CALDERWOOD & HARKNESS LLP Attorneys at Law
101 California Street, Suite 3200 San Francisco, California 94111 Telephone: (415) 772-8000
May 15, 2023
Adriana Voss, Esq. General Counsel Lumos Analytics Inc. 580 Howard Street, Suite 400 San Francisco, CA 94105
Dear Ms. Voss:
We appreciate the opportunity to represent Lumos Analytics Inc. in connection with the matter described below. This engagement letter sets forth the terms and conditions upon which Calderwood & Harkness LLP will provide legal services to Lumos Analytics Inc. We ask that you review this letter carefully and, if the terms are acceptable, sign and return a copy to our office to confirm our engagement.
1. Purpose and Engagement
Calderwood & Harkness LLP ("C&H" or the "Firm") is pleased to confirm its engagement by Lumos Analytics Inc. ("Lumos" or the "Client") to represent Lumos in connection with the breach-of-contract claim asserted by Pinnacle Financial Holdings LLC ("Pinnacle"), a Delaware limited liability company with principal offices at 200 South Wacker Drive, Suite 2800, Chicago, Illinois 60606. The claim arises from the Master Services Agreement between Lumos and Pinnacle dated January 15, 2021 (the "MSA"), designated as Agreement No. MSA-PFH-2021-0015.
As you are aware, Pinnacle, through its outside counsel, Hargrove, Tillman & Burch LLP, transmitted a formal demand letter dated May 1, 2023 (the "Demand Letter"), in which Pinnacle asserts that Lumos materially breached the MSA and its accompanying Service Level Agreement, and demands payment of Two Million Eight Hundred Seventy Thousand Dollars ($2,870,000) in SLA credits, direct damages, and consequential damages. A copy of the Demand Letter has been received by the Client and provided to the Firm for review.
This engagement has been assigned Firm matter number 1008-00007. All correspondence, invoices, and internal records relating to this representation will reference this matter number. We ask that the Client include this number on all communications directed to the Firm concerning this matter.
2. Scope of Representation
The scope of the Firm's representation of Lumos in this engagement encompasses the following:
(a) Defense of Pinnacle's Claims. The Firm will defend Lumos against Pinnacle's claims of breach of the MSA and its Exhibit C (Service Level Agreement), including all disputes regarding Pinnacle's allegations that Lumos failed to meet the contractual uptime availability and response-time service level commitments set forth therein. Pinnacle's claims relate to four alleged service disruptions identified in the Demand Letter as Incidents INC-4471, INC-4602, INC-4815, and INC-5033, which allegedly occurred during the period from October 2022 through March 2023.
(b) Contractual Analysis and Defenses. The Firm will conduct a thorough analysis of the MSA, the SLA, and all related exhibits, amendments, and change orders to identify and develop all available contractual defenses, including but not limited to force majeure provisions, limitations of liability, exclusions of consequential damages, applicable cure periods, and any defenses arising from Pinnacle's own performance or failure to mitigate.
(c) Factual Investigation. The Firm will review all relevant monitoring data, incident records, post-mortem reports, internal communications, and customer-facing communications relating to the four incidents at issue, in coordination with the Client's engineering, site reliability engineering, and customer success teams.
(d) Correspondence and Negotiation. The Firm will manage all correspondence and negotiations with Pinnacle's outside counsel, Hargrove, Tillman & Burch LLP (contact partner: Martin J. Hargrove), with the objective of achieving a favorable resolution of the dispute.
(e) Mediation. Pursuant to Section 14.3 of the MSA, the parties are required to participate in mandatory mediation prior to initiating litigation. The Firm will prepare for and represent Lumos in that mediation, including the selection of a mediator, preparation of mediation briefs, and attendance at the mediation session or sessions.
(f) Litigation Defense. If mediation is unsuccessful and Pinnacle initiates litigation, the Firm will defend Lumos in any action filed in state or federal courts located in San Francisco County, California, consistent with the forum selection clause set forth in Section 14.5 of the MSA.
