Getting It Done Value Projects Inspired by ACC's

Legal Service Management Workshop

January 26, 2012

Surprise Negotiation of Union Contract A One-Off Case on a Value-Based Fee

Lou Ann Koval

Chief Legal Counsel HB Performance Systems Inc.

Surprise Negotiation of Union Contract

•  Company received unsolicited offer buy its primary manufacturing facility employing 150 unionized employees

•  Wage concession negotiations in 2010 failed •  Company considering relocation to reduce wages

Surprise Negotiation of Union Contract •  Selling facility could fund move to lower cost location •  Company felt it needed to notify union of offer and

negotiate in good faith re whether facility would be sold and jobs eliminated

•  Time short because potential buyer wanted decision quickly

Perfect project for fixed fee •  Scope limited to union contract negotiation •  Project timeline short—project could not drag out •  Success easily defined—Union must ratify •  Project primarily involved one outside lawyer’s time

thus reducing law firm politics associated with fixed fee billing

•  Access to historical cost from 2010 union negotiation

Structure of flat fee •  Fixed fee set at 50% of legal fees incurred in 2010

labor contract negotiations •  Success fee at 40% of 2010 fees •  Success defined as ratification of contract (risk

sharing) •  Equitable adjustment if negotiations terminated early

Benefits to flat fee arrangement •  Maximum cost set at beginning of project •  Incentives aligned with outside lawyer—needed to

get a contract that would be ratified by union •  Minimized executive frustrations when outside lawyer

was multi-tasking such as taking calls from other clients etc.

Legal Project Management In Action

Frederick (Russ) Dempsey VP & Chief Legal Officer

United Retirement Plan Consultants

Legal Service Management seminar •  Process management and staffing decisions

interactive exercises of particular help in –  Identifying business and project goals –  Defining scope –  Aligning interests—success fees etc.

•  Figure out what you are willing to pay and work backwards

Legal Project Management

•  Outside Counsel Engagements –  Fixed fee lease structure

•  In-house Projects –  Operations Manual

Elements of Project Charter •  Problem statement •  Vision •  Steps needed for solution •  How long each step will take •  Who to staff for each step •  Completion statement •  Deadlines •  Summary budget •  Stakeholders

Risk Chart

Risk Chart

In-house Project Management

Strategic Partnerships on Value-Based Fee structures – Getting Started

William Herrmann

Managing Deputy GC National Railroad Passenger Corporation

(Amtrak)

Strategic Partnerships – Getting Started

1. Setting Your Goals 2. Research Your Past 3. Manage Your Change

Strategic Partnerships – Setting Your Goals

1.  Timeline a. 6 – 8 months

2.  Identify Success a. Learn From Others Mistakes b. Budget Certainty/Savings c. Better Legal Services

3.  Develop Statement of Work a. Pilot One Area of Practice b. Be Clear – What Is & Is Not Included

Strategic Partnerships – Research Your Past 1.  Be Prepared to Share

a.  Know Your Legal Spend b.  Know Your Matters

2.  RFP a.  Fee Proposal Option Worksheet b.  Targeted Firms c.  Build in Time for a Conversation

3.  Evaluate Business Acumen in Response a.  Firms You Trust vs. Unknown b.  Do They Know How to Make a Profit?

Strategic Partnerships – Manage Your Change

1.  Change Management Planning a.  C-Suite b.  Law Department

2.  Transitioning Matters a.  Two Month Transition b.  Anticipate Difficulties

3.  Measure Success 4.  Take the Next Step

Q & A

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