August 6 2014 Managing Litigation to Contain Costs

Programs Bank of America uses when retaining law firms: The Litigation Roundtable • Convergence of over 700 litigation law firms to 30 primary firms for all new defensive litigation wor

Managing Litigation to Contain

Costs and Build Predictability

About Legal Spend

Presented by:

Jake Modla, Angela Cummings and

Lani Quarmby

Associate General Counsel

and Senior Vice President

Bank of America

Charlotte Office

980.386.8368

Lani.Quarmby@bankofamerica.com

Quick Introduction:

"Managing Litigation as a Business" (MLB)

• Challenges We Are Facing –

– Who has had formal training in business process

re-engineering or value engineering (BPE / VE)?

– Who has had formal training in managing litigation

in a cost-effective, business-like manner?

– Who has extra time, dollars and human

resources on hand to experiment with

new approaches for doing a better

job at managing your company’s

litigation?

Quick Introduction to MLB

• The Obvious Need –

– State-of-the-art education – Discovering what is

working well – Sharing best practices

– Ongoing collaborative effort among law departments

to develop knowledge and resources and improve

risk, dispute and litigation management skills

among in-house legal teams

– Additional resources for managing these disciplines

effectively and driving continuous improvement

programs

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Billing Arrangements

• The traditional practice of hiring a law firm and paying

the requested hourly rate for each hour worked is not an arrangement that is going to drive “value” for the client

nor require efficiency on the part of the law firm in how

they manage the matter

• There are many alternatives to the traditional

arrangement

• However, the client must collect and understand its own

historical data before it can begin to

select an alternative fee

arrangement

Know Your Data

• Lawsuits/Administrative Charges

– Number new per year

– Number resolved each year

– Number pending at end of year

– Resolution ration (Resolved/New)

– Current matter life ratio ( X% greater than months)

– Total : Fees, costs, settlements

– Average/Median: Fees, costs, settlements per matter

– Frequency compared to employee population

– Average/Median days to settle/close each matter

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Know Your Data

Know Your Data

• For all matters

– Sort by protected class (race, sex, age etc.)

– Sort by status (applicant , current, former)

– Sort by where they come from

( Ex Region 35)

– Sort by leader

The more you know the

better the pricing you can

obtain from a law firm

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Know Your Data

• If you have been using a law firm for several years-they should be

able to give you this data

• Possession of this data also allows you to set objective/measurable

goals for those responsible for the management

of these matters.

2014 Portfolio Work Regions:

Mortgage

• The map below highlights the firms responsible for Mortgage portfolio matters in each state for 2014.

RI

Not shown but assigned to Firm 2:

Alaska and Hawaii

*Indicates a state that will divide matters among multiple firms with capacity in that area Color coding on divided states not correlated to actual case location

Programs Bank of America uses when retaining

law firms: The Litigation Roundtable

• Convergence of over 700 litigation law firms to 30 primary firms for all new

defensive litigation work;

• Consolidated thousands of high-volume single plaintiff matters to 13

Roundtable firms managing matters nationally These matters have been

place on a fixed fee for the life of the matter;

• Annual summit for all 26 firms and in-house litigators The Summit is an

opportunity to share best practices, subject matter expertise, coming

litigation trends and effective budget management skills;

• Foster collaboration and information sharing among Roundtable firms and

through peer networking (COO conversations) via working groups;

• Savings are a product of fixed and alternative fee arrangements, volume

What stresses we are under / what

challenges do we face?

• Expense forecasting and vendor spend reductions with both law firm and non-law firm

vendors continue to be a challenge In complex litigation we use budgets and fixed fees to better predict vendor spend All matters with anticipated spend of more than $250,000

must utilize a Bank developed budget template

– Budgets include an estimate of all anticipated expenses including primary outside counsel, local

counsel and indemnified counsel, expenses, experts, third party vendors and discovery It is the law firm’s responsibility to compile this information Only approved vendors can be utilized

– Alternative fee negotiations are based upon the same phase of the case review Firms provide

proposals for fixed fees that are based upon specific assumptions The fee proposal and the

assumptions are reviewed by and approved by the handling in-house attorney

• eDiscovery continues to be about 30% of our vendor spend Other challenges our

eDiscovery management team faces is consistency in productions, discovery responses

and privilege logs among complex litigation involving multiple law firms Effective

collaboration among our law firms, our e-Discovery vendors and our internal discovery

management team is a key to overcoming “COO stress.”

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Changes we are making with law firms:

Enhanced Outside Counsel / Vendor Management

Processes

• Ultimately, we want to be easier to work with as a client Some examples of

recent changes include:

– Increase use of fixed fees in lines of business outside of litigation

– Developed a Relationship Manager / Relationship Partner Program for 50+ top firms;

– Conducting onsite information security assessments with our law firms to ensure

protection of confidential information;

– Outside Counsel Procedures - supplemented terms and conditions are reviewed and

revised annually Similar to other financial institutions, our procedures includes

protocols for information security, data and document management and

indemnification;

– Created Performance Management Program and evaluation process for outside

counsel;

– Created an e-Discovery Management Team consisting of both in-house and outside

counsel to foster better communication and collaboration; and

– Considering reviewing financial viability of our law firms and vendors, especially in

Examples of relationships that work

and ones that give us difficulty?

Works:

1.Firms that collaborate;

2.Firms that escalate issues on a

timely basis;

3.Firms that apprise us of market

developments and reputational risks;

4.Firms and vendors that have the

ability to budget well based upon

articulated assumptions;

5.Firms that manage third party

vendors and experts well; and

6.Firms that appreciate our customer

focus.

Does not work:

1.Firms focused on hourly rates, rate increases and have not moved to a fixed fee model;

2.Firms that surprise us on budgets

by not accounting for experts, discovery vendors or other things that drive up spend;

3.Firms that do not collaborate well with each other and/or fail to provide updates to in house counsel;

4.Firms that allow events to develop before we are apprised; and

5.Firms that lack of media savvy or

do not appreciate potential reputational risk

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Alternative Fee Arrangements (AFA) –

Life Cycle and Benefits

•Case Analysis and Budgeting: (1) Determine risk level, (2) Determine if budget use is feasible and (3)

Identify period of the AFA term – Life of Matter, Phase, Quarter.

•Assumption Identification and Negotiation: (1) Identify anticipated work during AFA period, (2) Estimate

case phases or most likely to occur during the AFA period, and (3) Adopt a relationship-based approach to

negotiating the fee with Outside Counsel while being mindful of the value provided Avoid adopting a worst

case scenario basis for setting the fee.

•AFA Validation at End of Period: (1) Determine work actually performed during AFA period, (2) Review

Outside Counsel summary of hours worked by timekeeper level, and (3) If assumptions were misaligned to

actual events discuss a true-up with Outside Counsel.

Littler CaseSmart ®

• Redesigned Legal Process

• Advanced Technology Platform

• Customized Client Dashboard

• Dedicated Alternative Staffing

• Business Intelligence

Customized

Solutions

Project Managemen

t Focus

Cost Savings

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– Attorney Work Product

Matter Status Reporting

– Detailed Data Analytics

– Actionable Intelligence

Client Dashboard – Litigation

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What is Knowledge Management

at Littler?

• KM enables Littler’s attorneys to

access the knowledge of their peers

and improve the quality and efficiency

of their work for clients.

• KM leverages current firm knowledge

to create technologies and innovative

client services.

Littler GPS ─ Leave of Absence

Comparison

Legislative Monitoring

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Managing Litigation

to Contain Costs and Build Predictability About Legal Spend