Efficiently and Effectively Using IT for Matter Management Spend Management and Creating Best Practice Analytics - Mike Caplan, Marsh & McLennan Companies Inc

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Marsh & McLennan CompaniesGlobal Legal Department

September 15th, 2011

Legal Technology, Data Analytics and Best Practices

PRIVILEGED AND CONFIDENTIAL

2Marsh & McLennan Companies PRIVILEGED AND CONFIDENTIAL

Corporate Legal Department Technology Evolution

0

Evolution of Managing Spend and Implementing Legal TechnologyEvolution of Managing Spend and Implementing Legal Technology

Lawyers were solely responsible for identifying and managing outside counsel.

Rates were rarely discussed. Budget information was not

required. Invoices with “for services

rendered” were regularly accepted.

Relationships with attorneys lead to matter assignments

AFAs? What are they? Initial eBilling and electronic

invoice approval. Not a lot of best practices

published or captured among firms in the FS community

Not a lot of metrics and analytics captured through eBilling, Matter Management and Litigation Spend

Lawyers were solely responsible for identifying and managing outside counsel.

Rates were rarely discussed. Budget information was not

required. Invoices with “for services

rendered” were regularly accepted.

Relationships with attorneys lead to matter assignments

AFAs? What are they? Initial eBilling and electronic

invoice approval. Not a lot of best practices

published or captured among firms in the FS community

Not a lot of metrics and analytics captured through eBilling, Matter Management and Litigation Spend

2007“Wild West”

Legal Chief of Staff is responsible for controlling costs.

Preferred vendors are identified and list of billable vendors is being reduced.

Budgets are captured on most large matters.

Use of the Fixed Fee and Blended Rate become critical

Post matter assessments are occasionally performed to evaluated law firm performance.

Outside counsel billing guidelines are typically standard across organizations.

All expenses are classified and validated with eBilling.

Law Firm Timekeeper billable hours are being questioned as they align to the “type” of work performed

Using non-traditional law firms becomes a new phenomenon

Legal Chief of Staff is responsible for controlling costs.

Preferred vendors are identified and list of billable vendors is being reduced.

Budgets are captured on most large matters.

Use of the Fixed Fee and Blended Rate become critical

Post matter assessments are occasionally performed to evaluated law firm performance.

Outside counsel billing guidelines are typically standard across organizations.

All expenses are classified and validated with eBilling.

Law Firm Timekeeper billable hours are being questioned as they align to the “type” of work performed

Using non-traditional law firms becomes a new phenomenon

2010“Build the Foundation”

Law firm engagements resemble other “service” procurement processes.

Preferred law firm partners are proactively identifying win/win billing arrangements & solutions to matters

Having comparative data on law firm rates, negotiated discounts, technology solutions and vendor data becomes a way to strategically plan for future saves.

eDiscovery and invoice processing are outsourced to preferred providers

Expenses are only reimbursed for travel on client’s behalf. Other expenses are absorbed as a cost of doing business

Year-over-year rate increases are a thing of the past except for small non-preferred vendors.

Law firm engagements resemble other “service” procurement processes.

Preferred law firm partners are proactively identifying win/win billing arrangements & solutions to matters

Having comparative data on law firm rates, negotiated discounts, technology solutions and vendor data becomes a way to strategically plan for future saves.

eDiscovery and invoice processing are outsourced to preferred providers

Expenses are only reimbursed for travel on client’s behalf. Other expenses are absorbed as a cost of doing business

Year-over-year rate increases are a thing of the past except for small non-preferred vendors.

2011“Optimized Approach”


The Evolution of Legal Spend Management

Trusted Partner

Expanding the Relationship

Create the ROI plan

Negotiations for 2011•Freeze or Increase•Blended and Fixed•Matter Comparisons•Peer group strategy

PREFERRED LAW FIRM

PROACTIVE ANALYSIS

Savings Opportunities ROI

FOCUS ON RATES• Opportunity Cost ROI by

business and trend by quarter.

• Determine the “rules” for capturing best practices rates, discounts and AFAs to systematically compare to the traditional billable hour.

• Proactively hold relationship meetings. Be prepared with billing analytics

• Work with lead attorney to identify staffing plan and budget. Provide historical analysis to back-up.

• Identify AFAs being used at other clients – understand fit to current client.

• Be made aware of new matters at the time of creation. Work with client to identify billing arrangements favorable to both parties.

• Work with client to meet organizational goals

• Have the law firm “plan” with you to maintain economies of scale and feel like they’re preferred

• Publish the firm-by-firm benchmarks (Create competitive bidding)

• Provide the spend potential for each firm in terms of business needs and rate adjustments


Having the Matter Represent the “Nucleus” of all Data

Reports

• Matter Name• Practice Area• Matter Type• Description• Status / Phase• Opened Date• Closed Date• Exposure/Risk• Narratives• Resolution• Related Matters

• Internal People• Legal Department

Personnel• Company Management• Business Unit Personnel

• External People• Outside Counsel Staff• Opposing Counsel Staff• Experts• Fact Witnesses• Defendants• Plaintiffs• Judges

• Internal Organizations• Business Units• Departments• Regions• Subsidiaries

• External Organizations• Outside Counsel Firms• Opposing Counsel

Firms• Vendors• Defendant Entities• Plaintiff Entities• Courts

• Budgets• Invoices• Reserves• Accruals• Allocations

• Tasks• Events (Key lifecycle dates

such as filing dates, court dates, response dates, due diligence dates, transaction closing dates)

• Time tracking for internal legal department timekeepers

• Electronic Documents • Emails• Excel, PowerPoint,

Word Documents• PDFs

• Management Reports• Matter Management• Portfolio Management• Resource Management• Risk Management• Vendor Management

Reports

• Matter Name• Practice Area• Matter Type• Description• Status / Phase• Opened Date• Closed Date• Exposure/Risk• Narratives• Resolution• Related Matters

• Internal People• Legal Department

Personnel• Company Management• Business Unit Personnel

• External People• Outside Counsel Staff• Opposing Counsel Staff• Experts• Fact Witnesses• Defendants• Plaintiffs• Judges

• Internal Organizations• Business Units• Departments• Regions• Subsidiaries

• External Organizations• Outside Counsel Firms• Opposing Counsel

Firms• Vendors• Defendant Entities• Plaintiff Entities• Courts

• Budgets• Invoices• Reserves• Accruals• Allocations

• Tasks• Events (Key lifecycle dates

such as filing dates, court dates, response dates, due diligence dates, transaction closing dates)

• Time tracking for internal legal department timekeepers

• Electronic Documents • Emails• Excel, PowerPoint,

Word Documents• PDFs

• Management Reports• Matter Management• Portfolio Management• Resource Management• Risk Management• Vendor Management

Courtesy of Datacert, Inc.


