Partnering Agreements

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Types of Agreements Covered by the Guidelines

(See Our Complete list of Partnering Agreements)

| Deal Sheets and Agreement Reviews | Marketing and Distribution Agreements | License Agreements | Software License Agreements for Preexisting Software | Technology Development Agreements | Computer Software Development Agreements | Manufacturing/Supply Agreements | Outsourcing and Facilities Management Agreements | Computer System Outsourcing, Facilities Management, Software Integration | Security and Collateral Agreements / Letters of Credit | Proprietary Rights / Non-Compete Agreements | The CPI Base Multiplier (Examples) |

 
Deal Sheets and Agreement Reviews

Deal Sheets and Agreement Reviews

  • Deal Sheets
    • Interview client 0.5 - 3 hrs (1)
    • Prepare first draft of Deal Sheet 4 hrs
    • Modify prior draft of a lawyer drafted Deal Sheet 2 hrs

      (1) depends on the complexity of the matter and the lawyer's understanding of the business issues

  • Reviewing and Analyzing Agreements
    • As a general rule assume that the time it takes your lawyer to properly review and analyze an agreement in adequate detail will be 2 to 3 times the time it takes you to read it.
    • Add 1 - 3 hours of time to orally convey the analysis.
  
Marketing and Distribution Agreements

Marketing and Distribution Agreements (for both routine and non-routine agreements) (1)

  • Prepare a Deal Sheet (see above)
  • Review a routine marketing or distribution agreement license and make general oral assessment (includes 1 hour of telephone time): 3 hrs
  • Review a routine marketing or distribution agreement and prepare a written outline incorporating assessment of the agreement: 7 hrs
  • Review a routine marketing or distribution agreement and prepare written memo detailing specific proposed language changes and negotiating positions (1), (2)
  • Prepare a routine marketing or distribution agreement: 15 hrs
  • Prepare a non-routine marketing or distribution agreement: 15 - 60 hrs (1), (3)
  • Telephone and in-person conferences, negotiations, and preparation for negotiations: hourly

    (1) A routine marketing or distribution agreement is one that: (a) is of a type that is routine for the applicable market or industry, (b) follows a ritualized format that is used by most other participants in the market or industry, (c) is one of many similar agreements for the client, and (d) does not stand apart from other agreements as a particularly core or key strategic transaction for the client.

    (2) To be estimated after 15 minute review of document(s) and one half hour telephone conference.

    (3) To be estimated after either (a) the first five to ten hours, or (b) completion of a Deal Sheet.

  
License Agreements

License Agreements

  • License Agreements including patent, trade secret, copyright, and trademark licenses (for routine and non-routine agreements). (1)
  • Review a routine license and make general oral assessment (includes 1 hour of telephone time): 3 hrs
  • Review a routine license and prepare written outline incorporating assessment of the agreement: 7 hrs
  • Review a routine license and prepare written memo detailing specific changes to language and negotiating positions (2)
  • Prepare a routine license agreement: 20 hrs
  • Prepare a non-routine license agreement: 20 - 40+ hrs (3)
  • Telephone and in-person conferences, negotiations, and preparation for negotiations: hourly

    (1) A routine licensing agreement is one that meets the following criteria: (a) is of a type that is routine for the applicable market or industry, (b) follows a ritualized format that is used by most other participants in the market or industry, (c) is one of many similar agreements for the client, and (d) does not stand apart from other agreements as a particularly core or key strategic transaction for the client.

    (2) To be estimated after 15 minute review of document(s) and one half hour telephone conference.

    (3) To be estimated after either (a) the first three to six hours, or (b) completion of a Deal Sheet.

