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

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

2. Moderator & Panelists 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. CABA Corporate Counsel Seminar November 10, 2010 2

3. Introduction • 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 CABA Corporate Counsel Seminar November 10, 2010 Source: POSTLEWAITE, SUSAN: “Riding A Wave Of Misfortune” at dailybusinessreview.com 3

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

5. PROS CONS Discounted Hourly Fees • 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) • 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 5

6. 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 Blended Rates • 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) PROS CONS CABA Corporate Counsel Seminar November 10, 2010 6

7. 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 “Waterfall” Discounts • “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 CONS PROS CABA Corporate Counsel Seminar November 10, 2010 7

8. Discounts Based on No. of Matters & Total Spend • 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) CONS PROS • 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 8

9. Flat Fees • Drive business • Advance efficiencies • Advance expertise/SME proposition • Easing of administrative concerns • Predictability • Concerns about quality of work • Managing expectations within firm • Careful analysis on an ongoing basis • 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) PROS CONS CABA Corporate Counsel Seminar November 10, 2010 9

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

11. DO’S & DON’TS • 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) CABA Corporate Counsel Seminar November 10, 2010 11 11

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

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