Set Your Objectives

> Legal Outside Counsel Spend Strategic Objectives: (De-Centralized or Centralized)

• Enhance global Preferred Law Firm Relationship Management Program. (“Program” meaning the communication, reports, spend objectives, opportunity cost save goals and year-over-year trends with preferred law firms)

• Create a set of factual data reports for each Preferred Law Firm by business and law firm comparative analysis on spend by matter, discounts received to date, payment cycle time and new business opportunities.

• Have 100% of global Preferred Law Firm invoices entered and reported in your Legal eBilling system, but owned by attorneys

• Derive an Outside Counsel Steering Committee to make decisions on technology solutions, report needs, new Legal technology needs and determine the overall strategy and budget requirements for new technology

• Know where you stand with your competitors with the same set of Preferred Providers and use that benchmark as a “buyer” of services

• Create a set of recurring departmental reports for the General Counsel and each Operating Company General Counsel on outside counsel spend trends and quarterly spend goals/savings to be achieved


Create Best-In-Class Outside Counsel Billing Guidelines

Identify specifically how you as a firm address the guidelines

Managing the Relationship•Relationship Managers – Corporate legal departments are seeking a dedicated senior partner that will be oversee the entire relationship. The relationship manager is single point of contact on rates, invoices, matter questions, and responsible for proactive end of year reviews. Identify and expand on these responsibilities.•Referrals – Can you bring your client referrals? Are there particular areas? Identify them.

Managing Matters•Engagement Lifecycle – Provide details behind the engagement lifecycle.

1. Scoping - How your firm identifies and scopes a matter. Familiarity with creating and engagement plans – provide sample artifacts.

2. Budgeting – Detailed budgeting and forecasting process and templates3. Team structure and model – How staffing will take place? Focus on

dedicated team assigned to client. Use of and work assigned to partner, associate, paralegal and of counsel.

•Fees & Expenses – Primary importance to general counsel and head of legal. Identify specifically what is and what is not billable and reimbursable. (See appendix for current industry standard)

Controlling Costs•Fees & Expenses – Primary importance to general counsel and head of legal. Identify specifically what is and what is not billable and reimbursable. (See appendix for current industry standard)•Billing Format – Invoices must show actual costs and savings to the firm. Demonstrate through same invoices and billing practices.


Negotiating Discounts and Alternative Fee Arrangements

Before Negotiations: Preparation is Key

1 Agree on the key objectives for negotiating discounts & alternative fees Cost Savings vs. Predictability of fees

2 Prepare metrics to be used during negotiation discussions: Legal spend for previous 2 years Legal spend by major matter categories for previous 2 years Current discounts and actual discounts measured Rate, discount and spend benchmarks from law firm competitors for comparison

During Negotiations: Value Alignment

3 Keep the following in mind: Typical breakdown of associate billing rates cover one-third compensation, one-third overhead, and one-third partner profit. If that

split is approximately correct, then the discounts on associate rates, to reach an unprofitable level, would have to be on the order of 33 percent.

Lawyers billing should match the value the lawyers are delivering. Alternative fee arrangements should look to capitalize on this and be structured in a way that maximizes value. Hourly billing inherently provides lower value than negotiated fees.

4 Present the following information: How law firm’s current discounts compare to competitor firms in the same peer group Fee arrangements negotiated with other firms

5 Discuss and agree on the following: Term of fee arrangements Standard hourly discount percentage Relevant busted deal discounts – IBD Activity Opportunity for fee arrangements beyond hourly billing

After Negotiations: Capture, Acknowledge and Share

6 Capture agreed upon discounts

7 Provide discount agreement to law firm for acknowledgement

8 Communicate discount agreements to responsible lawyers and legal team.


Preparing Discounts and Alternative Fee Arrangement Analytics

• Discounts and Alternative Fee arrangements are important components of a legal spend management program and are instrumental in controlling legal fees and costs.

• Best practice Discounts and Alternative Fee Arrangements change and are directly aligned to volumes of business given to key law firms.

• It is important to note, the goal of discount and fee arrangements is to align the costs of the services provided to the value and to compare the so-called “discount” to your peer firms for similar matter types.

• An analysis of discount and alternative fee arrangement practices has been performed across the following categories among 15 FS organizations:

– Tracking Discounts– Applying Discounts– Reporting Discounts– Discount Benchmarks– Blended Rate Comparison– Measuring Effectiveness of Discounts– Fee Arrangement Overview and Comparison– Negotiating Discounts and Alternative Fees


Discount Types and How to Implement Them # Discount Type Description When to Use Benefit1 Standard Hourly Law firm’s standard hourly rate

before any discounts or adjustments.

Firms where volume of business does not justify a discount and work is non-routine and/or too complex to identify and appropriate alternative fee.

None

2 Hourly Volume Discounts

Law firm reduces its hourly rates in return for client guaranteeing a certain volume of legal work.

Should be negotiated with all firms with an ongoing relationship. Generally the first billing arrangement to be negotiated.

Discount can apply to specific matter types or overall discount with the firm.

3 Blended Hourly Rates

All hourly rates are the same regardless of who is billing.

Routine matters that don’t require a wide range of expertise and where it is easy to predict the required tasks and the personnel mix needed to perform them.

Easy to negotiate and administer.

4 Matter Type Hourly Rate

Hourly rate is negotiated and agreed to for the type of work that is being completed. Matters that are of higher value to client are billed at a higher hourly rate than matters that are of lower value.

When the value of the matter can be determined and the matter does not lend itself to a fixed rate.

Hourly rates more align to the overall value of the work to the client.

