How To Pay A Lawsuit In The United States

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1 EXAMPLES OF RETENTION AGREEMENT TERMS Monthly or Periodic Bills Statements should be submitted monthly. Please include on all bills the matter name and any sub-file matter names we agree upon. Company will pay reasonable hourly rates for professional services by outside counsel as agreed. Submit bills for such services every 90 days. If working on multiple matters, the firm should send separate bills for each matter. You will submit all bills, budgets, and case updates monthly via the Serengeti Tracker electronic invoicing system. We will pay all bills submitted through this system within 30 days after they are posted. We will discount by 15% any bill submitted more than 90 days after the earliest date of work performed, and will not pay any bill submitted more than 120 days after the earliest date of work performed. Budgets and Associated Reports You and our lead attorney will agree on a budget for the matter before you submit a bill. No changes to the budget will be accepted without prior approval from the responsible Company attorney. The responsible Company attorney must approve a budget for matters over $5,000 before any work is performed. We require that a project budget be prepared in every matter at the time the matter is commenced. The budget should be provided to and discussed with the Company Contact Person before commencement of the engagement and should include, at a minimum, a timetable, the personnel expected to be utilized, a forecast of hours, fees, and expenses and, with respect to matters which may have a variable outcome (e.g. litigation), a discussion of the possible outcomes defining what the relative cost/benefit ratios might be, based upon likely requirements and results for varying scenarios. Project budgets are to be reviewed with the Company Contact Person at least every quarter, and after the occurrence of a significant event, to assess strategy and status. The review should include a summary of the work performed to date on the matter and an updated projection of future anticipated work. Prior to submitting your first bill for any matter, you are required to submit a budget for the matter through the Serengeti Tracker matter management system. Your primary in-house counsel contact will notify you whether you should submit a phased budget or monthly budget. Staffi ng and Rates We must approve in advance the staffing of each matter. Once staffing has been agreed upon, please consult with us in advance before you make any changes or additions. We will pay for only one attendee at depositions, court hearings and negotiations, unless additional support is approved in advance. The Company Contact Person and outside counsel should discuss the firm s staffing of a matter at its outset. Ultimately, staffing is a Company decision, and the Company Contact Person will provide input and review staffing to ensure that it is optimal to achieve the goals of Company at the least cost. Additions or changes to staffing are not to be made without the Company Contact Person s prior agreement. If a staffing change is made after the start of a matter, Company does not expect to bear the cost of educating any attorneys so added. Company expects the lead counsel to have the expertise and remain on the case/transaction from start to finish, unless we request otherwise. As such, Company will NOT pay for review time if your firm changes lawyers handling the matter. Likewise, time spent educating junior lawyers and/or support staff will not be paid. We encourage the use of associates and paralegals to work on each case/transaction as the lead counsel deems necessary. However, we expect the lead counsel to take responsibility for the entire matter and direct their work. 1

2 Within 30 days of entry into this agreement, you will provide us with a current list of all lawyers and paralegals working on our account, including their current hourly billing rates. These rates will include all overhead and administrative costs involved in the operation of your firm or incidental to the provision of legal services to us. You will notify us of any increase to these rates at least 90 days before they go into effect. Rates for attorney and paralegal services must be agreed upon before any services are performed. You must notify us of any rate increases at least 60 days prior to any proposed increase. After notification and negotiation, rate changes for any timekeeper may be made only in the months of December and January. We expect that the rates in effect at the commencement of a matter will remain the same to the conclusion, unless we agree in writing to a change. Discounts from Standard Hourly Rates Company expects to be charged at no more than the firm s preferred client hourly rate for attorneys and paralegals assigned to Company matters. Standard and discounted rates should be provided to us at the outset of an engagement and should be updated whenever rates are changed by you. Rates should not be increased without prior notice and, in accordance with our e-billing procedures, will not be paid unless approved by the Company Contact Person. Company has established a volume discount program with certain preferred Outside