  
Software License Agreements for Preexisting Software

Software License Agreements for Preexisting Software (for either routine or non-routine software licenses). (1)

  • Review a routine software license and make general oral assessment (includes 1 hour of telephone time): 3 hrs
  • Review a routine software license and prepare written outline incorporating assessment of the agreement: 7 hrs
  • Review a routine software license and prepare written memo detailing specific changes to language and negotiating positions (2)
  • Review (and if necessary modify) prepared schedules for a software license agreement (2)
  • Prepare an addendum modifying a standard vendor's license agreement 2 hrs
  • Prepare a routine software license agreement: 10 hrs
  • Prepare a non-routine software license agreement: 10 - 20+ hrs (3)
  • In person or telephone conferences, negotiations, and preparation for negotiations: hourly

    (1) It is not a routine software license if:

    • (a) If the software will be implemented in a series of stages or it's likely that user requirements will change in the near future,
    • (b) There are multiple vendors involved in the implementation or support of the software (even if only one of them is taking contractual responsibility) including any key related hardware or third party software,
    • (c) The same release (or combination of releases) of the software has yet to be successfully implemented with the same release (or combination of releases) of related hardware and third party software, or
    • (d) The software requires modifications costing 50% or more of its license fee.

    (2) To be estimated after 15 minute review of document(s) and one half hour telephone conference.

    (3) To be estimated after either (a) the first two to four hours, or (b) completion of a Deal Sheet.

  
Technology Development Agreements

Technology Development Agreements

  • R&D Technology Development Agreements for technology other than computer software (for routine and non-routine projects). (1)
  • Prepare a Deal Sheet (see above)
  • Review an R&D technology development agreement and make general oral assessment (includes 3 hour of telephone time): 9 hrs
  • Review an R&D technology development agreement and prepare written outline incorporating assessment of the agreement: 12 hrs
  • Review an R&D technology development agreement and prepare written memo detailing specific changes to language and negotiating positions (2)
  • Review (and if necessary modify) prepared schedules for an R&D technology development agreement (3)
  • Prepare an R&D technology development agreement for a routine project expected to take less than 6 months to complete: 20 hrs
  • Prepare an R&D technology development agreement for a routine project expected to take 6 months or more to complete: 35 hrs
  • Prepare an R&D technology development agreement for a non-routine project: 20 - 70+ hrs (4)
  • In person or telephone conferences, negotiations, and preparation for negotiations: hourly

    (1) A routine project is one that meets all of the following criteria: (a) the developer has successfully completed R&D work for the same customer before, (b) the project represents a sufficiently small portion of the developer's business that the developer could absorb a 100% cost overrun if it had to, (c) the customer could absorb a 100% cost overrun if it had to, (d) the R&D project is not core or key to the customer's business or business strategy and it's failure would not be a catastrophic event.

    (2) To be estimated after one hour review of document(s) and two hour telephone conference.

    (3) To be estimated after 15 minute review of document(s) and one half hour telephone conference.

    (4) To be estimated after either (a) the first four to eight hours, or (b) completion of a Deal Sheet.

  
Computer Software Development Agreements

Computer Software Development Agreements (for either routine or non-routine projects). (1)

  • Prepare a Deal Sheet (see above)
  • Review a software development agreement and make general oral assessment (includes 3 hours of telephone time): 9 hrs
  • Review a software development agreement and prepare written outline incorporating assessment of the agreement: 12 hrs
  • Review a software development agreement and prepare written memo detailing specific changes to language and negotiating positions (2)
  • Review (and if necessary modify) prepared schedules for a software development agreement (3)
  • Prepare a software development agreement for a routine project expected to take less than 6 months to complete: 15 hrs
  • Prepare a software development agreement for a routine project expected to take 6 months or more to complete: 25 hrs
  • Prepare a software development agreement for a non-routine project: 15 - 50+ hrs (4)
  • In person or telephone conferences, negotiations, and preparation for negotiations: hourly

    (1) A routine project is one that meets all of the following criteria: (a) the developer has successfully completed R&D work for the same customer before, (b) the project represents a sufficiently small portion of the developer's business that the developer could absorb a 100% cost overrun if it had to, (c) the customer could absorb a 100% cost overrun if it had to, (d) the R&D project is not core or key to the customer's business or business strategy and it's failure would not be a catastrophic event.

    (2) To be estimated after one hour review of document(s) and two hour telephone conference.

    (3) To be estimated after 15 minute review of document(s) and one half hour telephone conference.

    (4) To be estimated after either (a) the first three hours, or (b) completion of a Deal Sheet.