(g) Insurance Coordination. The Firm will coordinate with Lumos's Technology Errors & Omissions and Cyber Liability insurer, Meridian Specialty Insurance Company, regarding Policy No. MSI-TECH-2022-07841, including tendering the Pinnacle claim, managing the self-insured retention, and liaising with the insurer's claims personnel, as further described in Section 7 of this letter.
Exclusions from Scope. The scope of this engagement does not include the following, unless separately agreed in writing between the Firm and the Client:
(i) any affirmative claims by Lumos against Pinnacle or any third party, including but not limited to Brindoval Cloud Infrastructure LLC, Lumos's infrastructure hosting provider;
(ii) any regulatory matters, investigations, or inquiries by any governmental or regulatory body;
(iii) negotiation of any renewal, extension, or amendment of the MSA beyond those terms directly related to the settlement or resolution of the Pinnacle dispute; or
(iv) any other matter not specifically described above.
Any expansion of the scope of this engagement shall require a written agreement between the Firm and the Client, which may take the form of an amended engagement letter or a supplemental engagement letter, as appropriate.
3. Engagement Team
The Firm has assembled the following team of attorneys to staff this engagement:
Linda Osei, Partner, will serve as the Responsible Partner for this engagement. In that capacity, Ms. Osei will maintain primary oversight of strategy, serve as the principal client relationship contact within the Firm, and bear ultimate responsibility for the quality and direction of the Firm's work product. Ms. Osei has more than twenty years of experience in complex commercial litigation, with particular depth in technology-sector disputes and breach-of-contract matters.
Priya Anand, Partner, will serve as the Billing Partner and will oversee all billing, matter management, and administrative aspects of the engagement. Ms. Anand will coordinate with Ms. Osei on case strategy and will be available to handle substantive work as needed.
Simone Laroche, Senior Associate, will serve as the Lead Associate and will be responsible for the day-to-day management of the matter, including legal research, drafting of memoranda and correspondence, mediation preparation, motion practice (if required), and regular coordination with the Client's internal team. Ms. Laroche will be the Client's primary day-to-day contact at the Firm.
Jeffrey Park, Associate, will support the engagement team with document review, factual analysis, research, and other tasks as assigned by the supervising attorneys.
The Firm may assign additional attorneys, paralegals, law clerks, or support staff to this engagement as reasonably necessary to provide efficient and effective representation. The Firm will notify the Client of any material changes to the composition of the engagement team, including the departure of any named team member or the addition of any new attorney at the partner or senior associate level.
The Client has designated Adriana Voss, General Counsel, as the primary client contact for this engagement. All material communications, strategic recommendations, and requests for authorization will be directed to Ms. Voss unless the Client designates an alternative contact in writing.
4. Fees and Billing Rates
The Firm will bill for its professional services on an hourly basis. The current standard hourly rates for the attorneys assigned to this engagement are as follows:
Time billed by paralegals and legal assistants assigned to this engagement will be billed at hourly rates ranging from $275.00 to $375.00, depending on the experience and seniority of the individual. The identity and rate of any paralegal or legal assistant who performs work on this matter will be reflected on the applicable monthly invoice.
The Firm's hourly rates are subject to periodic adjustment, which the Firm typically implements on January 1 of each calendar year. The Client will be notified in writing of any changes to the applicable hourly rates at least thirty (30) days in advance of the effective date of any such adjustment. Any rate adjustment will apply only to services rendered on or after the effective date and will not be applied retroactively.
The Firm does not charge for time spent by secretarial, word processing, or general administrative support personnel. Such costs are considered part of the Firm's general overhead and are absorbed by the Firm.
The Firm endeavors to staff each matter efficiently and to delegate work to the most junior attorney or staff member whose experience and skill level are appropriate for the task at hand. If the Client has any concerns at any time about the level of staffing or the efficiency of the Firm's work, we encourage the Client to raise those concerns promptly so that they may be addressed.
5. Expenses and Disbursements
In addition to professional fees for legal services, the Client will be responsible for reimbursement of reasonable out-of-pocket costs and disbursements incurred by the Firm in connection with this engagement. Such costs and disbursements will be itemized on the Firm's monthly invoices and are generally billed at cost, without markup, unless otherwise noted.
