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PLAYBOOK TEMPLATES
Outside Counsel Billing Guidelines
Outside Counsel Billing Guidelines set the standards for law firm engagement, billing, and matter management. This playbook details compliance expectations, expense policies, and audit rights.
Table of Contents
Liability and Damage Caps
Negotiation strategy
Negotiate for a liability cap that reflects the transaction's value and potential risks. Ensure exceptions for fundamental breaches and willful misconduct are clearly defined to protect the company's interests.
Advocate for a reasonable liability cap that limits exposure while allowing for exceptions in cases of gross negligence or willful misconduct. Ensure indemnification obligations are not overly burdensome.
Essential elements
1
Liability Cap
Maximum recoverable damages limit.
2
Exceptions to Cap
Carve-outs for serious breaches.
3
Exclusion of Damages
No consequential or punitive damages.
Action framework
ACCEPT
Propose edits if the liability cap does not align with the transaction's value or risk profile.
EDIT
Reject if the clause lacks necessary exceptions for fundamental breaches or willful misconduct.
ADD
Add provisions if liability caps are missing or unclear, ensuring alignment with transaction value.
PRO TIP
Always align liability caps with the transaction's value and risk profile to ensure fairness and clarity.
Real-world examples
FAVORABLE
Preferred Liability Cap Clause
"The total liability of either party under this Agreement shall not exceed [insert amount], which is agreed to be a reasonable estimate of the anticipated transaction value and potential risks associated with this Agreement."
NEUTRAL
Standard Liability Clause
"The liability of either party is limited to direct damages only, excluding any indirect or consequential damages."
UNFAVORABLE
Uncapped Liability Clause
"There shall be no cap on the liability of either party under this Agreement."
Alternative scenarios & positions
High-Risk Transactions
In high-risk transactions, consider higher liability caps or additional carve-outs to address potential increased exposure. Consult with risk management to tailor provisions accordingly.
Low-Value Contracts
For low-value contracts, a lower liability cap may be appropriate, but ensure exceptions for serious breaches remain intact to protect both parties.
International Agreements
In international agreements, consider jurisdictional differences in liability laws and adjust caps and exceptions to comply with local regulations.
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