Counsel who provide a significant amount of high quality legal service to the Company. In addition to volume discounts, the Company will consider alternatives to traditional hourly billing, including fixed-fee arrangements, reduced hourly rates with incentive bonuses, value billing, negotiated discounts and blended rates. The Company has adopted alternative fee arrangements in appropriate circumstances and encourages Outside Counsel to propose them. Between the date of this agreement and December 31, 2009, any discounts currently in effect will continue to apply. For each year starting January 1, 2010, you will provide us with a discount of 5% off your standard rates for all fees we pay over $100,000; a discount of 7.5% off your standard rates for all fees we pay over $500,000; and a discount of 10% off your standard rates for all fees we pay over $1,000,000. If you provide any steeper discounts to any other clients for comparable amounts of work, or your work is governed by an agreement with our insurer providing for larger discounts, you will apply those discount rates. If we pay amounts due within 30 days of receipt, we will discount our payment by two percent. We will pay 80% of the invoiced fees. Upon the conclusion of the project, or no less than annually, we will provide you with an evaluation of your performance to date, and based upon that evaluation, pay you 0-200% of the 20% withheld. In other words, you will, based upon performance, realize % of the aggregate amount of your invoices. Billing Formats and Details Narrative billing and block billing is unacceptable. Tasks performed on the same day should be identified by separate entries. For example, if numerous tasks are undertaken in one day, they should be identified with a specified time for performing that task and a description of the work performed. Hourly increments of.10 hours (rather than quarter-hour increments) should be used on all billing statements. Many individual tasks, such as short telephone calls, brief conferences and reviewing correspondence may take less than 6 minutes (.10 hours) to complete. In these instances, small task billing items should be combined and billed in.10 hour increments. 2

3 The firm s billing partner will review and sign off on all billings certifying that the bills are reviewed and in appropriate order. All bills must show total legal expenses to the date over the life of the file, and must show every time keeper (by name and category-partner, associate, paralegal) who billed against the file, together with the hours billed and fees charged. At a minimum, the firm s hourly billing format must include the following information: a. date and function performed; b. specific work description; c. personnel whose time is charged; d. time being billed per work item; e. hourly rate being charged for each person; f. total time and amount billed for date and person. Disbursements/out-of-pocket expenses must be shown with subtotals in the following separate categories with the rate basis, quantity and means of calculation shown: a. filing fees; b. court reporter fees; c. expert witness fees; d. computerized/database legal research; e. meals; f. travel; g. telephone; h. photocopy; i. messenger/express mail; j. miscellaneous. We use the Serengeti E-billing System, a system that allows for multiple formats of billing including LEDES. We do not accept paper invoices. You must sign these outside counsel guidelines and complete a new supplier questionnaire prior to being setup in the system. Training will be provided by Serengeti Law and the Company. Accruals/Unbilled Time In the event you expect to bill us for more than $10,000 in any month, you must provide an accrual amount for that month by the second to the last business day of the month. The accrual amount should reflect all known fees and expenses, as well as anticipated fees and expenses likely to be incurred by the end of the month. Accrual numbers should be ed to the responsible attorney and the Legal Department billing analyst. Five days prior to the end of the Company s fiscal year, all firms must submit accrual amounts for each matter, separately. Accrual amounts shall include all work in process time and expenses as well as estimates of fees and expenses likely to be incurred by the end of the fiscal year. Firms must submit accrual amounts quarterly. Accruals should include all unbilled time and expenses, reported separately for each matter. Accruals must be must be submitted through Serengeti Tracker. Early Case Assessments An initial Case Management Report, including a settlement recommendation, shall be submitted to the Company not later than ninety (90) days after Outside Counsel has received the complaint or other adverse notice (unless an exception is authorized by the Company). The Case Management Report must be completed with sufficient detail to accurately reflect Outside Counsel s efforts in investigating and evaluating the case up to the reporting date. 3

