5 years. These business practices pertain to fees and include discount or reduced fees (30%), fixed fees (15%), volume discounts (15%), blended rates (13%) and flat rates (9%). NOTE: This number is based on a very small sample size of 54 respondents. Four-in-ten continue to have experience with alternative billing structures Four-in-ten in-house counsel (38%) report that they or their organization have worked with alternative billing structures other than hourly billing. These findings remain unchanged from previous years. In-house counsel appear to be more likely to have worked with alternative billing structures if: Their impressions of outside service have improved (51%). They work for organizations with annual revenue of over $2 billion (54%). They work for a publicly traded organization (48%). They work for an organization with 11 or more lawyers (51%). In-House Counsel Barometer

45 Fixed fees used by three-quarters (73%) of those using alternative billing structures Among those respondents who have worked with alternative billing structures other than hourly billing, three-quarters (73%) have paid a fixed fee. Half indicate using percent discounts (47%) or capped fees (50%). 27. Experience with Alternative Billing Structures Question: From your dealings with outside counsel in the past, have you or your organization had experience with alternative billing structures, other than hourly billing? Base: All respondents n=500 Question: From the list below please indicate which types of alternative billing structures you or your organization have experienced in your dealings with outside counsel. Base: Have experience with alternative billing structures n=190 Managing the Relationship with Outside Counsel 43

46 NEW In-house counsel prefer capped and fixed fees In 2009, in-house counsel were asked what type of alternative billing structure they prefer. One-in-three report that they prefer capped fees (36%) and fixed fees (35%), followed by percent discounts (27%). Three-in-ten (28%) report they did not have a preferred alternative billing structure. 28. Alternative Billing Structure Preferred In-House Counsel Barometer 2009 Question: What (if any) type of alternative billing structure do you prefer? Base: All respondents n=500 Capped fees are more preferred by those working for a wholly owned subsidiary of a public company (49%) and those working in Ontario (42%). Fixed fees are more preferred by those working for organizations that have had no legal disputes filed against them (45%). In-house counsel working for an organization with annual revenue of over $300 million are more likely to prefer percent discounts (34%), as are those working for a wholly owned subsidiary of a public company (39%) and those working in the manufacturing sector (32%) and resources sector (31%). 44