5 Fixed or Flat Fees

Client engages law firm to provide a specific service for a set price. The service can represent one segment of a large matter (e.g. initial investigation phase of a litigation matter) or represent an arrangement for all matters of a certain matter type.

High volume, routine, commodity work where costs are easy to predict and surprises are rare. In fixed/flat fee arrangements, a safety valve should be in place to revise the agreement should unforeseen circumstances occur.

Encourages law firms to increase efficiencies without sacrificing quality.

Invoices do not need to be reviewed at a line item level.

Company A should negotiate a fixed price agreement that is 15-20% lower than the average cost of the matter.

6 Hourly w/Cap Client pays law firm up to a specified maximum amount but no more. Based on hourly bill rate.

High volume, routine, commodity work where costs are easy to predict and surprises are rare.

Costs are more predictable than a standard hourly billing arrangements. Law firms must use their time efficiently to ensure that costs are controlled.

7 Value Based Fee is determined at the conclusion of a matter and is based on a series of objectives that were agreed to at the outset of the matter. A reduced hourly rate may also be negotiated by type of matter.

When the value of the outcome can be measured.

Shifts from time spent by the law firm to the value of the results. The amount of the fee is based on the value to Company A.


Alternative Fee Arrangement Types and How to Implement Them

# Opportunity Recommendation Benefits

1 Budget by Litigation Phase – Where possible, negotiate a fixed fee for phases of litigation to arrived at a fair and predictable fee. (Early Case Assessment)

1. Perform a thorough estimate on the # of hours required to perform each phase of litigation.

2. Calculate the blended rate by phase to arrive at average blended rate.

3. Negotiate with law firm on the # of hours required and the blended rate to be used for calculation.

4. Arrive at fixed fee for phase.

Predictable fixed fee

2 Intellectual Property Fee – Negotiate a set of fixed fees for work associated to copyright, trademark, patent and related rights. Fixed fees many vary by type of work (complexity) or monthly fee for all intellectual property work.

Negotiate a single firm Monthly Retainer based on prior volumes and average monthly spend less 10%.

1. Identify more granular type of intellectual property matters.

2. Identify average matter costs for each of the matter types identified in step 1, may need to include complexity. Ex.) complex patent matter, medium patent matter, simple patent matter

3. Perform simple RFP with firms to arrive as fixed fees per matter type.

Predictable fees for intellectual property type matters. Seek fixed fees to drive efficiency in law firm approach.

Intellectual property YTD (July ’09) is about $400k.

3 Employment Law Monthly Fee – Options include a negotiated fixed fee per matter (outside of the current arrangement for defense of admin claims) or monthly retainer type.

1. Determine average monthly spend of employment matters.

2. Negotiate discounted fixed fee agreement with firm to handle all employment matters. Pay on monthly basis.

3. Monitor agreement on an on-going basis to ensure saves (# of matters vs. spend).

Predictable fixed fees. Fixed fees help drive efficiency of work by law firms.

Your organization should seek to negotiate a fixed price agreement that is 15-20% lower than the average cost of the matter, encouraging law firm efficiency.


Alternative Fee Arrangement Comparisons

Standard Hourly

VolumeDiscount

BlendedRate

FixedFee

Hourly w/ Cap

Value BasedHourly

ValueBased

Frequency of Industry Use High High Medium to

Low Medium Medium toLow Low Low

Type Hourly Hourly Hourly Flat Fee Hybrid Hourly Flat Fee

Risk of Cost Overrun Client Client Client Law Firm Shared Client Shared

Overall Alignment of Objectives

Low Low toMedium

Low toMedium Medium Medium Medium to

High High

Value to Client Low Low Low toMedium

Medium toHigh

Medium toHigh

Medium to High High

Incentive for Efficiency Low Low Low to

Medium High High Low toMedium

Medium toHigh

Predictability of Total Fee Low Low Low High Medium Low to

MediumLow toMedium

Degree of Trust Required Low Low to

Medium Medium Medium Medium Low toMedium High

Standard Hourly

VolumeDiscount

BlendedRate

FixedFee

Hourly w/ Cap

Value BasedHourly

ValueBased

Frequency of Industry Use High High Medium to

Low Medium Medium toLow Low Low

Type Hourly Hourly Hourly Flat Fee Hybrid Hourly Flat Fee

Risk of Cost Overrun Client Client Client Law Firm Shared Client Shared

Overall Alignment of Objectives

Low Low toMedium

Low toMedium Medium Medium Medium to

High High

Value to Client Low Low Low toMedium

Medium toHigh

Medium toHigh

Medium to High High

Incentive for Efficiency Low Low Low to

Medium High High Low toMedium

Medium toHigh

Predictability of Total Fee Low Low Low High Medium Low to

MediumLow toMedium

Degree of Trust Required Low Low to

Medium Medium Medium Medium Low toMedium High

More

• Fee arrangements can be measured on a variety of important dimensions. It is important to identify firm objectives and select fee arrangements which best align to those objectives.

PreferredFee Arrangements

Level of MaturityLess More


Best Practice Reports and Comparative Analytics

> Current Business Issues

Lack of information to effectively manage and report legal expenses in a timely and accurate manner

Manual and lengthy process to extract and report data (independent by business)

Inaccurate/incomplete legal expense data due to a lack of GL/AP data and no reporting/analytical tools

No automated process to validate compliance with billing guidelines

Inability to compare and contrast legal spend (hours, rates & expenses) across firms

> Value of an eBilling Implementation

Automated validation of billing guidelines compliance

Streamlined process for invoice review, approval and payment

Automated feed to AP system to eliminate errors and lost invoices

Effective management of all legal matters through consistent approach to law firm engagement

Single source for all legal matters with ease of reporting and tracking expense

> Value of Robust Data Warehouse and Reporting/Analytical tools

Single source for all GL/AP information related to legal expenses

Executive Dashboard and reports to view legal expenses across multiple key metrics while “highlighting” outliers

Customized and automated reporting

Analytical tools to compare and contrast legal spend by rates, hours, expenses and matter types across law firms



Best Practice Report Recommendations: Based on interviews with our clients and industry Best Practices, Knowledgent Group recommends the following reports, timing for implementation and the opportunities to measure savings. ROI Opportunity Cost Saves are geared towards Preferred Law Firms only. All reports can also be created “On Demand”.

