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in such a large partnership. "The eco- nomic downturn several years ago did several things," explains Munroe. "One, it reduced the fl ow of work par- ticularly to the corporate practice. Also, big institutional and corporate clients have become more proactive and cost- sensitive, and questioning, probably quite rightly, whether some services are as necessary on a given fi le. So that double pressure means that fi rms have to be in a position to rethink their busi- ness model." A smaller practice, he says, is able to off er more fl exibility in billing prac- tices. This means not simply cutting rates, but more eff ectively matching billing to value provided. "Now we can be creative and respond diff erently on diff erent fi les. That's diffi cult for a big national fi rm to do because it requires a certain degree of control to make sure the right decisions are being made." The large firms that continue to thrive recently have undergone rapid change. "The legal industry has been stuck in feudal times," says Matthew Peters, a Vancouver-based partner at McCarthy Tetrault LLP, which has fi ve offi ces across Canada, as well as one in London, U.K. The Vancouver offi ce was founded in 1960, and now has about 100 practicing lawyers. Peters, who is part of the senior leadership team and responsible for pricing, says the legal profession is now looking at its services the way Henry Ford looked at the assembly of an auto- mobile. "Traditionally, the way big and small fi rms have been operating, it's sort of like how a cobbler in feudal times would operate, one pair of shoes at a time," he says. "In the last fi ve years we've re-thought the whole way we deliver services. I think it's like apply- ing Industrial Revolution techniques to the law fi rm." The term that's being used is "disag- gregation," which means rethinking who performs each part of a project so that the lowest-cost resources can be used (including contract lawyers, para- legals, in-house, off shore lawyers, asso- ciates or partners), in all cases without sacrifi cing quality. McCarthy Tetrault has a full-time director of service deliv- ery, who helps lawyers in the fi rm draw upon alternative resources. The fi rm uses a legal process out- sourcer called Exigent in South Africa with more than 300 qualifi ed and expe- rienced lawyers. On certain projects, Exigent lawyers would be involved in document preparation (such as draft- ing forms of leases) where much of the process is done based upon prece- dents. McCarthy has a process to review the work done to ensure that it meets quality standards. On large M&A trans- actions, Exigent can provide due dili- gence at about 20 per cent of the cost of doing it in Canada, because the hourly salary rates are so much less and the fi rm has low overhead costs. If the due diligence part of a $250,000 contract is worth about $100,000, Peters explains, that outsourcing would reduce the total cost to $170,000. On large files, McCarthy Tetrault also uses the services of a Toronto- based fi rm called Cognition LLP, which has streamlined the model of a small fi rm even further. Cognition has a team of highly experienced lawyers but no offi ce space, and its website explains, "We don't have a mahogany-panelled boardroom. An army of receptionists. Or portraits of our founders hanging on the walls." What they do have is rates "up to 70 per cent less than the cost of comparable resources in a traditional 'bricks and mortar' law fi rm." Exam- ples of the work that Cognition lawyers perform for McCarthy include docu- ment review (such as due diligence) in M&A transactions, lease review work, simple contract drafting and basic research work. "So it's not like, big vs. small fi rms. There's a place for all these diff erent kinds of firms," says Peters. Clients come to McCarthy Tetrault and other big fi rms for large projects and complicated problems. Their role is similar, then, to a general contractor on a construction project—choosing subcontractors and assigning and monitoring work. "The reason most clients want us to play the role of 'aggregator' of the diff erent resources is quality control and risk," says Peters. "Having a single organization to point to is a lot safer and easier than the client itself trying to per- form quality control on a project. They want us to put all the pieces together to get the work done." ■ 66 BCBusiness June 2014 p62-p66_Law_june.indd 66 2014-05-01 2:10 PM