4 Central to the Company s case management philosophy is Early Case Assessment (ECA), a strategic litigation plan designed to achieve the earliest and most cost-effective resolution of litigation consistent with the Company s business objectives. The Company s ECA procedures create a collaborative process between the Company s Outside Counsel, the in-house attorney assigned to the matter, and the business client for evaluating the risk and potential exposure presented by the matter so that the appropriate resolution strategy may be developed and pursued. The Litigation Division has implemented an ECA process intended to assist the Company and Outside Counsel in the early evaluation of a case so that the business client can make an informed choice among various strategic options at the earliest possible stage in the litigation. Those options normally include: early settlement; alternative dispute resolution; litigating the case to a point when settlement may become more feasible; and litigating the case to conclusion. The objective of ECA is for all involved to make a concerted effort to evaluate the litigated matter sufficiently in the first 90 days after it is assigned to Outside Counsel to determine whether settlement is efficient, responsible, and prudent before engaging in protracted discovery, motion practice, or other expensive and time-consuming judicial procedures. Prior to submitting your first bill for each matter, you will complete all relevant fields in Serengeti Tracker, including (as required) estimates of budget, exposure, and time of resolution. You will also identify any opportunities for early dismissal, settlement, or other resolution of any litigation matter. Periodic Written Status Updates You should discuss general strategic direction with us and keep us informed of ongoing developments for each matter. Please send drafts of all documents and significant correspondence sufficiently in advance of filing or mailing to permit meaningful review and approval. Please send copies of all final documents, written communications, internal memoranda of fact or law (including witness interview memoranda and research memoranda) and other significant work product. In certain significant cases, the Company may request Monthly Litigation Reports. If requested to do so, Outside Counsel shall submit the requested Report to the Company via . The Report shall be submitted not later than the tenth calendar day of each month and shall be entitled Monthly Litigation Report and shall provide the following: a) A summary of the significant developments during the previous month, including any pleadings filed, pending discovery, trial dates, depositions taken and significant facts developed; b) A summary of the status of the matter and a description of significant developments expected in the matter during the next three months; and c) If no activity has occurred during the previous month, an explanation of any actions being taken by Outside Counsel to move the matter toward final resolution. Firms must submit status reports monthly and/or whenever there is a development in the status of the case that materially affects the fees, expenses, duration, or likely outcome of the matter. All status reports must be submitted in Serengeti Tracker, and no invoices will be paid until status reports are completed. Limits on Costs (copies, faxes) We will pay the actual cost of the following items incurred on our behalf: long-distance phone charges, messenger and express mail fees (although you will use electronic delivery wherever feasible), copying services (not to exceed ten cents a page), computer research (not to exceed $500 per matter per month without prior approval), deposition expenses (not to include expedited or video services without prior approval), process servers, and court fees. 4

5 Cellular/Mobile telephone charges and long distance phone calls (actual costs), copy of invoice must be attached. Outgoing faxes. Charges may not exceed fifty cents ($0.50) per page. Postage. U.S. mail services are preferred. Mileage Expense. Actual number of miles traveled to be reimbursed at current IRS rates. In-house photocopies. Billing statement must note the number of pages copied. Reimbursement rate will not exceed 12 per page. Copying: We pay for actual copying costs but no more than $0.10 per page for all regular copying and no more than $0.17 per page for non-auto feed copying. For copying to be performed by an independent service, we have chosen [Vendor Name] to be our preferred provider, and we encourage you to utilize [Vendor Name] s services on our behalf. We will be billed directly for any such copy jobs. When ordering services from [Vendor Name], please provide the relevant matter name. Copying performed by other independent services will be reimbursed to you at actual charges provided it meets the cost guidelines above and a duplicate invoice is submitted with your invoice. We will not accept invoices directly from third party providers. Fax: We pay for outgoing charges only, including long distance phone charges up to $.07/minute, if applicable. Telephone: We pay for long distance phone charges only up to $.07/minute domestic and $.15/minute international. We will not pay for normal overhead expenses, including: fixed costs associated with computers, fax machines, and other equipment; publications; continuing legal education; word processing charges; time keeper administration; accrual submission time; etc. Firms do not bill for overhead expenses such as computer assisted research, internal copying, faxing, or