60.5.5 Guidelines for Outside Counsel

Approval Authority: Chief Financial Officer

Responsible Executive: Chief Financial Officer

Responsible Office: Office of Finance

Originally Issued: March 1, 2006

Revisions/Updates:

1. Policy Statement

   Stevens Institute of Technology expects outside counsel to provide Stevens Institute of Technology and its subsidiaries and affiliated entities (collectively Stevens”) with the highest quality legal services in the most cost-effective manner possible.

2. Reason/Purpose for Policy

   This policy is intended to provide guidelines and procedures for using outside counsel and to promote quality, efficiency, and cost effectiveness when outside counsel is required.

3. Who Should Read Policy or Policy Applies To:

   This policy applies to all Stevens faculty and staff.

4. Related Documents

   Procurement Policy
   Handling Consulting & Independent Personal Services, Honoraria and Miscellaneous Payments

5. Contacts
   1. Office of Finance, Chief Financial Officer
   2. Procurement Director

6. The Policy

   1. Scope and Applicability of these Guidelines

      These guidelines set forth the policies and procedures governing the relationship of Stevens with outside counsel. These guidelines are intended to promote (i) high quality legal representation that produces maximum value, (ii) the most efficient use of resources and (iii) cost-effective results. Outside counsel performing any type of legal services for Stevens may not depart from these policies and procedures without the prior written approval of the CFO. Questions concerning these guidelines should be directed to the CFO.

   2. Lead Inside Counsel

      Stevens does not currently have a Lead Inside Counsel. In their place, the CFO will direct the representation and coordinate communications with all other Stevens’ personnel. The key internal client, defined by the CFO in the statement of work, or engagement letter, should be kept regularly apprised of all significant developments in the matter and consulted sufficiently in advance of the date by which any significant decision must be made. The key internal client should also be given the opportunity, including adequate time, to review drafts of all significant documents, including contracts, substantive pleadings, briefs, correspondence, and any other documents that will be provided to third parties on Stevens’ behalf.

   3. Outside Counsel Engagements

      1. Engagement Letter

         Every engagement (or continuing representation) of outside counsel must be memorialized by a letter setting forth the terms and conditions of the engagement in Stevens standard form of engagement letter (the “Engagement Letter”). The Engagement Letter must be signed by both Stevens’ CFO and the lead outside counsel and must indicate outside counsel’s familiarity with and agreement to adhere to these Guidelines. Stevens will not pay bills submitted by outside counsel who have not signed an Engagement Letter and whose subsequent work does not conform to these Guidelines. An example of Stevens’ current form of engagement letter is available.

      2. Staffing

         At the outset of an engagement, Stevens and outside counsel will in the Engagement Letter designate as the lead outside counsel a specific lawyer within the law firm who will be chiefly accountable for the conduct of the engagement. That lawyer must be personally and directly involved in the representation and be responsible for assuring that Stevens’ objectives are met with respect to the engagement and that the requirements of these guidelines are followed. Stevens’ CFO must approve in writing all additional members of the team handling the matter, as well as any subsequent changes to the team. Once the team is established, Stevens expects continuity of staffing for the duration of the engagement absent extraordinary circumstances.

         Matters should be staffed with the number and level of attorneys and paralegals that are appropriate in order to render quality service in a cost-effective manner. Lead outside counsel is responsible for closely monitoring the use and numbers of staff at meetings, depositions, court appearances, office conferences, and other events and ensuring that only those individuals who are essential to that aspect of the representation are present.

         Outside counsel may engage additional service providers, such as document managers, consultants, experts, accountants, or other lawyers, only with the prior written approval of Stevens’ CFO. Stevens’ internal client and lead outside counsel, working together, will be responsible, for the budgeting and billing arrangements governing the work to be performed by such experts, consultants, or attorneys, which should themselves conform to these Guidelines. Stevens expects that the lead outside counsel will negotiate aggressively with these service providers to obtain the lowest possible rate, and that they will be particularly focused on obtaining volume discounts. Lead outside counsel will be responsible for monitoring compliance with agreed fee arrangements with these service providers and will be responsible for any excess amount billed over agreed fee or budget arrangements that is not approved in advance by Stevens’ CFO.