  
Manufacturing/Supply Agreements

Manufacturing/Supply Agreements

  • Manufacturing/Supply Agreements (for routine and non-routine agreements). (1)
  • Review a routine license and make general oral assessment (includes 1 hour of telephone time): 2 hrs
  • Review a routine license and prepare written outline incorporating assessment of the agreement: 7 hrs
  • Review a routine license and prepare written memo detailing specific changes to language and negotiating positions (2)
  • Prepare a routine license agreement: 15 hrs
  • Prepare a non-routine license agreement: 15 - 30+ hrs (3)
  • Telephone and in-person conferences, negotiations, and preparation for negotiations: hourly

    (1) A routine manufacturing/supply agreement is one that meets the following criteria: (a) is of a type that is routine for the applicable market or industry, (b) is one of many similar agreements for one of the parties, and (c) is not a core or key strategic transaction for the client.

    (2) To be estimated after 15 minute review of document(s) and one half hour telephone conference.

    (3) To be estimated after either (a) the first three hours, or (b) completion of a Deal Sheet.

  
Outsourcing and Facilities Management Agreements

Outsourcing and Facilities Management Agreements

  • Non-Computer Related Outsourcing and Facilities Management Agreements for other than computer systems.
  • Prepare a Deal Sheet (see above)
  • Prepare agreement for non-critical function: 10 hrs (1)
  • Prepare agreement for a critical function: 20 - 100+ hrs (1), (2), (4)
  • Review (and if necessary modify) schedules to the agreement (3), (4)
  • In person or telephone conferences, negotiations, and preparation for negotiations: hourly

    (1) A critical function is a function that is not core or key to the customer's business or business strategy and it's failure would not be a catastrophic event.

    (2) To be estimated after the first five to ten hours or completion of a Deal Sheet.

    (3) To be estimated after 15 minute review of document(s) and one half hour telephone conference.

    (4) Substantially dependent on the level of preparation done by client and the complexity of the underlying transaction.

  
Computer System Outsourcing, Facilities Management, Software Integration

Computer System Outsourcing, Facilities Management or Integration Agreement

  • Prepare a Deal Sheet (see above)
  • Prepare agreement for non-critical and non-complex system: 20 hrs (1), (2)
  • Prepare agreement for core, mission critical or complex systems: 40 - 100+ hrs (1), (2), (3), (5)
  • Review (and if necessary modify) schedules to the agreement (4), (5)
  • In person or telephone conferences, negotiations, and preparation for negotiations: hourly

    (1) A complex system is a system which has one or more of the following characteristics:

    • (a) The implementation will be done in a series of stages or it's likely that user requirements will change in the near future.
    • (b) There are multiple vendors involved in the implementation or support of the system (even if only one of them is taking contractual responsibility) including any key related hardware or third party software.
    • (c) The same release (or combination of releases) of the system has yet to be successfully implemented with the same release (or combination of releases) of hardware and third party software.
    • (d) A preexisting software package that requires modifications costing 50% or more of its license fee constitutes a substantial portion of the system.

    (2) A critical system is a system that is not core or key to the customer's business or business strategy and it's failure would not be a catastrophic event.

    (3) To be estimated after the first five to ten hours or completion of a Deal Sheet.

    (4) To be estimated after 15 minute review of document(s) and one half hour telephone conference.

    (5) Substantially dependent on the level of preparation done by client and the complexity of the underlying transaction.

  
Security and Collateral Agreements / Letters of Credit

Security and Collateral Agreements (agreements to secure performance of other agreement)

  • Guarantees (uncollateralized).
  • Review a personal or corporate guarantee and make general oral assessment (includes 1 hour of telephone time): 2 hrs
  • Review a personal or corporate guarantee and prepare an addendum incorporating proposed changes: 3 hrs
  • Prepare a personal or corporate guarantee: 3 hrs
  • In person or telephone conferences, negotiations, and preparation for negotiations: hourly

Letters of Credit

  • Review a letter of credit and make general oral assessment (includes 1 hour of telephone time): 2 hrs
  • Review a letter of credit and prepare draw down language: 3 hrs
  • In person or telephone conferences, negotiations, and preparation for negotiations: hourly
  
Proprietary Rights / Non-Compete Agreements

Proprietary Rights Agreements.