telephone charges, library fees, secretarial overtime, after-hour meals or transportation or similar pass-through expenses. These types of charges are part of the firm s cost of providing legal services and should be included in hourly rates, fixed fees or retainers. By including these types of changes as part of an all in fee structure, the firm is encouraged to use the lowest possible cost provider or to encourage other forms of cost savings to improve its profit margin. This is precisely the dynamic the Company wants to encourage. Limits on Travel Expenses Travel and Lodging: We will pay only for coach-class travel. All travel on our behalf must be booked through our travel agency unless otherwise approved. Meals, airlines and hotels during travel should be moderately priced. Alternatives to Travel Encouraged: Alternatives to travel such as conference calls or videoconferences are strongly encouraged and should be used by Outside Counsel whenever practicable. Air Travel: All air travel must be first approved by the Company and should be anticipated by Outside Counsel and taken into consideration in the preparation of the Budget. Unless an exception is specifically approved in advance, the Company will not reimburse airfares that exceed the standard coach fare for air travel. It is expected that Outside Counsel will take advantage of any available discounts. Travel time may be billed to the Company at the full hourly rate only if the timekeeper in question actually worked on Company matters while traveling and a description of the work is provided. Otherwise, travel time shall be billed at a rate not exceeding 60% of Outside Counsel s regular rate, unless a different rate has been previously set by agreement. 5

6 Airfare: We will pay the least expensive coach-class fare, but will reimburse business-class travel for trips that require at least 8 hours of continuous published air travel. Such arrangements must be pre-approved by our lead attorney, and we will seek to use upgrade certificates if possible. Rental cars. We will reimburse fees of up to $50 per day. Food. We will reimburse per-person meal expenses for attorneys on a Company-related trip up to $10 for breakfast, $15 for lunch, and $25 for dinner. We will not reimburse for meals in the office or during meetings with Company personnel unless authorized in advance by our lead attorney. Hotels. We will reimburse hotel expenses up to $150 per night. Miscellaneous transportation. You will use the least expensive reasonable alternatives for incidental transportation. If travel is to a high-cost area where no reasonably acceptable accommodations or meals are available at the above prices, we may reimburse higher expenses pre-approved by our lead attorney. Any of your personnel expecting to take more than one trip involving air travel in connection with a Company matter will use our travel agent book all air travel. Legal Research Prior approval from the Company is required for any research project in excess of four hours. Lexis/Westlaw: Copy of invoice must be attached and the service must be used judiciously. Before you undertake significant legal research, you will discuss the matter with our lead attorney to determine whether alternative sources of legal research are available. You will promptly provide us with electronic copies of all research and filings done on our behalf. We acknowledge that computerized research reduces the attorney s time spent on research and therefore is productive and cost-efficient. However, many firms now utilize electronic research as an alternative to maintaining a legal library. Accordingly, we view the cost of electronic research as overhead costs embedded in your fee rate. Reviews and Assessments We request that you schedule an annual meeting with the Company Contact Person and General Counsel in order to discuss our relationship with your firm. Such meetings are intended to be constructive and provide an opportunity to both you and us to review the work that has been performed and our satisfaction with it and to explore how we can mutually benefit from our relationship on a going forward basis. We view our relationship with your firm as collaboration and want to ensure that we maintain an open dialogue to further effective representation and productivity. At the end of any major project, you will provide a brief summary of results achieved, how those results compared with your estimates and goals, and any lessons learned that may improve our handling of future matters. We will meet with you at least annually to review your work for us, to inform you of our business and legal priorities, and to exchange suggestions regarding the potential for increased quality and efficiency in our work together. The criteria we will use in your firm s evaluation are the overall quality of service based on our assessment of the following factors: knowledge; responsiveness; effectiveness; efficiency; predictive accuracy; and goals achievement. We will discuss our evaluation with you and make adjustments we deem appropriate in our final evaluation. The Company intends to periodically review and evaluate Outside Counsel s performance. This assessment shall serve as a tool to improve our communications and to provide constructive feedback to Outside Counsel. It may also facilitate consideration of the Company s year-end review of Outside Counsel s effectiveness, efficiency and diversity. Outside Counsel will be required to submit an action plan outlining the steps it will take to remedy any deficiencies identified in the evaluations. 6

