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Cost Control in the Current Economic Environment

April 29, 2009

Association of Corporate Counselwww.acc.com

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  Introductions   Speakers   QualcommOverview

  CostControlintheCurrentEconomicEnvironment   CreatingSustainableCostSavings   FoundationalQuestions   3FoundationalCost-SavingProjects   10(+1)ProvenCost-SavingIdeas

Agenda

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Nancy Jessen Managing Director

Legal Business Consulting

Bill Sailer Senior VP, Legal Counsel Qualcomm, Incorporated

Introductions

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  Industry:Telecommunications   2008Revenue:$11.1B   BusinessSegments:

  QualcommCDMATechnologies(QCT)   QualcommTechnologyLicensing(QTL)   QualcommWireless&Internet(QWI)   QualcommStrategicInitiatives(QSI)

Qualcomm

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Polling Question   Have you been asked to cut costs in 2009?

  Yes   No

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Polling Question   What is your target cost savings for 2009?

  0-5%   5-10%   10-15%   15-20%   Over 20%

  Is the target higher than your target for 2008?   Yes   No

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Process and Technology Utilization

Technology Process

Collaboration

Knowledge Sharing

Skills & Capacity

Management

Performance Management

Matter Management

Resource Management

Financial Management

Portal

Corporate Secretary

Patent Management

Discovery Management

Contract Management

Document Management

Matter Management

Expenses Hours Rates + X Cost =

Transformation

Generates tangible savings

Sustains savings generated

Hard Payback

Soft Payback

Short-term Payback

Long-term Payback

Outside Counsel & Vendor

Management

Internal Resource Optimization

Process and Technology Utilization

Law Dept Strategy and Plan

Operational Performance Management

Align client service delivery with business needs through the right mix of tools and resources at the

appropriate cost

Law departments are focused on reducing costs and creating sustainable long-term cost savings with a high return on investment. They are implementing legal cost management programs that balance strategy, people, processes and tools.

Creating Sustainable Cost Savings

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Question Analysis Needed Internal Focus

External Focus

1. What services are we delivering to the business?

Quantified baseline of the number of Full Time Equivalents (FTEs) and dollars spent

Type of work and staffing

Type of work, leverage and cost

2. How do we prioritize the value the services currently being delivered?

Qualitative value assessment to determine priorities

Value the work based on risk and contribution to achieving the company’s strategy.

3. Who should be delivering the services?

Criteria for sourcing the work Align internal resources to most highly valued work

Align work to appropriate price point

4. What can be done to drive costs down while improving the quality of services delivered?

Cost savings initiatives for the short and long term

Internal Resource Optimization Outside Counsel & Vendor Management Process and Technology Utilization Operational Performance Management

We ask the following questions to help provide a framework for understanding how to manage legal costs and resource allocation

Foundational Questions

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Resources Spend

External Resources $20,000,000

Internal Resources $8,000,000

Total $28,000,000

Sample Data

Foundational Questions 1. What services are we delivering to the business?

Resources Avg. Cost per

Resource

External Resources $593,472

Internal Resources $266,667

Regulatory Litigation Commercial Employment Non-Client

Service Unknown Total FTEs

7.90

20.35

7.70

10.75

9.80

2.05 2.20 2.40

0.25 0.30

30.00

33.70

FTE

Matter Type

$12.08M

$2.11M

$2.05M

$6.38M

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To define the Right Work Law Departments must prioritize the entire portfolio of legal work required by the business based upon Impact on Competitive Advantage and Risk Potential. This process enables the Department to make more proactive decisions about the legal services delivered.

VALUE is combination of:

Risk Potential The extent to which specific types of

legal work have the potential to negatively impact the Company, e.g. financial, regulatory, reputation

Impact on Competitive Advantage The degree to which the type of legal work drives competitive advantage and supports the Corporate strategy

Foundational Questions 2. How do we prioritize the value?

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External Resources Internal Resources

Strategically aligned with Company Predictable cost with defined skills

Strategically aligned with Company Predictable cost with defined skills

Doing the Work Right requires a deliberate approach to aligning the resources with the value and volume of the legal work.

Foundational Questions 3. Who should be delivering the services?

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Foundational Questions 4. What can be done to drive costs down? Sustainable cost reduction programs address all areas of legal spend, focusing on both the internal and external costs.

As much as 80% of internal costs are attributable to compensation and benefits

Although external spend consists primarily of outside counsel, non-law firm spend continues to grow with additional opportunity for scrutiny

Savings on internal costs can be achieved by: •  Appropriately allocating internal work to minimize

fragmentation, duplication and process inefficiencies •  Leveraging lower risk work to lower cost resources

either inside or outside

Savings on external spend can be achieved by: •  Consolidating work with fewer number of firms •  Aggressive negotiations and using alternative fee

arrangements •  Only outsourcing specific and discrete areas of legal

matters by unbundling tasks. Examples include document review and other discovery related tasks.

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Question

1. What services are we delivering to the business?

2. How do we prioritize the value the services currently being delivered?

3. Who should be delivering the services?

4. What can be done to drive costs down while improving the quality of services delivered?

“Doing the Right Work” Identifying the work most highly valued by the business

“Doing the Work Right” Identifying the service delivery model with the appropriate mix of internal/external resources and required skills

Doing the Right Work – Doing the Work Right

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Polling Question   In what areas are you seeking to reduce costs?

(may select more than one)   Internal headcount   Outside counsel   Other vendors   Contracts   Corporate   Human Resources   IP   Litigation   E-Discovery

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  E-Billing   Lineitemreview   Guidelineenforcement

  Nonlawfirmvendornegotiations   Specializedservices   Lowerpricepoints   Consolidation   Discounts

  Valuechallengediscussionswithlawfirms   Consolidation   Discounts   Alternativefeearrangements   Othervalue-addservices

3 Foundational Cost-Saving Projects

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1.  Assignlowvalue/lowriskcontractstonon-attorneysresources2.  CreatecriteriaforlegalinvolvementinHRissues(e.g.terminations,immigration)3.  OutsourceImmigrationworktonon-lawfirmvendor4.  Simplifycontractlanguagetoreducelawdepartmentreview5.  Createtrademarkstandardstodefinenecessityforpreliminarysearches6.  Unbundledocumentreviewfromlawfirmservices7.  Consolidateemploymentlitigationtoasingleoutsidecounselfirmatafixedannualfee/percasefee

8.  Applycost-benefitconceptstolitigationtodeterminefightorsettlestrategy(leverageanalysisofhistoricalportfolio)

9.  Negotiateflatfeesforpredictableannualcorporatework10. Update(andenforce)outsidecounselguidelinesforcopy/faxandtravelcharges11.  LimitIPassertionsandoffensivelitigationtocriticalmisuse

10 (+1) Proven Cost-Saving Ideas

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Question and Answer Session

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