  • Review a routine proprietary rights agreement and make general oral assessment (includes 0.5 hour of telephone time): 1 hrs
  • Prepare a routine proprietary rights agreement: 2 hrs
  • In person or telephone conferences, negotiations, and preparation for negotiations: hourly

Corporate Non-competition Agreements (excluding employee non-competes)

  • Review a routine non-competition agreement and make general oral assessment (includes 1.0 hour of telephone time): 2 hrs
  • Prepare a routine non-competition agreement: 2 hrs
  • In person or telephone conferences, negotiations, and preparation for negotiations: hourly

Employee Non-competition Agreements

  • Review a routine employee non-competition agreement and make general oral assessment (includes 0.5 hour of telephone time): 1 hrs
  • Prepare a routine employee non-competition agreement 2 hrs
  • In person or telephone conferences, negotiations, and preparation for negotiations: hourly
  
The CPI Base Multiplier

The CPI Base Multiplier

Many of the CPI Legal Fee Guidelines are fixed or bracketed quantities of time required to accomplish specific tasks. These fixed times can't take into account complications that can impact the total time necessary to consummate a transaction. The purpose of the "CPI Base Multiplier" is to adjust for these complications.

The time guidelines for drafting documents assume two drafts of a document. Sometimes agreements may require three or more drafts.

The number of times a legal agreement is redrafted relates directly to the complexity and/or difficulty of the negotiations and the agreement itself. The CPI Base Multiplier uses the number of times an agreement is drafted as an indicator of complexity and difficulty of an agreement.

To keep the CPI Base Multiplier formula as simple as possible we have used several other such factors to approximate the complexity and difficulty of the engagement.

The CPI Base Multiplier is calculated separately for each transaction. You calculate it as follows:

  • 1. Start with a "Base Multiplier" of 1.0 for the initial two drafts. (this means that is the number produced by the basic guidelines remains unaffected)
  • 2. If the agreement is derived from a previously negotiated a Deal Sheet:
    • Subtract 0.25 from the "Base Multiplier" if the Deal Sheet is prepared by the same lawyer drafting the agreement.
    • Add 0.50 to the "Base Multiplier" if the Deal Sheet is prepared by an attorney representing the other side (even if that lawyer isn't drafting the agreement).
    • Add 0.75 to the "Base Multiplier" if the Deal Sheet is prepared by an non-lawyer (even if it's someone on your side).
  • 3. Add to the "Base Multiplier" a factor of .3 times the number of additional drafts in excess of two initial drafts.
  • 4. Multiply the results of the above by the following: (1.0) + (.35 for each party in excess of the initial two parties) + (.22 for each lawyer involved in excess of two lawyers). More lawyers and more parties make more work.

Once you calculate the multiplier, multiply it times the estimated number of hours for that transaction.

  
Examples of How to Calculate The CPI Base Multiplier

Here are some examples starting from the simple and escalating to the complex:

1. A two party Marketing and Distribution Agreement takes 2 drafts (no Deal Sheet and two lawyers)
The CPI Base Multiplier is 1.0.

2. A two party Marketing and Distribution Agreement takes 2 drafts and is based on a Deal Sheet prepared by the your lawyer who drafts the agreement (two lawyers)
The CPI Base Multiplier is 0.75.
It's calculated as follows: (1.0 - 0.25) + (0.3 x 0)

3. A two party Marketing and Distribution Agreement takes 4 drafts (no Deal Sheet and two lawyers)
The CPI Base Multiplier is 1.6.
It's calculated as follows: (1.0 - 0.0) + (0.3 x 2)

4. A two party Marketing and Distribution Agreement takes 6 drafts (no Deal Sheet and two lawyers)
The CPI Base Multiplier is 2.2.
It's calculated as follows: (1.0 - 0.0) + (0.3 x 4)

5. A two party Marketing and Distribution Agreement takes 6 drafts and is based on a Deal Sheet prepared by the lawyer representing the other side (two lawyers).
The CPI Base Multiplier is 3.3.
It's calculated as follows: (1.0 + 0.5) + (0.3 x 4)

6. A three party Marketing and Distribution Agreement takes 6 drafts (no Deal Sheet and four lawyers)
The CPI Base Multiplier is 3.938.
It's calculated as follows: [(1.0 - 0.0) + (0.3 x 4)] x [1 + .35 + .44]

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