   4. Planning, Evaluation and Early Resolution
      
      For each significant matter and where requested by Stevens, lead outside counsel should prepare a written strategic plan for the conduct of the representation. The timing, form and length of the plan will vary, of course, depending on the scope and significance of the matter, but generally it should be prepared early in the engagement and should include an identification of Stevens’ objectives and a proposal as to how best to achieve them; the major steps likely to be required in the short- and long-term as well as their timing and sequence; a budget for the fees and expenses for each identified phase of the matter; and the staffing planned for the matter. The plan should be reviewed in draft with the key internal client prior to being finalized and should be updated from time-to-time, as appropriate (but in no event less than every ninety-days), to reflect developments in the matter and evolving understanding of the relevant facts or issues. Engagement budgets must be reviewed every ninety days with the key internal client. To the extent and in the form requested by key internal client, the plan should include an assessment of Stevens’ prospects in the matter as well as outside counsel’s view of the best strategy for efficiently concluding the matter consistent with Stevens’ objectives. If such an assessment is requested, it should also be reviewed in draft with key internal client before it is finalized. The plan should also, as appropriate, address different options for resolving the matter. Stevens will not pay for any time associated with the preparation of any such strategic plan.

      Stevens looks to its outside counsel to identify early resolution opportunities, including contacting opposing counsel prior to filing an answer (x) to assess opposing counsel’s objectives and (y) to explore whether early settlement or alternative resolutions are realistic possibilities.

   5. Compensation

      1. Types of Fee Arrangements

         In appropriate cases, Stevens may request outside counsel to propose, or require outside counsel to adhere to, alternatives to conventional hourly-rate fee arrangements, including fixed fees, caps, productivity incentives, risk-sharing, contingent fees, and other approaches. In all cases, the terms on which Stevens will be charged for the representation will be set forth in the Engagement Letter (both at the outset of the engagement and at any point in the engagement at which those terms are modified).

      2. Hourly Rates

         In matters that are to be billed based on the law firm’s hourly rates, Stevens and outside counsel shall, prior to engagement, agree on a schedule showing the billing rate for each timekeeper (or class of timekeeper) assigned to the engagement which will be attached to the engagement letter. Once agreed upon at the commencement of a matter, the scheduled billing rates shall remain in effect for the duration of the engagement unless key Stevens’ CFO approves in writing proposed rate changes in advance. In no event will rate changes be more than an annual cost of living adjustment and such rate changes must be applicable to all other clients of outside counsel. Outside counsel shall provide Stevens with at least thirty (30) days advance written notice of any increase in rates. Stevens expects to be billed at rates that are highly competitive with those of comparable firms providing comparable services to Stevens or other similar clients. In addition, Stevens expects that outside counsel will charge for services at net billing rates which represent a discount to the standard rates charged by the firm. For fee arrangements on or incorporating an hourly basis, billing should be on a [one-tenth] of an hour interval unless the Engagement Letter indicates otherwise.

         For general, recurring issues, Stevens’ and outside legal counsel will set rates at a master level (e.g., rates will be $___ per partner, $___ for fifth year associate, etc.) and then have annual increases starting Jan 1 of each year, which are the lesser of 3% or annual cost of living.

      3. Task-Based Budgeting and Billing

         It is the policy of Stevens that, in substantial engagements to be billed using hourly rates, outside counsel will charge only those fees and expenses that are consistent with task-based budgets approved by Stevens’ CFO and that outside counsel will render its bills in a form corresponding to that budget, as described and illustrated in this document. Prior to incurring unbudgeted fees for a particular task, outside counsel must obtain the advance written approval of the CFO. Stevens will not pay bills for legal fees and expenses for a particular task that exceed the budget approved for that task.

         The budget and bill formats should, to the extent practicable, employ the standard task codes promulgated by the American Bar Association and the American Corporate Counsel Association, as modified from time-to-time. The particular form, frequency, and content of the task-based budgets and bills to be used for a specific engagement should be agreed upon in advance by Stevens’ CFO and outside counsel. Stevens will generally not pay for any time associated with preparation of a budget or staffing plan for a particular matter.