Report Name and Description TimingCost Save

OpportunitiesMetrics

1. Blended Hourly Rate and Timekeeper Activity Distribution Report

> Compare law firm “Blended” rates> Compare Partner, Associate, Paralegal Distribution

of time> Compare against other law firms overall

and by matter

Monthly > Objective is to utilize Blended Rate detail by firm to compare all Preferred Law Firms, for specific businesses and matters

> Investment: eBilling Development Cost> Benefit: Reduction of rates by matter for firms with high blended

rates. Projected Opportunity Cost Saves of 3% per year

> Average Blended Rateby Firm / Matter and variances for other preferred law firms

2. Monthly Legal Spend By Law Firm, Matter, Region (future)

> Comparative analysis by law firm, practice group and / or region

> Utilize spend volumes by matter for discount negotiations

> Review volumes of business by matter across multiple firms

Monthly > Objective is to find areas where a law firm does not have a large volume of business with the organization and use that to reduce rates in other areas where this high volumes of business

> Investment: eBilling Development Cost> Benefit: Projected Opportunity Cost Save Saves of 3-8% per year

with new discounts

> Average Discount received by matter based on volume of business

3. Law Firm Expenses versus Fees Report> Verify periodic expenses / fees percentages by law

firms and by expense “type”

Quarterly > Objective is to provide Month-over-Month, Quarter-over-Quarter and Year-over-Year comparison of expense and fee percentages for Preferred Law Firms

> Investment: EBilling Development Cost> Benefits: Expense to Fee Ratios Best Practice is 15%. Evaluate

expenses by “type” for firms with a ratio > 15%

> Expense to Fee Ratio comparisons with preferred firms

> Expenses by “Type” compared to Billing Guidelines

4. Law Firm Rate Change Report> Ensure compliance with billing rules around

rate changes

Quarterly > Report will show rejected volumes, attorneys, matter name and rate submitted / rejected

> Investment: EBilling Development Time> Benefit: Projected timekeeper approved rates only lead to cost

saves of 3%

> Number of attorney rate changes and total $ impact to spend






5. Average Days Payment to Preferred Law Firm> For comparative purposes, the average days to

payment should be fairly consistent among Preferred Law Firms

> Provides detail for investigative purposes if invoices are taking longer to approve, or if they’re rejected

Monthly > Objective is to provide quarterly trend reports with Preferred Law Firms all getting paid within 20-30 business days (Submission to Payment)

> Investment: eBilling Development Time> Benefit: Shorter payment cycles equates to non-issue invoices

with agreed upon rates and discounts. Project saves of 2-3%

> Average Days to pay each preferred law firm

> Average Days to pay by matter

6. Law Firm Compliance Report> Measures compliance to the organizations outside

counsel billing guidelines> Provides a set of rules around billing, rates, expenses,

resources, etc. for all outside counsel doing business with the organization

Quarterly > Objective is to ensures that no excessive / out of guideline fees and / or expenses are submitted by outside counsel. EBilling application automatically rejects bill and captures the submission attempt

> Investment: eBilling Time for guideline adherence.

> Benefit: Projected Opportunity Cost Saves of 3% in Fees and 10% in Expenses (System will prohibit any bill from entering attorney approval queues)

> By Law Firm, number, type and total dollars for non-compliance

7. Alternative Fee Arrangement (AFA) by Law Firm and Opportunity Cost Savings Report

> Document AFA(s) by Law Firm for comparative purposes by specific matter type

> Understand how law firm AFAs and discounts compare to industry best practices

Quarterly > Objective is to create a consistent set of AFA(s) for Preferred Law Firms by matter and move away from the standard hourly rate

> Report to be maintained by the organization’s outside counsel taskforce and updated monthly with results from Preferred Law Firm Relationship Manager Meetings

> Investment: Internal database and resource costs> Benefit: Projected monthly saves by matter: 1-2% per month

> AFA by preferred law firm and associated spend compared to traditional hourly rates

8. Law Firm Rejected Invoice Report> Volume and Costs trends for rejected bills by law firm> Reasons for rejection documented

Quarterly > Objective is to have zero invoices rejected in 12 months. > Report provides a summary of law firms for investigation based

on rejections. (e.g. rates too high, missing invoice data, attorney issues, etc.)

> Investment: EBilling Development Time> Benefit: On average, less rejected invoices, equates to faster

payments and the ability to ask for more discounts.

> Average days to payment for rejected invoices compared to non-rejected invoices






9. Significant Exposures Report> Proactive matter management by tracking potential

exposures through “worst case” scenario planning> Tracks spend against the “worst case”

scenario budget

Monthly > Objective is to identify key engagements with a high risk of outside counsel spend due to the nature of the case, unknown length of time with outside counsel, etc.

> Report will track spend on these engagements only and provide an updated monthly estimate

> Investment: eBilling Development Time> Benefit: Provides GC and DGC’s with a report by business that

allows them to track spend and possibly settle cases at points in time. Project Cost saves in this category can range from 5-10% per engagement if tracked closely

> Budget or expected spend compared to actual spend for points in time

> Tracking by “Matter Type”is critical for this metric

10. Legal Spend vs Budget Report> Attorneys should be discussing engagement budgets

for outside counsel work prior to the engagement> Budgets should be used by attorneys as reminders

to outside counsel to keep the organization up to date on spend, especially if the spend goes higher than the budget

Monthly > Objective is to remind outside counsel that a budget is more than just an estimate. It should be viewed by the outside counsel as the spend for the engagement

> This report will provide comparative data by law firm that shows both percentages and cumulative dollars spent by the law firm over the engagement’s budget

> Investment: EBillingDevelopment Time> Benefit: Law Firm Relationship Managers should look for

discounts / adjustments at times for spend greater than budget, especially if there was no communication

> Budget to Actual spend each month by matter

> By law firm, number of engagements and total $ amount over or under project budgets

11. Unbilled Fees Estimate and eBilling Accruals Report

> Estimated accruals by law firm which includes both eBilling unpaid bills and Preferred Law Firm unbilled fees by matter

Monthly > Objective is to create a monthly accruals report from two sources: EBilling and Law Firms Directly

