1. 501 – Outside Counsel Management
James Dixon- Senior Vice President & Chief Operating Officer- Con Edison Clean Energy Businesses, Inc.
Kelly Livingston- Counsel- Honda North America, Inc.
Dorothy Black Franzoni- Partner- Eversheds Sutherland (US) LLP

2. What do you hope to get out of this session?
I am somewhat new to the role of corporate counsel, and hoping to better educate myself on the use of outside counsel
I use corporate counsel pretty frequently, feel fairly comfortable using them, and want to brush up on best practices
I use outside counsel, but have not had good experience doing so, and hope to gain some insight
This was the most interesting session being held at this time .

3. How frequently do you reach out to outside counsel?
2. Maybe once a month
Every couple of months
4. Infrequently

4. During the 2008 Recession, there was a dramatic divergence between the number of departments decreasing their use of outside counsel and those increasing usage.
No more carte blanche
Multiple surveys report reducing outside counsel costs top concern
Advent of ACC Value Challenge. “Meet. Talk. Act.”
Competition for limited work drives introduction of legal project management techniques
From 2015 Altman Weil CLO Survey

6. Critical elements for partnering with outside counsel .
Understood our business
Understood our needs
Demonstrated expertise
Knew our industry
Chemistry
Lisa Hart, Acritas-Georgetown University Law Center’s Center for the Study of the Legal Profession 2011

7. What is your #1 method for the selection of outside counsel?
We select the most reputable firm in the area
2. ACC Conferences and Seminars
3. RFP
4. Cost
5. Word of mouth/ talking to other attorneys .

8. How to Find Outside Counsel
Referrals (Peers, Other Counsel, the Other-Side)
Referrals from Company Management
Organizations (ACC, Bar Associations)
Seminars, conferences and other events
Solicitation of Interest Process

9. Typical Challenges Do more with less, decreasing budgets
More complex business and legal environment
Business needs more of our time
Inability to focus on the strategic and critical issues

10. Why do we use outside counsel?
Lack the staff
Specialization required
Pressed for time

11. SUPER ATTORNEY
Lack the Staff

12. Specialization Corporate counsel have areas of expertise
Know your own limitations. Know when you can assist, and when it is time to call the experts!

13. What is an Extraordinary Transaction?
Requires expertise not within the legal department
Foreign laws
Labor laws
Bankruptcy
Complex intellectual property
Overwhelms the resources within the Legal Department

14. What is an Extraordinary Transaction?
Is it mission critical to the client’s business?
Is it a large dollar matter?
Does it impact a core business?
Does it impact the client in another country?
Is it a complex outsourcing transaction?
Are there significant internal investments of time, strategy, resources, and money?

15. Time crunch
Best made plans go astray
Still can add value by helping to formulate a plan
Advise of the risk

16. Some Additional Factors to Consider
Reputation
Expertise
Track Record
Potential Conflicts
$$$$$$$

17. In House Counsel Objectives
Risk Management
Control Costs
Protection
Priority #1
Can we accomplish this with the budget established?
Insulation of the company from liability

18. What happens when a matter arises for which outside counsel is needed?
What is the process? (Do we have a process?)
Have I scoped out the work?
How do I manage the matter?
Do I check in from time to time?
Am I actively engaged and involved?
Am I making sure my customer is aware of the status?
Am I measuring the results?
Do I evaluate the performance?
Do I have any lessons learned?

19. What are the expectations of using outside counsel?
Guidance
Can I do this
Legal solution
Risk Avoidance
Audit
Compliance
Representation
Resolution of a legal suit

20. Selecting Outside Counsel
Quantitative
Qualitative
Beauty Contests
Sole Source
Know Who Decides

21. Annual Outside Counsel Budget/Expense:
$0 - $5M
$5.1M – $10M
$10M - $25M
Over $25M

22. Budget Focus Scope Channeling all outside counsel requests
Be prepared to assist

23. Negotiation Don’t pay sticker price Shop Around Locally and regionally
You don’t have to always purchase the luxury model
Negotiate! Negotiate! Negotiate!