      4. Billing Timing and Contents

         Unless Stevens’ CFO approves different arrangements in writing, bills must be rendered monthly, within thirty (30) days after the end of the month in which the services were rendered. Except for very minor matters, each engagement should be invoiced as a separate matter and not as “miscellaneous” or “general”. All billing statements for legal services shall be supported with details of the work performed. The details to be included are:

         1. Company Matter Name and Number
         2. A narrative description of the work performed for each specific task by the professional performing the work. Daily “block” billing description will not be sufficient. The description should state clearly the nature of the task performed and allow Stevens to understand why the work was necessary. Where more than one professional is involved in the same work project – such as writing a brief or attending a meeting or a deposition – the details in the billing statement should make it clear why the other person or persons’ presence was necessary.
         3. The UTBMS Task, Activity and Disbursement Codes associated with each specific tasks
         4. The name of the person undertaking the task
         5. The spend on the task described, in at [least tenths] of hours
         6. A summary by each professional providing services during that billing period, showing (i) the total time spent by that professional, (ii) the billing rate for that professional, (iii) the position of that professional (e.g., Partner, Third Year Associate, paralegal), and (iv) the total charges for that professional
         7. Itemized disbursements separately using UTMBS expense codes
         8. Total fees and disbursements year-to-date on the matter
         9. Total fees and disbursements from the inception of the case to date
         10. Indicate budget year-to-date and from the inception of the case
         11. A summary of staff, their position and hourly billing rates

         Each bill should be in a standard format showing the information and details (reflecting individual hours, hourly rates and detailed time entries) contained in the form of bill included in the Task Based Billing & Budgeting document. Bills must include a statement by lead outside counsel that charges for fees and expenses comply with these Guidelines. Stevens will not pay for fees or expenses that are not billed on a timely basis or in the agreed-upon format or which do not otherwise conform to these Guidelines.

         All third-party invoices that are less than ten thousand dollars ($10,000) should be presented as a disbursement on outside counsel’s bills and outside counsel should attach a copy of the original invoice from the third-party for such expenses. Third-party invoices totaling more ten thousand dollars ($10,000) or more should be billed directly to Stevens. Stevens expects that bills will reflect the billing judgment of lead outside counsel with respect to the quality and efficiency of the services rendered. Stevens reserves the right to request copies of outside counsel’s billing records and supporting documentation with respect to the charges to Stevens and to conduct audits of the bills. Subject to its right to audit and contest any bill submitted by Outside Counsel, Stevens shall pay invoices within sixty (60) days from Stevens’ receipt of the invoice, with payment in this time frame being considered timely and not subject to interest.

   6. Expenses, Disbursements and Non-Billable Matters

      Stevens will reimburse outside counsel for actually incurred out-of-pocket expenses with no mark-up or administrative fees, provided those expenses are reasonable and comply with the guidelines set forth below and in the Engagement Letter. Stevens expects outside counsel to use its best efforts to minimize reimbursable out-of-pocket costs. Any single disbursement in excess of [five hundred dollars ($500)], must be approved in advance in writing by the key internal client. Stevens may find it necessary to impose other billing requirements and policies outside of these guidelines during an engagement to manage the matter properly. Prior notice will be given and the matter discussed with outside counsel if this is deemed necessary.

      1. Overhead Expenses

         Overhead expenses will be covered by outside counsel’s hourly rate fees and will not be paid. Overhead expenses include (but are not limited to) items such as:
         

         Rent	Library Use and Materials	Overtime
         Filing	Publications	Disbursements for Lexis/Nexis & Westlaw
         File Maintenance	Clerical Tasks	Time Charged for Preparing, Revising or Negotiating Invoices
         Case Administration	Receiving, Reviewing and Distributing Mail	Telephone Charges
         Word Processing	Faxing Documents	Cellular Charges
         Conference Room Charges	Checking Mail	Facsimiles
         Supplies	Converting Information to Disks	Interoffice Conferences
         Library Staff	Support Staff Salaries	Postage
         Continuing Legal Education Seminars	Time Charge or Duplication Charges for Routine Copy	Time Charge for Stamping or Numbering Documents, Indexing or Tagging Exhibits, Organizing Files or Reproducing Documents
         Firm Management	Secretarial time	[OTHERS]

         
         

      2. Use of Outside Experts, Consultants and Local Counsel

         Stevens will not reimburse outside counsel for the services related to any outside document managers, consultants, experts, accountants, other lawyers, or other third-parties, unless outside counsel obtain the prior approval of Stevens’ CFO before engaging such parties.

