Liberty Mutual Group Guidelines

THE LIBERTY MUTUAL GROUP
LIBERTY INTERNATIONAL UNDERWRITERS
GUIDELINES FOR LAW FIRMS

I.        PREFACE

1. A. Philosophy: The Firm is expected to work with the Liberty Mutual Group (hereinafter “LMG”) and the insured/customer to achieve the best result for the insured/customer in a timely, efficient, and cost-conscious manner consistent with the clients’ interests and the Firm’s ethical obligations, and to resist non-meritorious, suspicious or frivolous claims. Nothing contained herein is intended to nor shall restrict defense counsel’s independent exercise of professional judgment in rendering legal services for the insured/customer.
2. B. Conflicts:

1. Initial Conflicts Check: As part of the Firm’s ethical obligations, the Firm must, upon notification by LIU to the Firm of a defense assignment, immediately conduct a thorough conflicts check, including, without limitation, LMG and its affiliates and subsidiaries. The Firm must confirm in writing to the LIU case handler, preferably within twenty-four (24) but by no later than three (3) business days after receipt of the assignment, that the Firm has completed its conflicts check, there is no conflict or appearance of a conflict, and the Firm is able to handle all aspects of the defense on behalf of the insured/customer.

If, as a result of the conflicts check, there is a conflict or an appearance of a conflict, the Firm shall either: a. Seek a full and informed waiver of the conflict, in writing, from all interested parties and as required by the rules of professional conduct; orb. Decline the defense assignment in writing to the LIU case handler and the insured/customer, returning to LIU and the insured/customer any documentation or materials provided to it and maintaining as confidential and privileged any information provided to it by LIU and the insured/customer.

2. Conflicts which arise during the representation: Defense counsel has a continuing obligation to ensure that there exist no conflicts relative to its ongoing representation of the insured/customer (e.g., when parties are added in ongoing litigation). If, at any point in time during its representation, a conflict or the appearance of a conflict arises, the Firm shall immediately notify the LIU case handler and insured/customer in writing so that they, with the Firm, have an opportunity to address and resolve the issue.

II.        GENERAL CASE DEVELOPMENT

An effective and strategically sound legal defense is the responsibility of defense counsel in direct consultation with the LIU case handler and should be developed in a timely manner.

1. The goal is to timely identify those claims for which there is liability, and to discuss settlement opportunities early. The activities necessary to defend a given claim and bring it to appropriate resolution should be addressed early and the steps necessary to achieve that resolution should be jointly agreed upon between LIU and defense counsel. To that end, budgets addressing case activity may be required pursuant to case handling and reporting protocols and/or in conjunction with discussions with the LIU case handler responsible for the case.
2. The use of alternative dispute resolution is encouraged to facilitate early resolution of claims where LIU and defense counsel agree such should be settled.
3. If defense counsel is requested to be involved in settlement negotiations, settlement authority must be obtained from LIU and requests for authority should be made timely.

III. STAFFING PHILOSOPHY

The Firm will designate one attorney to have primary responsibility for each case on which its services are requested. Initial time taken for internal file assignment to staff is considered a non-compensable administrative task. The case should be staffed effectively and economically.

To achieve the best efficiency and value, the role and responsibilities of the staff members should be clearly defined and appropriate to each individual’s qualifications, level of experience, and billing rate. Lead defense counsel should delegate work to subordinates wherever possible to achieve efficiency and cost-effectiveness without compromising quality.

Duplication of effort within the firm should be avoided, especially when files are re­assigned within the firm. All administrative related activities are not to be billed, regardless of the staff member performing the activity. High volume, repetitive or routine tasks, requiring legal expertise which clerical support staff does not possess should be assigned to a paralegal whenever appropriate. LIU does not expect to be billed for work performed by firm employees other than attorneys, paralegals and law clerks unless approved in advance by LIU. LIU will only pay the appropriate rate level for the worked performed, regardless of the person’s title actually performing the work.

IV. REPORTING

A. Additional Case Handling and Reporting Protocols:

1. 1. Acknowledgement:

Upon receipt of a new case, counsel should send an acknowledgement letter, preferably within twenty-four (24) hours but by no later than three (3) business days, to the LIU case handler regarding receipt of the file, the results of the conflicts check, and (assuming no conflicts) designating the legal team assigned to the case. Any matters of immediate concern or information that may result in early resolution should be addressed in the acknowledgement letter. Counsel should contact the insured/customer, preferably within twenty-four (24) hours but by no later than three (3) business days, after retention to introduce his/her firm.