Examples of reimbursable costs and disbursements include, but are not limited to, the following:
• Court filing fees and service of process charges;
• Mediation and arbitration fees, including mediator compensation and administrative fees charged by the mediation service provider (e.g., Bay Area Dispute Resolution Center or JAMS);
• Expert consultant and testifying expert fees and expenses;
• Travel expenses, including airfare, ground transportation, lodging, and meals, incurred in connection with depositions, mediations, court appearances, or client meetings outside San Francisco;
• Document reproduction, printing, and production costs, including costs associated with electronic discovery processing and hosting by third-party vendors;
• Messenger, courier, and overnight delivery charges;
• Electronic legal research charges (e.g., Westmark Data Systems, Sundial Solutions);
• Court reporter and transcript fees;
• Third-party vendor charges for litigation support services; and
• Long-distance telephone and videoconference charges, to the extent not included in the Firm's general overhead.
Mediation fees charged by the mediator or mediation service provider will be billed to the Client to the extent they represent Lumos's proportionate share of such fees, as determined by agreement of the parties or by order of the mediator.
The Firm will exercise reasonable judgment in incurring expenses on the Client's behalf. Any individual expense or vendor engagement expected to exceed Five Thousand Dollars ($5,000.00) will be discussed with the Client in advance and will not be incurred without the Client's prior approval, except in circumstances where delay would prejudice the Client's interests and the Client is not reasonably available for consultation.
6. Billing and Payment Terms
The Firm will issue invoices on a monthly basis, reflecting professional fees and reimbursable disbursements incurred during the preceding calendar month. Invoices are typically transmitted during the first two weeks of the month following the billing period. Each invoice will include a summary of time entries organized by timekeeper, a narrative description of the work performed, and an itemized listing of all disbursements incurred during the billing period.
All invoices are due and payable within thirty (30) days of the date of the invoice. Payments should be directed to Calderwood & Harkness LLP by check or electronic funds transfer to the account specified on the invoice.
Amounts remaining unpaid more than thirty (30) days after the invoice date will accrue interest at the rate of one percent (1.0%) per month, which is equivalent to an annual rate of twelve percent (12.0%), compounded monthly. The Firm reserves the right to waive or reduce interest charges in its discretion.
The Client may request additional detail regarding any invoice or raise billing inquiries within thirty (30) days of receipt. The Firm will work in good faith to address and resolve any such inquiries or disputes promptly. The submission of a billing inquiry will not relieve the Client of its obligation to pay undisputed portions of an invoice in a timely manner.
The Firm reserves the right to request a retainer deposit or advance payment of anticipated costs at any stage of the engagement, particularly in advance of significant expenditures such as mediation sessions, expert retention, or the commencement of active litigation. Any retainer deposit will be held in the Firm's client trust account in accordance with the California Rules of Professional Conduct and will be applied against outstanding invoices as they become due, with appropriate accountings provided to the Client. No retainer is being requested at this time.
7. Insurance Coordination
The Client has advised the Firm that Lumos maintains a Technology Errors & Omissions and Cyber Liability insurance policy issued by Meridian Specialty Insurance Company (the "Policy"), bearing Policy No. MSI-TECH-2022-07841. The material terms of the Policy, as reported by the Client, are as follows:
• Policy Period: July 1, 2022 through July 1, 2023
• Per-Occurrence Limit: $5,000,000
• Aggregate Limit: $10,000,000
• Self-Insured Retention ("SIR"): $250,000
• Insurance Broker: Velthorn Risk Advisors LLC (contact: Neil Frazier, Account Executive)
With the Client's authorization, the Firm will tender the Pinnacle claim to Meridian Specialty Insurance Company on Lumos's behalf. The Firm will coordinate with Patricia Engel, Senior Claims Examiner at Meridian, regarding coverage analysis, the reservation of rights process (if any), and the application of defense costs against the self-insured retention. The Firm understands that the Policy contains a duty-to-defend provision that is triggered once the SIR has been satisfied, and that defense costs incurred by the Firm in this engagement are expected to erode the $250,000 SIR.