      3. Third-Party Arrangements

         Stevens has a number of arrangements with third party vendors and may require Outside Counsel to use Stevens’ preferred vendors.

      4. Travel and Related Matters

         Stevens expects outside counsel to avoid unnecessary travel through such alternatives as teleconferencing. Stevens will only reimburse outside counsel for reasonable travel expenses incurred provided that (i) such expenses are incurred pursuant to Stevens' Travel Policy, (ii) supported by adequate documentation, (iii) outside counsel has first obtained the CFO’s prior written approval before incurring such expense, and (iv) such expenses are for reasonable airfare, lodging, meal and related expenses incurred by outside counsel personnel in providing services to Stevens. Stevens expects outside counsel to use commercially reasonable efforts to make all travel arrangements through one of Stevens’ approved travel vendors and to make all travel arrangements at the lowest commercially available rates available for the specific dates and time that travel is required. Reimbursable charges for meals and incidentals will not exceed the Internal Revenue Services’ or Stevens’ per diem rate in its travel policy for the location of Company’s facility at which the services will be performed. Notwithstanding anything to the contrary in these guidelines or Stevens’ travel policy, Stevens will not pay for:

         1. meals or other incidental expenses for attorneys or staff members when they are working in their normal office location

         2. the full-hourly rate of professionals for time spent related to long-distance traveling (100 or more miles) unless, and then only to the extent that, such professionals work on Company business while traveling. Time spent traveling, but not working on Company business, will only be reimbursed at one-half of the professional’s hourly rate. If outside counsel personnel are traveling on business for more than one client, Stevens expects outside counsel to apportion the expenses appropriately;

         3. the full-hourly rate of professionals for time spent on local traveling (less than 100 miles). Time spent on local traveling will only be reimbursed at one-half of the professional’s hourly rate;

         4. the full-hourly rate of professionals for time spent waiting for hearings, motions, conferences and other similar matters. Waiting time will only be reimbursed at one-half of the professional’s hourly rate;

         5. airfare that is not the lowest available or which is in business or first-class; provided that for international flights over seven (7) hours, Stevens will reimburse business-class airfare for attorneys;

         6. luxury transportation, including, but not limited to, limos and full sized or above car rentals;

         7. luxury lodging and hotel accommodations; and

         8. personal incidental expenses incurred while working on Company matters, such expenses must be distinguished from those expenses that are appropriately charged to Stevens.

      5. Computerized Legal

         Expenses for computerized research on Lexis-Nexis or Westlaw (or similar legal systems) will be considered by Stevens to be overhead and not reimbursable. Stevens will reimburse outside counsel for the actual, out-of-pocket cost for research that is not obtainable through such providers, provided that where the anticipated cost for such research will be over five hundred dollars ($500), outside counsel obtains the prior approval of the CFO prior to undertaking the activity.

      6. Duplication Services.

         Stevens will not reimburse outside counsel for duplication charges (and associated time) related to routine copying. Stevens considers routine copying to be overhead. For reproduction activities that require copy center services, Stevens will reimburse outside counsel for necessary photocopying at the firm’s actual annualized per-copy expense if the Stevens’ print shop cannot do this work.

      7. Telephone, Facsimile and Messenger Services

         Stevens expects outside counsel to utilize Stevens’ preferred vendor for overnight, express mail services and for messenger services. Stevens will provide outside counsel with an account number for billing of such services. If Stevens’ preferred messenger supplier is not available, Stevens will reimburse outside counsel for actual charges billed to the firm for messenger deliveries. Stevens expects outside counsel to only use delivery services (overnight and messenger) when they are absolutely necessary for speed and reliability, and in such cases to use the most cost-effective service required to meet the delivery timeframe (e.g., ground for next day service in tri-state area, or same day service (no time guarantee) for messenger deliveries, where package is required to be delivered by end of business).