> EBilling System: All invoices not yet paid in the system.> Law Firms: Monthly report of work not yet billed> Provides financial management with a realistic picture

each month of future spend

> Investment: EBilling Development Time> Benefit: No hard-dollars. Better planning for monthly

legal spend

> Monthly Average Accrual dollar amount by firm by matter compared to monthly average payment by firm by matter


Litigation Dashboard Sample

Law FirmYTD Blended

Rate Partner Associate ParalegalOf

CounselLit Support &

Specialists

PY Blended

RateSeyfarth Shaw 450 900 307 275 825 275 475 (25.00) (5.26)Dechert 522 1222 783 265 889 208 500 22.00 4.40Proskauer Rose 370 705 645 296 685 210 380 (10.00) (2.63)Goodwin Procter 583 692 478 256 591 310 600 (17.00) (2.83)Fish & Richardson 522 615 450 254 600 295 575 (53.00) (9.22)Bingham McCutchen 428 695 394 695 531 207 400 28.00 7.00Mayer Brown 758 686 355 155 640 350 778 (20.00) (2.57)Thompson Hine 451 483 286 209 462 233 435 16.00 3.68Sullivan & Worcester 525 588 314 233 575 225 535 (10.00) (1.87)Wilmer Hale 480 700 455 325 655 325 500 (20.00) (4.00)

Change $ / %

Law Firm Rates (Top 10 Firms)

Law FirmsSeyfarth Shaw 2,500 11.29 2,000 9.71 500 32.08 4,425 9.71Goodwin Procter 2,250 10.16 2,000 9.71 250 16.04 4,425 9.71Thompson Hine 2,025 9.14 2,000 9.71 25 1.60 4,425 9.71Mayer Brown 1,750 7.90 1,600 7.77 150 9.62 3,540 7.77Dechert 1,750 7.90 1,725 8.38 25 1.60 3,816 8.38Fish & Richardson 1,100 4.97 1,050 5.10 50 3.21 2,323 5.10Wilmer Hale 1,075 4.85 1,068 5.19 7 0.45 2,363 5.19Sullivan & Worcester 998 4.51 985 4.78 13 0.83 2,179 4.78Bingham McCutchen 975 4.40 925 4.49 50 3.21 2,046 4.49Proskauer Rose 850 3.84 845 4.10 5 0.32 1,869 4.10

Spend$ 000 / %

Total Hours / %

Law Firm Fees vs. Expenses (Monthly) - Top 10 Firms in SpendExpenses

$ 000 / %Fees

$ 000 / %

Law Firm Rates (Top 10 Firms)

Litigation Dashboard ConclusionsLaw Firm Rates - Blended Rate• Sullivan & Worcester blended rate of 800

should be reviewed with law firm relationship due to increased YTD spend (discount opportunity)

Fees vs. Expenses• Seyfarth Shaw Expense to Fee ratio is out-of-

line with the other top law firms and should be discussed with the law firm relationship manager.

Discounts/AFA Saves• IP flat fee arrangements should be investigated

across law firms as well as fully exploited at Proskauer

Law Firm Fees vs. Expenses (Monthly) – Top 10 Firms in Spend

Prior Month July YTD July YTD Total FeesLaw Firm Fees Fees Fees Fees

Bingham McCutchen 50,000 729,000 900,000 650,000 812,500 1,137,500 Fish & Richardson 500,000 480,000 1,000,250 400,000 500,000 700,000 Wilmer Hale 425,000 465,750 925,000 565,000 706,250 988,750 Proskauer Rose 350,000 412,500 900,000 375,000 468,750 656,250 Goodwin Procter 410,000 408,000 850,000 425,000 531,250 743,750 Sullivan & Worcester 350,000 403,200 875,000 475,000 593,750 831,250 Dechert 100,000 315,000 425,000 350,000 405,000 567,000 EAP&D 200,000 181,500 425,000 75,000 93,750 131,250 Thompson Hine 75,000 168,000 375,000 250,000 312,500 437,500 Seyfarth Shaw 50,000 60,000 700,000 55,000 66,000 92,400

Prior YearLegal Spend (Monthly) - Top 10 Law Firms in Current Month Litigation Legal Spend

Current Year

Legal Spend (Monthly) – Top 10 Law Firms in Spend

Law Firm Discount Matter CategoryDiscount/Alternative

TypeDiscount YTD

Saves ($) AFA Save ($)Seyfarth Shaw 10 % Base 125,000 Seyfarth Shaw 20 % Volume 97,500 Proskauer Rose 35 % IP Flat Fee 350,000 Goodwin Procter 12 % Base 175,000 Fish & Richardson Human Resourc Services Retainer 67,500 Bingham McCutchen Regulator Budget 35,000 Mayer Brown 10 % Base 65,000 Thompson Hine Tax Flat Fee 27,850 Sullivan & Worcester 20 % Tiered 250,000 Wilmer Hale 15 % Volume 67,500 Wilmer Hale 35 % Blended Rate 75,000

Discounts/Alternative Fees/Saves - Top 10 Firms in Spend

Discounts/Alternative Fee Saves – Top 10 Law Firms in Spend

Date CaseDamages Claimed Schedule Attorney

7/7 Grand Jury Subpoena/New Mexico - Response Due7/8 Buchanan 25,000 Arbitration Hearing - (get city from Paula), Florida Paula McManus7/13 Owens Corning Mediation (telephonic) Laura Tholen

7/13 Tousa 6,000,000 Trial - Ft. Lauderdale, FLColleen HankinsOutside Counsel: Chadbourne & Parke

7/14 Construction Parts 550,000 Hearing on Motion to Dismiss (telephonic)Colleen HankinsOutside Counsel: Thompson Hine

7/17 Dankman et al. (Brookstreet) 1,500,000 Mediation - Miami, FLRichelle KennedyOutside Counsel: Fowler White

7/19 Zametkin Motion to dismiss

7/21 - 7/22 Page (Brookstreet) 1,900,000 Mediation - Portland, ORRichelle KennedyOutside Counsel: Bingham McCutchen

7/24 Foamex Plaintiff's reply in support of motion for class certification

Monthly Calendar

Monthly Calendar



Litigation Dashboard ConclusionsLegal Spend – Matter Categories• Month over month increase due to two new

litigations in Employment Law (Smith Matter and Sommers Matter)

• Intellectual Property litigation spend up $679,000 due to Patent infringement case. Estimated to be settled.