24. Alternative/ Value-Based Fees
Fixed or Flat Fee
Fixed Fee with Collar
Contingency/Reverse Contingency Fee
Success/Incentive Fees
Holdbacks
Capped Fee
Straight Discounts/Volume Discounts/Blended Rates
Combinations or permutations of the foregoing

25. Establishing the Relationship
The First Date (in person or otherwise)
Take the time to educate potential counsel about your business and its culture
Build Trust
Secondments
Set expectations
Meet Key Players (both sides)
Exchange information

26. Relationship Benefits
Relevant Industry Information
Best Practices
Education
Development Opportunities
Introductions
Contacts
[Last Minute Conference Speakers]

27. Challenges to the Relationship
Conflicts of interest
Attorney mobility
Time Zones
Not seeing “eye-to-eye”
Too much communication
Too little communication
“It’s not you, it’s me.”
Don’t be afraid to have the hard conversation

28. Maintaining the Relationship
Resource v. Partner
Partner/Principal Relationship
Communication
Keeping the faith
Plan the Work …
… Work the Plan
Peeking at the Short/Long Term Prospective

29. Case on Point

30. … And Now a Word from Our Sponsor
Choosing the right law firm/attorney for the job
Cheap, fast and top-quality
Brain surgeon or internist
Now you’re the client – tell me what you need
What
When
How
Why
And what do you want?

31. Managing Outside Counsel
In-house counsel is captain of the ship
Be copied on all s
Attend major meetings
Review major drafts of the agreements
Be the interface between senior management and outside counsel
Make sure you understand the agreement

32. PDCA Plan business process components to improve results
Do implement your plan and measure results
Check evaluate the processes and objectives against the results
Act decide on changes needed and implement
-Deming Circle/ Cycle Wheel

33. Streamline the outside counsel contracting function to make it efficient
PDCA of outside counsel management should be continuous
Talk to legal colleagues in your company
Don’t be afraid to say no

34. Appendix

35. Fixed or Flat Fees
Fixed or flat fee—agreed upon fee for a deliverable, portfolio or period of time.
Benefits
Budget and accrual predictability
Low administrative burden
Efficiency
Guaranteed revenue for law firm
Risks
Little incentive to produce quality work
Risk of leaving money on the table
Law firms continue to support hourly billing.
Best suited for
Large portfolio of work
Recurring work
IP, Immigration, Litigation
Debt financings, including payment of underwriter’s counsel.
Communication and trust essential

36. Fixed Fee With Collar
Agreement as to fixed fee with further agreement as to “collar” (frequently10%) around the fixed fee.
Adjustment where actual hours are above or below the collar with refund or payment at a predetermined percentage (frequently 50%) of the of the overage or underage.
Benefits
Mitigates fixed fee risks to client/firm for work significantly over or under fixed fee
Maintains efficiency
Cons
Need to maintain shadow billing
Complicated and time consuming
Best suited for
Matters of first impression
Transitioning to fixed fee arrangements

37. Contingency / Reverse-contingency Fees
Contingency--based on a percentage of settlement or recovery.
Reverse Contingency—based on a percentage of the amount saved for the client.
Calculation requires agreement as to potential exposure
Benefits
Shifts downside risk of litigation
Incentive for law firm to maximize recovery or minimize loss
Can favor settlement and alternative dispute resolution
Cons
May be difficult to quantify exposure
Greater risks to law firms who may not be interested

38. Success/Incentive Fees
Contingent payment made when goals (monetary or non-monetary) are achieved.
Client and firm must establish goals in advance
May be combined with reduced fees
May Involve forfeiture of percentage of fees for failures
Benefits
Encourages early case assessment
Shifts some of the risk to the law firm
Result focused
Cons
Success may not be attributable to the firm’s efforts

39. Holdbacks
Standard fees are charged with a certain percentage held back. Holdback amount is paid to the firm based on an evaluation of performance.
Benefits
Accountability
Promotes better working relationship where firm is performing
Firm shares in the downside
Cons
Must be prepared to pay full freight
Might led to tough conversations

40. Capped Fees
A cap or maximum is set above which the client no longer pays fees.
Benefits
Control legal fees inside the cap
May encourage efficiency if cap set low enough
Necessary where you pay counterparty’s legal fees such as in debt financing or asset backed securities issuance.
Cons
No incentive to bring in fees under cap
Law firm likely to want provision to cover complication
Give me your best hour.

41. Discounts (Straight & Volume) and Blended Rates
Straight Discounts—firms are generally willing to discount fees 10-15% just by asking.
Volume Discounts—firms may offer a tiered approach for significant work
Discourages selecting the right firm for the matter
Blended Rates—all lawyer time charged at the same rate.
Encourages use of lawyers whose rates are below the blended rate
May not be the best lawyer for the work

42. Value Based Fees: Other Considerations
Nature of the work
Importance of the to the company
Relationship with the law firm
As you get creative, keep ethical considerations in mind.