APPLYING VALUE LEVERS
HIROC brought in Catalyst Consulting of Vancouver, British Columbia, to conduct an in-depth analysis
of four years of matters with five levels of complexity for litigation; and to study average and total hours
and staffing patterns for each level. To this was added a five-year forecast of the demand and growth in
matters by level of complexity.
In August 2011, HIROC issued a request for agreement for legal services only to BLG. The scope of work
included slightly more than 300 new matters per year across five levels of complexity. The request detailed
criteria for the configuration of a team of about 20 lawyers and 10 paralegals, rigorous protocols for the
preparation and approval of matter budgets, and the use of legal process management methodologies.
Compensation would be in the form of a base fee combined with a performance fee determined by such
value criteria as process management, responsiveness, predictable costs and results delivered.
The base fee includes all professional fees; all office-related expenses such as binding, copying, courier
and postage; and increases for timekeeper experience and inflation. The agreement also accounts for an
eventual reduction in number of matters to BLG because of HIROC’s insourcing plans.
• Increased budget predictability
• Improved talent retention
• Improved succession planning
• Minimized bureaucracy.
HIROC's Situation - 2002
HIROC had been partnering since 1987
Used outside counsel and relied
upon overall cost per file
averages from benchmarking to
measure our efficiencies
A restricted competitive
environment means that simple
benchmarking was NOT
sufficient for adequate review
Increased Claims Frequencies
and Severities were pressuring
the med-mal market
Board were pressuring for
internal counsel — little
appreciation of the risks
Needed to implement a change
Incent to produce improvements.
Share the benefit with your
Produce a sustainable CQI
system with better results and
Redesign reporting methods and
attorney internal reports to use
Heavy use of Paralegals and
correct level of solicitor
Standardize budget approach
Incent for improved performance
and results using redesigned
Move from hourly rate to
annualized "blended rate"
payment and three-year contract
Use of a collar to safeguard both
la w firm and HIROC
Share savings with la w firm for
length of contract
Commit to exclusivity for term of
contract (except for conflict work)
Major difference from Dupont
was the development of new
approaches for reporting and
processing instead of using only
existing modern practice.
CQI - plan for introduction of
limited in-house and corporate
Improvements could be rolled
into subsequent contracts
Legal HR issues remained off-shored
Allowed for subsequent
introduction of internal legal
Incentives mean self-policing. No
payments to monitoring agency.
Graduated approach meant early
detection of problems and the
ability to correct them.
Development of metrics was
Regular monitoring needed to
ensure metrics remain
Re-education of lawyers — we do
not pay for hours billed. We pay
for sustainable results.
Partial loss of ability to
5% reduction in contribution of
legal fees to total incurred costs
for all closed files
ACC estimates $5 million per
year in savings from this