To facilitate effective SIR management and to ensure a smooth transition to insurer-funded defense coverage once the SIR is exhausted, the Firm will maintain detailed records of all defense costs (fees and expenses) incurred in this engagement and will provide periodic reports to the Client and, with the Client's consent, to Meridian, summarizing accrued defense costs relative to the remaining SIR balance.
The Client acknowledges and understands that:
(a) The Firm's primary duty of loyalty and professional obligation runs to the Client, Lumos Analytics Inc., and not to Meridian Specialty Insurance Company or any other insurer;
(b) The Firm will not accept direction from Meridian or any insurer-appointed representative that conflicts with the Client's interests without first obtaining the Client's informed consent;
(c) If a conflict arises between the Client's interests and the interests or directives of Meridian, the Firm will promptly advise the Client and will follow the Client's instructions, subject to the Firm's ethical obligations; and
(d) The Client retains ultimate decision-making authority over the defense, including settlement authority, regardless of whether defense costs are being reimbursed by the insurer.
The Client is encouraged to keep Velthorn Risk Advisors LLC (Mr. Frazier) apprised of developments in the matter and to coordinate with the Firm regarding any communications received directly from Meridian.
8. Client Responsibilities
The effectiveness of the Firm's representation depends in significant part on the Client's active cooperation and timely provision of information. The Client agrees to cooperate fully with the Firm and to provide prompt access to all documents, data, electronically stored information, and personnel that the Firm reasonably determines are necessary to the representation.
The following individuals have been identified as key internal contacts at Lumos for purposes of this engagement:
• Adriana Voss, General Counsel — overall legal oversight and strategic direction;
• Thomas Kwan, Vice President of Engineering / Site Reliability Engineering — technical subject matter expert regarding platform architecture, incident response, monitoring data, and SLA performance metrics; and
• Rachel Dominguez, Vice President of Customer Success — primary relationship manager for the Pinnacle account and custodian of customer communications and escalation records.
The Client will also coordinate the Firm's access to monitoring and telemetry data maintained by Sentinel Uptime Services Inc., a third-party monitoring and observability services provider engaged by Lumos. The Firm's contact at Sentinel Uptime Services Inc. is Brenda Hale, Director of Client Engineering, located at 2200 Mission College Boulevard, Suite 100, Santa Clara, California 95054. The Firm may need to issue third-party subpoenas or requests for data preservation to Sentinel in the event litigation is commenced.
Litigation Hold. The Client will promptly implement a litigation hold, as directed and outlined by the Firm in a separate memorandum to be provided concurrently with this engagement letter, to preserve all documents, communications, electronically stored information, and data that may be relevant to the MSA, the SLA, and the four incidents at issue (INC-4471, INC-4602, INC-4815, and INC-5033). The litigation hold will apply to all relevant custodians and data sources identified by the Firm and the Client, including email, instant messaging platforms, engineering incident logs, monitoring dashboards, ticket management systems, and backup media. Failure to implement and maintain an adequate litigation hold may expose the Client to adverse inferences or sanctions in subsequent proceedings.
Communications. The Client will notify the Firm promptly of any communications received from Pinnacle, Hargrove, Tillman & Burch LLP, Meridian Specialty Insurance Company, or any third party regarding this matter, including any correspondence, settlement overtures, subpoenas, or regulatory inquiries. The Client should refrain from responding to any such communications without first consulting with the Firm.
9. Confidentiality and Privilege
All communications between the Client and the Firm relating to this engagement are protected by the attorney-client privilege and, to the extent applicable, the work product doctrine. These protections are essential to the effectiveness of the Firm's representation and must be carefully safeguarded.
The Firm will take reasonable steps to preserve the confidentiality of all Client information received in connection with this engagement, including proprietary business information, technical data, financial information, and personnel matters. The Firm's confidentiality obligations are subject to and governed by the California Rules of Professional Conduct, Rule 1.6.
To preserve the protections afforded by the attorney-client privilege, the Client should direct all communications regarding the substance of this matter through the Firm. The Client should exercise caution in forwarding, copying, or discussing privileged communications with individuals who are not within the scope of the privilege, and should clearly label all communications with the Firm as "Attorney-Client Privileged and Confidential."