Litigation Spend• Large increase in litigation spend in ABB, Inc.

matter due to the matter progressing to the discovery phase.

Discovery Phase• The new billing method for discovery is resulting in

a large decreases in spend

Litigation NameLitigation

Description Lifecycle Phase Law FirmFidelity

Professional

Prior MonthSpend

Current Month Spend

YTD Spend

TotalSpend

Estimated Damages

BudgetVariance

Real Estate - Project X Trial Seyfarth Shaw Michael Epstein 325,000 517,500 900,000 950,000 2,000,000 40,000 SEC Investigation Case Assessment Proskauer Rose Susan McSwain 391,500 498,750 623,438 1,091,016 750,000 (91,016) ABB, Inc. Excessive 401 (K) Fee Discovery Dechert Tom Bridge 150,000 475,000 750,000 900,000 1,250,000 (150,000) FINRA Inquiry - Auction Rate Securities Pre-Trial Motions Wilmer Hale Jody Forchheimer 300,000 440,000 800,000 1,000,000 3,000,000 100,000 Bennett Class Action Deposition Bingham McCutchen Mark Laffey 250,000 407,000 850,000 900,000 750,000 50,000 Insider Trading Allegation Discovery Thompson Hine Jennifer Inker 261,000 347,525 434,406 760,211 825,000 114,789 FCMS Trader Inquiry Settlement Negotiations EAP&D Nick Westlind 250,000 341,000 675,000 725,000 475,000 75,000 ADD, Inc. Trial Dechert Mark Jensen 326,250 312,575 390,719 683,758 725,000 (8,758) Owens Corning ERISA Litigation Discovery Sullivan & Worcester Erin Fair 200,000 251,500 475,000 490,000 625,000 85,000 Mattel, Inc Trial Preparation Fish & Richardson Colleen Hankins 195,750 225,000 281,250 492,188 800,000 7,813

Litigation Spend (Monthly) - By Top 10 Litigation Matters in SpendLitigation Spend (Monthly) by Top 10 Litigation Matters in Spend

Matter CategoryIntellectual Property 1 50,000 15 729,000 20.00 13.25 76 900,000 12 650,000 82 812,500 1,137,500 Brokerage (Retail) 7 500,000 6 480,000 8.00 8.73 55 1,000,250 5 400,000 57 500,000 700,000 Other 4 425,000 4 465,750 5.33 8.47 88 925,000 5 565,000 95 706,250 988,750 Workplace Investing 2 350,000 4 412,500 5.33 7.50 102 900,000 2 375,000 125 468,750 656,250 Human Resource Services 6 410,000 5 408,000 6.67 7.42 90 850,000 5 425,000 105 531,250 743,750 Tax 8 350,000 8 403,200 10.67 7.33 75 875,000 9 475,000 77 593,750 831,250 Brokerage (Institutional) 12 100,000 13 315,000 17.33 5.73 99 425,000 10 350,000 110 405,000 567,000 Project (Enterprise-wide) 11 200,000 9 181,500 12.00 3.30 220 425,000 5 75,000 220 93,750 131,250 Asset Management 2 75,000 3 168,000 4.00 3.05 45 375,000 11 250,000 50 312,500 437,500 Regulatory 10 50,000 11 60,000 14.67 1.09 175 700,000 8 55,000 190 66,000 92,400

Legal Spend (Monthly) - Matter Categories

Ave. Duration (Days)

Ave. Duration (Days)

July # / Fees

Prior YearCurrent Year

YTD Total FeesPrior Month# / Fees

July# / Fees

% of Total# / Fees YTD Fees

Legal Spend (Monthly) by Top 10 Matter Categories in Spend

Matters Lifecycle Phase Task Law FirmFidelity

Professional Fees Expenses Total Spend% of Total

MatterABB, Inc. Excessive 401 (K) Fee Discovery (L300) Document Review Dechert Meg Redford 450,000 18,000 468,000 54.55ABB, Inc. Excessive 401 (K) Fee Discovery (L300) Depositions Dechert Meg Redford 375,000 15,000 390,000 45.45Owens Corning ERISA Litigation Trial (L400) Trial and Hearing Attendance Sullivan & Worcester Nick Westlind 750,000 30,000 780,000 75.00Owens Corning ERISA Litigation Appeal (L500) Draft Sullivan & Worcester Nick Westlind 250,000 10,000 260,000 25.00FINRA Inquiry - Auction Rate Securities Pre-Trial (L200) Pleadings Wilmer Hale Joseph Boyland 425,000 17,000 442,000 77.27FINRA Inquiry - Auction Rate Securities Discovery (L300) Document Production Wilmer Hale Joseph Boyland 125,000 5,000 130,000 22.73Real Estate - Project X Case Assessment (L100) Fact Investigation Seyfarth Shaw Michael Epstein 510,000 20,400 530,400 100.00FCMS Trader Inquiry Discovery (L300) Depositions EAP&D Erin Fair 100,000 4,000 104,000 23.53FCMS Trader Inquiry Trial Prep (L400) Expert Witness EAP&D Erin Fair 325,000 13,000 338,000 76.47

Matter Phase/Task (YTD) - Top 5 Matters in Spend

MattersMatter

Description Law FirmFidelity

Professional FeesSpend -

Old Method VarianceInsider Trading Allegation Bingham McCutchen Collen Hankins 623,757 625,000 (1,243) FCMS Trader Inquiry Seyfarth Shaw Karen O'Toole 510,000 700,000 (190,000) Mattel, Inc. Dechert Meg Redford 450,000 750,000 (300,000) ABB, Inc. Excessive 401 (K) Fee Wilmer Hale Joseph Boyland 425,000 800,000 (375,000) Bennett Class Action Proskauer Rose Susan McSwain 375,000 350,000 25,000 FINRA Inquiry - Auction Rate Securities Mayer Brown Marty Mazzone 275,000 350,000 (75,000) SEC Investigation Sullivan & Worcester Mark Jensen 250,000 240,000 10,000 Real Estate - Project X Thompson Hine Jennifer Inker 225,658 300,000 (74,342) Owens Corning ERISA Litigation Fish & Richardson Wendy Zazik 125,000 250,000 (125,000) ADD, Inc. Goodwin Procter Richelle Kennedy 112,456 110,000 2,456

