1 Corporate Counsel Seminar Alternate Billing Practices: Thinking Outside of the.10 Increments November 10, 2010 Miami, Florida

2 Moderator & Panelists  Moderator  Richard Montes de Oca, Esq. Associate Vice President and Assistant General Counsel Global Compliance & Ethics Royal Caribbean Cruises Ltd.  Panelists  Joseph Nuñez, Esq. Senior Group Counsel Target  Luis Consuegra, Esq. Contract Attorney Chevron Products Company  Mario D. Carballo, Esq. Assistant General Counsel LNR Partners, LLC  Stephanie Chin, Esq. Senior Associate General Counsel Section Head Tort Litigation Wal-Mart Stores, Inc. Moderator & Panelists CABA Corporate Counsel Seminar November 10, 2010

3  Economic crisis has forced corporate legal departments to cut costs  Despite economic conditions, law firms continue to increase rates  South Florida law firm rates at $785 p/hour; NY rates at $1,000 p/hour  Corporate counsel placing increased focus on value vs. hours  Alternate billing is improving efficiency and cost effectiveness  Many law firms remain unwilling to “play ball” or put “skin in the game”  Alternatives to traditional law firms are becoming increasingly attractive Source: POSTLEWAITE, SUSAN: “Riding A Wave Of Misfortune” at dailybusinessreview.com Introduction CABA Corporate Counsel Seminar November 10, 2010

4 Alternate Billing Practices CABA Corporate Counsel Seminar November 10, 2010 Alternate Billing Practices “Waterfall” Discounts Hybrid Fees Discounts Based on No. of Matters & Total Spend Flat Fees Discounted Hourly Fees Blended Rates

5  Discounted Hourly Fees  Description Across-the-board reduction in the standard hourly fees Percentage reduction on all bills Usually, 5% to 15% discount  Types of Matters International Work (e.g. Chevron) Judicial Foreclosures (e.g. LNR) Personal Injury (e.g. RCL) Discounted Hourly Fees  Incentive to employ firm  Reward clients with larger billings, number of matters  Advance efficiencies of practice  Drive business  Precedent-setting concerns  Administrative concerns  Managing expectations  Risk to “standard” billing rates CABA Corporate Counsel Seminar November 10, 2010 PROSCONS

6  Blended Rates  Description Attorneys’ time is billed equally, regardless of seniority Require close management of attorneys to ensure oversight Approx. $350 per hour (e.g. partners $500; associates $275)  Types of Matters Tort Litigation (e.g. Wal-Mart) Real Estate Litigation (e.g. LNR) Blended Rates  Concerns about quality of work  Administrative concerns  Risk to “standard” billing rates  Encourage more efficient staffing and lower rates  Promote simpler record-keeping and billing by outside counsel  Simplifies bill review and budgeting CABA Corporate Counsel Seminar November 10, 2010 PROSCONS

7  “Waterfall” Discounts  Description Stepped discounts – the percentage of discounts increases as the amount of money billed on the matters increases (e.g. 5% discount on first $100k, 10% on next $200k, 15% on anything over $300k)  Types of Matters Real Estate Transactions (e.g. Target) Commercial Litigation “Waterfall” Discounts  Greater administrative concerns  Managing expectations  Apportionment by client across different matters  Risk to “standard” billing rates  Greater incentives to employ firm  Reward clients with larger billings, number of matters  Great incentive for client to pool legal resources in one firm  Drive business CABA Corporate Counsel Seminar November 10, 2010 PROS CONS

8  Discount Based on Number of Matters  Description Discount of 5% if more than X number of matters  Discount Based on Total Spend  Description Discount of 5% upon $100K in billings  Types of Matters Workouts and Foreclosures (e.g. LNR) Discounts Based on No. of Matters & Total Spend  Greater incentives than regular discounts  Reward clients with larger volume of matters and billings  Drive business  Advance efficiencies  Administrative concerns  Apportionment by client across different matters  Risk of inconsequential file openings CABA Corporate Counsel Seminar November 10, 2010 PROS CONS

9  Flat Fees  Description Specific services for a set price during the course of a specified period Ceiling on what the client pays the law firm for specific services Straight (e.g. $5k for retail lease negotiation) or graduated (e.g. $5k for first 5, $4k thereafter)  Types of Matters Labor and employment (e.g. Wal-Mart; RCL) Corporate Secretarial Services (e.g. RCL) Uncontested Non-Judicial Foreclosures (e.g. LNR) Real Estate Closings (e.g. Banks and Financial Services) Real Estate Files Reviews (e.g. Target) Flat Fees  Concerns about quality of work  Managing expectations within firm  Careful analysis on an ongoing basis  Drive business  Advance efficiencies  Advance expertise/SME proposition  Easing of administrative concerns  Predictability CABA Corporate Counsel Seminar November 10, 2010 PROSCONS

10  Hybrid Fees  Description Combination of a discounted hourly rate and contingency fee arrangement  Types of Matters Commercial Litigation Class Action Litigation Anti-trust Intellectual Property Hybrid Fees  Easy to negotiate and administer  Client’s control of litigation expenses  Incentives to both the firm and the client CABA Corporate Counsel Seminar November 10, 2010  Concerns about quality of work  Managing expectations within firm  Careful analysis on an ongoing basis PROS CONS

11  DON’T send inaccurate bills or nickel and dime (e.g. bills for.10 hours)  DON’T automatically increase bills (e.g. focus on merit, expertise and inflation)  DON’T be afraid to be creative (e.g. reverse auctions; travel time, contract attorneys)  DO make billing statements, relationships and discussions easy  DO promote diversity within the law firm  DO consider using technology (e.g. Serengeti) DO’S & DON’TS CABA Corporate Counsel Seminar November 10, 2010

12 QUESTIONS & ANSWERS CABA Corporate Counsel Seminar November 10, 2010

13 Corporate Counsel Seminar Alternate Billing Practices: Thinking Outside of the.10 Increments November 10, 2010 Miami, Florida