7 Media You may not make statements or discuss our matters with the media. Any media inquiries should be directed to the Company public relations department, and you should notify the responsible attorney of the inquiry. Outside Counsel shall not make any statements to the media on behalf of the Company or relating to Company matters without the express direction and approval of the Executive Vice President and General Counsel. Outside Counsel may be asked on occasion to assist in the development of media responses. All media inquiries, including questions regarding the Company s relationship with Outside Counsel, must be immediately reported to the Company or to Corporate Communications. When reported directly to the in-house attorney, he or she should refrain from making any comments to the media and notify Corporate Communications and their Vice President and General Counsel immediately. Outside Counsel should be alert to matters and legal issues with the potential for media interest and make sure these matters are brought immediately to the attention of the Company Legal Department. Settlements Settlement offers from an opposing party must be reported immediately to the responsible attorney, and no settlement offers may be made without the express written approval of the responsible attorney. The Company encourages early settlement discussions when the settlement of a litigated matter is the right thing to do under the circumstances. Outside Counsel should bring settlement opportunities to the Company s attention. The Company must authorize any settlement communications. The business person with whom Outside Counsel may work to obtain information or who represents the Company at trial or mediation does not have authority to direct Outside Counsel concerning settlement unless such authority has been specifically delegated to the business person. All recommendations to settle a case and offers of settlement from opposing counsel shall be promptly communicated to the Company. The Company encourages use of Alternative Dispute Resolution ( ADR ) techniques in appropriate circumstances. Outside Counsel should proactively identify and bring to the attention of the Company all opportunities to utilize ADR. Company seeks to resolve all matters in litigation as expeditiously and economically as possible. We will work with you to identify, early in the proceedings, whether the case should be considered for early settlement because trial of the case would impose a significant adverse risk to Company. Company will resist even a nuisance value settlement with respect to cases involving legal issues which are of significant importance or where a settlement is likely to have an adverse precedential effect. While we will avoid settlements which are likely to encourage additional litigation, in most cases, efforts should be made to resolve litigation at the earliest stage of the proceedings that is practicable. Settlement on the eve of trial or at the courthouse door normally is to be avoided as such settlements often are not costeffective. To be cost-effective, cases should be settled, if they are to be settled at all, at earlier stages in a proceeding. In most cases, outside legal counsel should contact opposing counsel immediately upon receipt of the assignment from Company, even prior to receipt of the file. Settlement at an early stage is not always possible, as that is the point in time in which the plaintiff s motivations may be more for vengeance than for justice, and opposing counsel s appraisal of the value of his case may be at its highest point. We believe, nevertheless, that such an early approach can, in many cases, result in a favorable and cost-effective settlement. Even if such initial contacts are not successful in immediately resolving the litigation, such contacts can be a valuable tool in evaluating both the liability and ultimate settlement potential of the case. Each case should be reviewed periodically for settlement purposes if initial settlement attempts are not successful. All settlement proposals or requests for settlement authority must be submitted to Company s inhouse counsel for approval. 7

8 Confl icts Any potential conflict must be brought to our attention as soon as it is discovered. Conflict waivers must be issued in writing and signed by one of our attorneys after thorough discussion and disclosure of all material facts. Company does not grant blanket forward looking waivers; however, it is our policy to be flexible, accommodating and reasonable in granting matter specific or general issue waivers on a case-by-case basis. Please identify any direct or indirect issue or policy-driven conflict even if waivable or otherwise curable which might arise from your representation, broadly construed, of the Company. Outside Counsel shall thoroughly check for actual or potential conflicts of interest that may arise from counsel s representation of the Company, as defined in these Guidelines