         Stevens will not reimburse outside counsel with respect to charges related to telephone, cellular or facsimile services. Stevens views these costs as overhead.

      8. Court Fees and Associated Charges.

         Stevens will reimburse outside counsel for filing fees, motion fees, process server fees, reporting fees and other similar expenses.

      9. Interoffice Conferences

         Discussions or conferences between or among attorneys are generally considered by Stevens to be overhead and should be minimized. Such conferences should only be undertaken and billed when that is the most efficient means possible to convey or obtain information. Billing descriptions for such conservations should indicate why a conference was needed. An entry “Conference with XYX regarding status of case” is not a sufficient explanation. Stevens may deny billing for internal discussions or conferences that do not in its sole discretion add value. For instance, discussions or conferences required to transfer the case from one attorney to another will be considered overhead and not subject to payment. As a general guideline, Stevens will not pay for internal conferencing that exceeds five (5%)] of the total billings for engagement for the month in question. Further, Stevens will not pay the billing rate for more than one attorney when two or more firm attorneys meet to discuss a Company matter.

      10. Staffing and Billing

          Stevens strongly encourages lean staffing on all Company matters. In particular, Stevens will carefully review and may, at its sole discretion, refuse payment for excessive staffing or duplicative work, including:

          1. the attendance by more than two (2) attorneys or more than one (1) paralegal at an event (negotiation, deposition, witness meeting, trial, settlement conference, other conferences and other meeting)

          2. duplicative document review

          3. extensive research and drafting tasks

          Stevens will not pay for either secretarial, word processing or inside messenger services, or any overtime (holiday, weekend, after-hours, etc.). Paraprofessional time billed should not include tasks that are more appropriate for clerical or secretarial personnel, such as tamping or numbering documents, indexing or tagging exhibits, organizing files or reproducing documents.

          Stevens expects continuity of staffing for the duration of the engagement absent extraordinary circumstances. In particular, Stevens will not pay for “learning time” required by the substitution of attorneys or paralegals working on the engagement. Persons participating in an engagement must in all instances be rendering valuable services.

          Stevens will not reimburse for or pay any charges:

          1. related to any law firm professional not authorized by the key internal client to work on the engagement; and

          2. in excess of the agreed-upon estimated amount budgeted for a particular matter

          In sum, Stevens expects that the number of hours for which Stevens is billed should be the subject of “billing judgment” exercised by the key internal client, so that the fees charged reflect only the time appropriately and productively devoted to the matter.

   7. Confidentiality and Public Comment

      All Stevens matters must be treated as confidential. Stevens generally does not authorize outside counsel to offer media or other public comment on matters being handled for Stevens. Any inquiries or proposed public comment about a Stevens matter must be referred to the CFO who will determine whether comment by outside counsel is appropriate.

   8. Other Clients

      It is the responsibility of outside counsel to identify and disclose to Stevens any existing or prospective engagement by another client that could create an actual or potential conflict of interest with counsel’s representation of Stevens.

   9. Ownership of Materials

      All materials in written, graphic, electronically stored or other form generated or prepared in the course of representing Stevens or its affiliates and all copyrights therein shall belong to Stevens. Outside counsel agrees to assign, and upon execution of an engagement letter does assign, all right, title, interest and copyrights in all such materials to Stevens and agrees to execute all papers necessary for Stevens to perfect its ownership and copyright interests. At the conclusion of the engagement, outside counsel should obtain direction from key internal client regarding disposition of all such materials.

   10. Contacts

       For additional information, please contact:

       Stefano Falconi, Chief Financial Officer
       Stevens Institute of Technology
       Castle Point on Hudson
       Hoboken, NJ 07030
       Telephone: 201-216-5215
       Fax: 201-216-5137
       Email: sfalconi@stevens.edu

Table of Contents

60. Finance

Sample Engagement Letter

Task Based Billing and Budgeting