The Client is specifically advised that disclosure of privileged communications to third parties — including, without limitation, Ridgeline Capital Partners, LP (the Client's private equity sponsor), individual board members or board observers, portfolio company management teams, or co-investors — may result in inadvertent waiver of the attorney-client privilege. Any proposed disclosure of privileged communications or work product to such parties should be coordinated with the Firm in advance so that appropriate measures (such as common interest agreements or non-disclosure agreements) may be implemented to mitigate the risk of waiver. The Firm is available to advise the Client on structuring communications with Ridgeline Capital Partners and the board to preserve privilege to the maximum extent permitted by law.
10. Conflicts of Interest
The Firm has conducted a comprehensive conflicts check in accordance with its standard procedures and the California Rules of Professional Conduct, Rules 1.7 and 1.9. Based on the information available to the Firm as of the date of this letter, the Firm has identified no conflict of interest that would preclude or limit the Firm's representation of Lumos in this matter.
Specifically, the Firm confirms that it does not currently represent, and has not within the past three years represented, any of the following parties in any matter:
• Pinnacle Financial Holdings LLC;
• Hargrove, Tillman & Burch LLP;
• Brindoval Cloud Infrastructure LLC; or
• Any other party identified as potentially adverse to Lumos in connection with this dispute.
If at any point during the engagement the Firm identifies a potential or actual conflict of interest, the Firm will promptly notify the Client and take all steps required by the applicable Rules of Professional Conduct, which may include seeking the Client's informed written consent to continued representation or, if the conflict is not consentable, withdrawing from the engagement.
The Client is likewise requested to advise the Firm promptly if the Client becomes aware of any facts or circumstances that may give rise to a conflict, including any affiliations, business relationships, or transactions involving the parties to this dispute.
11. Termination
Either the Client or the Firm may terminate this engagement at any time upon written notice to the other party. Termination by the Client will be effective upon receipt of written notice by the Firm. Termination by the Firm will be subject to the requirements of applicable law and the Rules of Professional Conduct, including the obligation to provide reasonable notice and to obtain leave of the court to withdraw if litigation is then pending.
Upon termination of the engagement for any reason:
(a) The Client will remain responsible for payment of all professional fees incurred and disbursements advanced through the effective date of termination, in accordance with the billing and payment terms set forth in this letter;
(b) The Firm will take all reasonable steps to protect the Client's interests during the transition period, including cooperating in the orderly transfer of the matter file, work product, and client property to successor counsel designated by the Client; and
(c) The Firm will promptly return to the Client all original documents and property belonging to the Client, subject to the Firm's right to retain copies for its records and to assert any applicable attorney's lien for unpaid fees and costs.
The Firm's obligation to continue the representation is contingent upon the Client's timely payment of fees and costs in accordance with this letter and the Client's ongoing cooperation as described in Section 8. The Firm reserves the right to withdraw from the representation in the event of non-payment or material non-cooperation, subject to compliance with all applicable ethical and procedural requirements.
12. No Guarantee of Outcome
The practice of law involves inherent uncertainties. While the Firm will provide its candid professional assessment of the merits, risks, and potential outcomes associated with the Pinnacle dispute, and will bring its best professional judgment and advocacy to bear on the Client's behalf, the Firm makes no guarantee, promise, or warranty regarding the outcome of any dispute, negotiation, mediation, or litigation arising from or related to this engagement. Any assessment of potential outcomes or exposure provided by the Firm reflects the Firm's professional opinion based on the information available at the time and should not be construed as a prediction or guarantee of a particular result.
The Client acknowledges that it retains ultimate decision-making authority over all material decisions in this matter, including but not limited to whether to accept or reject any settlement proposal, what positions to take in mediation, and whether to authorize the filing of any particular motion or the pursuit of any particular litigation strategy. The Firm will provide its recommendations and counsel to inform those decisions, but the final authority rests with the Client.