or in any applicable code of professional responsibility or rules of professional conduct. The Company expects Counsel to use their best efforts to identify and discuss with the inhouse legal department any potential conflicts of a philosophical or policy-driven nature that may compromise a position taken by the company. Any conflict must be discussed with the Company as soon as it becomes known. The Company reserves the right to make an independent determination whether Outside Counsel has an actual or potential conflict of interest. The obligation to disclose actual and potential conflicts of interest continues throughout the term of the representation. Outside Counsel must review conflicts of interest on an ongoing basis as new matters are opened. Any new attorney/client relationships that create a conflict shall be reported to the Company immediately. The acceptance of an engagement on a matter by Outside Counsel without written disclosure of any conflicts and the written waiver by the Company of all conflicts disclosed constitutes a representation by Outside Counsel that a conflicts check has been conducted and that there are no conflicts. Business-Related Confl icts Please identify any business-related conflict that may exist as a result of your firm s representation of other companies that compete in markets in which the Company also competes. A list of Company s domestic and foreign affiliates and subsidiaries is available on the Company s website and its SEC filings. The Company may conclude that an actual conflict of interest exists if Outside Counsel or Outside Counsel s law firm represents a significant competitor of the Company or its subsidiaries or affiliates. A list of Company s principal subsidiaries is attached as Exhibit. As a pre-condition of engagement, Outside Counsel must disclose in writing the identity of any national or regional retailers or any significant competitors of the Company or its subsidiaries or affiliates (see Exhibit X for examples) that the Outside Counsel firm represents, together with a general description of the type of legal services that the Outside Counsel firm provides to such client(s). If Outside Counsel concludes that it would be improper to provide this information to the Company, Outside Counsel should decline the engagement. Confi dentiality This agreement and all communications between you and the Company are confidential unless otherwise agreed in writing by the parties. 8

9 In the course of representing the Company, Outside Counsel frequently has access to nonpublic and confidential information. Outside Counsel must have in place appropriate procedures to ensure the protection of all such information. Outside Counsel must take appropriate measures to ensure that all legal and non-legal personnel are familiar with this requirement and are effectively supervised in this regard. Outside Counsel must consult with the Company before disseminating any potentially sensitive information acquired from the Company or developed or learned while representing the Company. In addition, third-party vendors engaged by Outside Counsel that acquire or have access to confidential or proprietary material of the Company (including work product) should be requested to sign a Confidentiality Agreement (Exhibit ). It is the responsibility of Outside Counsel to obtain a signed Confidentiality Agreement from third-party vendors and to retain it. Compliance with this confidentiality requirement is subject to periodic audit. Acceptance of an engagement by Outside Counsel shall constitute Outside Counsel s acceptance of the terms of the Confidentiality Agreement. Third-Party Service Providers (Experts, Consultants, etc.) Our lead attorney must approve in advance any expenses for any expert, consultant, or other third-party service provider in excess of $1,000. Our lead attorney will determine whether we have a negotiated rate or a preferred relationship with a particular vendor for such services. We require that other law firms, outside consultants, or expert witnesses will not be retained without prior approval and that outside counsel will work closely with the Company Contact Person to closely manage and control any fees and disbursements which are incurred. The Company will pay for reasonable and actual law firm disbursements to third-party vendors for the following items: 1. Filing fees; 2. Court reporter fees; 3. Expert witness fees; 4. Computerized/database research (e.g. Westlaw, Lexis, etc.); 5. Coach-class airfare; 6. Necessary and reasonable travel and lodging expenses; 7. Long distance telephone charges, including voice, fax or data; 8. Local business transportation (e.g. train, taxi, etc.); 9. Inside photocopy, binding and printing services; 10. Outside photocopy, binding, and printing services; 11. Airfreight/express mail deliveries; and 12. Outside messenger services. Advertising or Marketing You may not use the Company s name or logo in any public listing or promotion without our prior written consent. It is a condition of The Firm s retention that it consult with and receive approval from the General Counsel prior to identification of the Company as its client in any promotional matters, including seminars, publications, meetings, press conferences, and speeches. 9