Discovery Phase Spend (YTD) - Top 10 Matters in Spend

Matter Phase/Task (YTD) – Top 5 Matters in Spend

Discovery Phase Spend (YTD) – Top 10 Matters in Spend



Law FirmMatter Count

Average Matter Duration (days) Fees Expenses Total Spend

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Sullivan & Worcester 167 82 9,519,000 571,140 10,090,140 2,050,000 20.32 68.00 30 21 49 35 12 1 17Goodwin Procter 157 67 8,949,000 536,940 9,485,940 3,575,000 37.69 86.00 29 22 43 31 10 10 12Proskauer Rose 89 35 5,073,000 304,380 5,377,380 257,878 4.80 97.00 12 15 9 5 12 11 25Bingham McCutchen 84 167 4,788,000 287,280 5,075,280 457,750 9.02 82.00 17 9 11 13 8 13 18Wilmer Hale 68 110 3,876,000 232,560 4,108,560 450,775 10.97 65.00 13 11 9 15 6 11 3Thompson Hine 59 39 3,363,000 201,780 3,564,780 275,000 7.71 25.00 5 8 10 7 9 8 12Seyfarth Shaw 57 89 3,249,000 194,940 3,443,940 100,000 2.90 6.70 9 6 11 6 8 8 9Dechert 35 59 1,995,000 119,700 2,114,700 750,000 35.47 4.80 4 8 2 6 5 7 3Fish & Richardson 24 95 1,368,000 82,080 1,450,080 159,500 11.00 59.00 2 5 1 7 2 6 1Mayer Brown 12 67 684,000 41,040 725,040 67,500 9.31 98.00 3 1 3 2 1 1 1

Resolution Amnts / % of Spend

Law Firm Outcome Analysis (YTD) - Top 10 Law Firms in Spend

Law Firm Outcome Analysis (YTD) – Top 10 Law Firms in Spend

Matter Name Matter Category Law Firm Fidelity ProfessionalFees(000)

Expenses(000)

Total Spend (000) Resolution

ADD, Inc. Brokerage (Retail) Mayer Brown Colleen Hankins 757.8 27.8 785.6 185.9 23.66 Award/Judgement against FidelityMattel, Inc. Brokerage (Inst) Proskauer Rose Susan McSwain 567.1 14.7 581.8 127.2 21.86 Settled - Paid by FidelityReal Estate - Project X Asset Management Seyfarth Shaw Michael Epstein 517.5 38.8 556.3 Award/Judgement for FidelityABB, Inc. Excessive 401 (K) Fee Brokerage (Retail) Dechert Tom Bridge 475.0 35.6 510.6 150.0 29.38 Award/Judgement against FidelityInsider Trading Allegation Regulatory Thompson Hine Marty Mazzone 425.2 50.6 475.8 Dismissed by Motion (Substantive)FINRA Inquiry - Auction Rate Securities Brokerage (Inst) Wilmer Hale Jody Forchheimer 440.0 33.0 473.0 Dismissed by Motion (Proced/Timeliness)Bennett Class Action IP Bingham McCutchen Mark Laffey 407.0 30.5 437.5 57.0 13.03 Settled - Paid by FidelityFCMS Trader Inquiry Brokerage (Retail) EAP&D Nick Westlind 341.0 25.5 366.5 187.5 51.15 Award/Judgement against FidelityOwens Corning ERISA Litigation Regulatory Sullivan & Worcester Erin Fair 251.5 18.8 270.3 200.0 73.97 Settled - Paid by FidelitySEC Investigation Regulatory Goodwin Procter Joseph Boyland 235.0 20.2 255.2 175.7 68.85 Award/Judgement against Fidelity

Damages$ (000) / %

Matter Outcome Analysis (YTD) - Top 10 Matters in Spend

Matter Outcome Analysis (YTD) – Top 10 Matters in Spend

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Intellectual Property 2 1 1 3 1 1 1 1 1 1Brokerage (Retail) 3 4 1 2 4 2 2 0 3 0Other 1 2 3 3 2 2 0 0 2 1Workplace Investing 0 3 2 1 3 0 0 0 1 2Human Resource Services 3 1 2 1 1 2 0 1 2 9Tax 2 0 1 0 4 1 0 1 1 1Brokerage (Institutional) 4 0 3 0 1 0 0 1 0 0Project (Enterprise-wide) 0 2 2 3 2 0 1 0 0 0Asset Management 1 1 0 4 1 0 1 0 1 0Regulatory 1 4 1 1 0 1 0 1 0 1

Matter Resolution (YTD) by Matter CategoryMatter Resolution (YTD) by Matter Category

Litigation Dashboard ConclusionsLaw Firm Outcome• Proskauer not only has the best success ratio, but also has

the best damage to fee ratio. Matter Outcome Analysis• The strategy of early case settlement of the Owens matter

resulted in the lowest cost to Fidelity of any of the Top 10 matters. More early case settlement opportunities should be pursued.

Matter Recovery• For the Top 10 Matters, Insurance accounted for 64% of the

total recovery received

Matter Recovery – Top 10 Matters in Recovery Amount

Matter Name Matter CategoryTotal

SpendRecovered

AmountType of

RecoveryNet Out of

PocketMattel, Inc. Brokerage (Inst) 950,250 900,000 Insurance 50,250 Bennett Class Action IP 437,575 375,000 Co-defendant 62,575 ABB, Inc. Excessive 401 (K) Fee Brokerage (Retail) 510,600 250,000 3rd Party 260,600 Owens Corning ERISA Litigation Regulatory 270,375 200,000 Insurance 70,375 FCMS Trader Inquiry Brokerage (Retail) 366,557 183,000 Insurance 183,557 SEC Investigation Regulatory 750,000 125,000 Co-defendant 625,000 FINRA Inquiry - Auction Rate Securities Brokerage (Inst) 475,000 100,000 Insurance 375,000 Insider Trading Allegation Regulatory 77,575 59,750 3rd Party 17,825 ADD, Inc. Brokerage (Retail) 376,589 50,000 Insurance 326,589 Real Estate - Project X Asset Management 556,355 25,000 Insurance 531,355

Matter Recovery - Top 10 Matters in Recovery Amount


Legal Spend Operations and Technology Roadmap

> Listed below is an example of how recommend your organization to move forward and plan:

Re-Write a merged organizational set of Outside Counsel Billing Guidelines aligned to best practices seen with other clients in Financial Services and specific to Banking (Investment and Commercial).