13. Governing Law
This engagement letter and the relationship between the Firm and the Client arising hereunder shall be governed by and construed in accordance with the laws of the State of California, including the California Rules of Professional Conduct as adopted by the State Bar of California and interpreted by the courts of the State of California. In the event of any dispute arising between the Firm and the Client relating to this engagement, the parties agree to participate in good faith mediation prior to initiating any formal proceeding, and any such proceeding shall be brought exclusively in the state or federal courts located in San Francisco County, California.
14. Document Retention
The Firm will retain all engagement files — including correspondence, pleadings, memoranda, research, and working files — in accordance with the Firm's standard document retention policies. Upon conclusion of this matter, whether by settlement, final judgment, or otherwise, the Client may request the return of any original documents in the Firm's possession that belong to the Client.
Electronic and hard-copy working files generated by the Firm (including internal memoranda, research files, drafts, and attorney notes) will be maintained by the Firm for a period of seven (7) years following the closure of the matter, unless the Client requests earlier return or destruction of specific materials. After the expiration of the seven-year retention period, the Firm may destroy such files without further notice to the Client.
The Client is encouraged to maintain its own copies of all documents and correspondence provided to or received from the Firm during the course of the engagement.
15. Acceptance and Execution
If the terms of this engagement letter are acceptable to Lumos Analytics Inc., we respectfully request that Ms. Voss execute this letter in the space provided below and return a signed copy to the Firm at your earliest convenience. A countersigned copy may be returned by hand delivery, overnight courier, electronic mail (PDF), or U.S. mail to the Firm's address set forth above, to the attention of Linda Osei. This engagement letter will become effective upon receipt by the Firm of the Client's countersigned copy.
If you have any questions regarding any provision of this letter, or if you would like to discuss any modifications prior to execution, please do not hesitate to contact me directly.
Enclosures and References
The Firm's standard Terms of Engagement, to the extent not inconsistent with the terms set forth in this letter, are incorporated herein by reference. In the event of any conflict between this engagement letter and the standard Terms of Engagement, the terms of this letter shall control.
The Firm acknowledges receipt of a copy of the Demand Letter from Pinnacle Financial Holdings LLC dated May 1, 2023, which was provided by the Client. No additional enclosures accompany this letter.
We are grateful for the opportunity to represent Lumos Analytics Inc. in this matter. We are confident in the strength of the engagement team assembled for this dispute and in our ability to mount a vigorous and effective defense of Lumos's interests. We look forward to working closely with you and your team throughout the course of this engagement.
For day-to-day communications, please do not hesitate to reach out to either of the following:
Linda Osei, Partner Direct: (415) 772-8042
Email: losei@calderwoodharkness.com
Simone Laroche, Senior Associate Direct: (415) 772-8187
Email: slaroche@calderwoodharkness.com
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Linda Osei Partner
Date: May 15, 2023
ACCEPTED AND AGREED
The undersigned, on behalf of Lumos Analytics Inc., hereby confirms acceptance of the terms of engagement set forth in this letter and authorizes Calderwood & Harkness LLP to proceed with the representation described herein.
LUMOS ANALYTICS INC.
By: ________
Name: Adriana Voss
Title: General Counsel
Date: ________
CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED This engagement letter and its contents are confidential and are intended solely for the use of the addressee. This document contains information that is protected by the attorney-client privilege. Unauthorized disclosure, copying, or distribution of this letter or its contents is prohibited.
For the avoidance of doubt, the Client, Lumos Analytics Inc., is a portfolio company of Pinnacle Venture Fund II LP, and certain consents and reporting obligations to the sponsor may apply in connection with this matter.
| Attorney | Role | Practice Area |
| Linda Osei | Responsible Partner | Litigation (General) |
| Priya Anand | Billing Partner | Litigation (General) |
| Simone Laroche | Lead Associate | Litigation (General) |
| Jeffrey Park | Working Associate | Litigation (General) |
| Timekeeper | Position | Hourly Rate |
| Linda Osei | Partner | $1,050.00 |
| Priya Anand | Partner | $995.00 |
| Simone Laroche | Senior Associate | $725.00 |
| Jeffrey Park | Associate | $575.00 |