Bay Street law firm launches legal ‘incubator’ in Halifax

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One of the country's top business law firms, Torys LLP, is opening a small "insourcing" office in Halifax that it says will be much more than a place where it can simply send Bay Street work to be done more cheaply.

The firm says its new Torys Legal Services Centre, due to open this fall, will act for the Bay Street firm's established corporate clients, performing high-volume, recurring legal work such as reviewing contracts or performing due diligence on corporate deals.

The office will be charged with developing new, more efficient ways of doing this kind of legal work that can then be rolled out across the rest of the firm, which has offices in Toronto, New York, Calgary and Montreal.

"This makes it different from outsourcing, very different," managing partner Les Viner told The Globe and Mail. "It is going to be an innovation incubator."

The move comes as debate over new ways of doing business continue to ripple through the legal profession. The corporate clients that use the country's elite law firms are increasingly demanding they curb the spiralling costs that come with $800-an-hour senior partners, or provide more predictable legal bills with fixed fees or flat rates.

Some law firms and corporate legal departments have started outsourcing routine legal work to operations in India to cut costs. Others have hired Canadian-based legal outsourcing operations for certain tasks, such as reviewing mountains of documents and company e-mails before a litigation battle.

But Torys says it is going in a completely different direction. Mr. Viner acknowledges that locating in Halifax will allow the firm's costs – pay and rent – to come down. But the new office is being given a bold innovation mandate. From the start, it will charge only fixed fees, with the hourly rate banished – a revolutionary move for a major law firm.

And unlike an outsourcing operation, it remains part of Torys. It will be staffed with four or five Torys associates led by long-time Toronto partner Chris Fowles, and eventually staffed with up to 15 experienced lawyers, Mr. Viner said.

Torys says its plan is unique in Canada, although British firm Allen & Overy opened a similar office in Belfast in 2011, where it also moved human resources and other support staff to cut costs.

Mr. Viner said locating in Halifax is not all about costs. "It is cheaper to live there but there are cheaper places to live in Canada. It is a fabulous city where we think top talent will be attracted. We are going to recruit nationally; we think we will get Haligonians returning. They have great law schools, great quality of life."

Mr. Fowles, who articled at Torys in 1994, said the new office is simply a response to client demands: "They want to know upfront what things are going to cost and we'll be able to tell them, and they will be able to rely on it."

Mr. Viner said Torys had experimented previously with outsourcing to India, with little success, so the firm went back to the drawing board. "We've looked at it. We've tested it. It doesn't work for us," he said. " … So we are going to do it ourselves, and we've got a made-in-Canada solution, which makes me feel proud."

Simon Fish, executive vice-president and general counsel of the Bank of Montreal – a long-time Torys client that also engages a large number of law firms – said the move clearly differentiates Torys from its rivals on Bay Street.

Mr. Fish would not say whether BMO itself uses offshore legal service providers in India now. But he said the Torys made-in-Canada concept was appealing.

"This could be seen as an example of 'nearshoring,'" he said, referring to the trend of companies bringing work they would have otherwise sent overseas closer to home where quality control is easier. "… It is certainly designed, I think, to achieve many of the benefits that one gets from offshoring."