Perform an eBilling vendor selection and RFP. Provide all the integration requirements for a reporting data warehouse. Includes all law firm communications, project management, fast-tracked integration for preferred law firms and attorney training.

Provide a set of requirements, wireframes and integration roadmap for an Enterprise Content Management Program: eBilling, Matter Management, Document Management, Contract Management and eDiscovery. (Case Management and Case Tracking)

Create a corporate eDiscovery strategy for maintaining Legal Holds through existing technology or 3rd party technology. Includes the complete Legal Hold Lifecycle, Security, Administration, Calendar, Maintenance and email

Provide the requirements and implementation of the Litigation Management Lifecycle for invoice tracking, savings tracking, discount implementation and matter management. Includes Document Review, Early Case Assessment, Subpoenas, Case Tracking, Pre-Trial, Trail and Post-Trial.

Create a set of merged Matter Names, Allocation Integrations to cost centers and alignment to a merged organizational set of approval chains (Part of eBilling Integration)

Provide a set of best practices, support and recommendations for Corporate Legal Department Administration, including staffing, technology support, off-shoring model, etc.


Legal Spend Operations and Technology Roadmap

Annual or One Time

Billing Guideline Recommendations and Review Every Two Years

Billing Guideline Distribution to Outside Counsel Every Two Years

Review E-Counsel automated billing rules and align to the TIAA Billing Guidelines One Time

Review Discount and AFA Recommendations by Law Firm compared to TIAA Peer Firms Annual

Determine opportunities for Discount and AFA s for Law Firm Discussions Annual

Confirm Discounts for Preferred Law Firms globally and implement a communications plan within TIAA Annual

Update Discounts for Preferred Law Firms as Automated Billing Rules in the eBilling system Annual

Manage Discount save reports and dashboards out of eBilling and compare firms by matter type Annual

Identify Law Firms with key spend volume and review certain matter types that can be tracked for Fixed Pricing, Monthly Retainers, Blended Rates or Budgets Annual

Continue to track the billable hourly rate against the AFA out of the eBilling system to capture saves and use those saves as part of negotiating rates and fixed fees for future work Annual

Determine where there are opportunities to improve rates at the firm level, by volume and eventually by matter (e.g. Litigation ) On-going

Determine the plan for TIAA manage timing of rate increase requests and associated matriculation Annual

Implement updated rate cards in your eBilling system and capture automated billing rules to reject invoices that don’t align (by timekeeper) to those rates Annual

Implement a policy and associated communication to law firms about rate review discussions, timing of those discussions and the fact that TIAA will continue to benchmark what other firms are doing in this space. Annual


Outside Counsel Spend Management Metrics Program

> Your organization should maintain a database of law firm rates, discounts, AFAs and expense types by matter that is provided by Outside Counsel:

• Enhance global Preferred Law Firm Relationship Management Program and ROI Roadmap on Industry Spend Benchmarks. (“Program” meaning the communication, reports, spend objectives, opportunity cost save goals and year-over-year trends with preferred law firms).

• Create a set of factual data reports for each Preferred Law Firm by business and law firm comparative analysis on spend by matter, discounts received to date, payment cycle time and new business opportunities.

Industry Best Practices on Rate Negotiations: By Law Firm, By Matter, By Deal and for what period of time.

Create a set of reporting dashboards including spend metrics and trends, blended rates, expenses vs. fees and accruals – Provide Best Practices on Discounts and Rates.

Create an immediate ROI around Document Review outsourcing through key vendors along with identified policies and procedures to capture saves and report to senior management.

Provide a set of save opportunities against a set of spend and discount benchmarks and industry best practices: Discounts, Blended Rates and Fixed Fees.

Perform an audit of outside counsel invoices against the following: Approved Discounts, Busted Deal Discounts, Outside Counsel Billing Guidelines, Attorney Rates, Fixed Fees, Monthly Retainers, etc.

Trend Reporting aligned to eBilling Guidelines and “Rules” on Rates, Expenses, Discounts and associated saves.


Build Your Two-Year Technology Roadmap

MeasureIdentify

Potential SavesDevelop

Saves StrategiesDefine/EvaluateSavings Actions

ImplementSavings Actions

RealizeBenefits

MeasureIdentify

Potential SavesDevelop

Saves StrategiesDefine/EvaluateSavings Actions

ImplementSavings Actions

RealizeBenefits

1. Quarterly E&O Loss & Case Estimates

2. Quarterly D&T Audit Report

3. Monthly Case Estimate

4. Quarterly JL Jones Update

5. Marsh E&O Data Extract - Compliance

6. Marsh E&O Data Extract – Root Cause Committee

7. Monthly Internal Audit Reports

8. Tax Report

9. Ad-Hoc E&O Report Requests

1. Blended Hourly Rate andTimekeeper ActivityDistribution Report

2. Monthly Legal Spend By LawFirm, Matter, Region (future)

3. Law Firm Expenses versusFees Report

4. Law Firm Rate Change Report5. Average Days Payment to

Preferred Law Firm6. Law Firm Compliance Report7. Alternative Fee Arrangement

(AFA) by Law Firm andOpportunity Cost Savings Report

8. Law Firm RejectedInvoice Report

9. Significant Exposures Report10. Legal Spend vs Budge Report11. Unbilled Fees Estimate and

eBilling Accruals Report12. Matter Management

Compliance Report

Contract Mgmt

E-Discovery

DocumentMgmt

Electronic Billingapplication linked toin-house relational

database and Business Intelligence

(BI) tool

Multi-DimensionalFact Base

Alerts

Matter MgtReports E-Billing

Reports

Load targets, benchmarksand variances for each

Preferred Law Firm KPI;“Scorecards” used toevaluate Law Firms

BI Solution

DataRepository