1. 2. Reporting to the Insured/Customer:

Counsel must also abide by any reporting requirements set forth in an insured’s/customer’s Special Service Instructions (SSIs) as advised by LIU Claims. As a general rule, Counsel should keep the insured/customer appraised

of significant developments relative to:                           final settlement (unless the
insured’s/customer’s consent is needed at the onset); filing dates and results of dispositive motions; date(s) for the insured’s/customer’s deposition; changes in the evaluation of liability and damages; and pre-trial and trial dates.

1. 3. Documentation:

Counsel and the LIU case handler should always discuss what documentation the LIU case handler would like Counsel to submit.

Unless specifically requested by the LIU case handler, reporting in the regular course of case handling shall not include submitting copies of the following documents:

1. Research Memorandum, Motion Papers and Legal Briefs;
2. Deposition Transcripts; and
3. Discovery Requests.

Counsel will still be required to advise the LIU case handler on how these documents (e.g., legal arguments; deposition testimony; propounded discovery) affect the outcome and evaluation of the case and impact defense strategies.

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In the regular course of case handling, Counsel shall provide copies to the LIU case handler (unless copies are already in the handler’s possession) of Expert Reports, Medical Reports and all other Pleadings filed by or against the insured client along with releases, orders of dismissal and final judgments. Counsel shall continue to advise the LIU case handler on how these reports/pleadings affect the outcome and evaluation of the case and impact defense strategies. Counsel shall also provide copies of all releases, orders of dismissal and final judgments to the insured client.

Counsel should consult with LIU on the appropriate means of communication with LIU, whether by e-mail (which is the preferred method when possible), fax, or regular mail, to avoid duplication.

1. 4. Budgets:

Unless the LIU requires otherwise, an initial budget for all files expected to exceed $5,000 in defense costs shall be drafted and discussed with the appropriate LIU case handler. An initial budget should realistically set out only those expected defense costs for the case handling that are associated with the applicable litigation strategy being discussed with the LIU case handler, whether that strategy is Settlement, Discovery/Investigation, or Trial. Once discussed and approved, an electronically billing firm should provide the budget to the LIU case handler and should also post the initial budget in PDF or Word format into Legal eXchange for that specific case.

Even after a budget is approved for the designated strategy, Counsel should continue to consult with LIU Claims as the case handling addressed in the budget is carried out, so that together they may best manage the accuracy of the budget, including the costs and tasks contemplated by such.

Any updated or subsequent budgets should be discussed with and submitted to the LIU case handler as agreed upon with the LIU. Any approved updated or subsequent budgets in a case should also be posted into Legal eXchange for that specific case. Counsel and LIU Claims should continue to communicate in managing any updated/subsequent budget and tasks.

1. 5. General Confidentiality - Media Contact and Marketing:

Counsel shall treat any LMG-LIU business, financial or claims information, and LMG-LIU’s claims and litigation management approaches, as confidential and shall not disclose such information and approaches to the public or media absent written consent from LMG-LIU. Any public or media inquiries made to Counsel about LMG or LIU, or any claim or case shall be referred to LMG-LIU unless LIU has previously and specifically authorized Counsel in writing to respond to such. Counsel may not use LMG or LIU or any of its Affiliates’ names, or claim or case specific information, in public statements or marketing materials without LMG-LIU’s prior written consent.

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1. V. LIBERTY MUTUAL GROUP PREFERRED VENDOR PROGRAMS

LMG-LIU may arrange to utilize preferred vendors, nationally or otherwise, for legal services. Detailed information about these programs and individual vendors' services will be provided separately by your LMG Enterprise Legal Services Regional Manager. These preferred vendors should be utilized, if available and practical, and in a manner consistent with all applicable state statutes and regulations, for all related work. Payment for these services will be directly billed to and paid by Liberty and should not be paid for by the firm. Payment procedure for other vendors is discussed in Section VI. C (2).

1. VI. BILLING

A.        Billing Procedures:

1. Frequency and timeliness of Billing:

1. a. Frequency of Billing: Invoices should be submitted quarterly (90 day cycle) commencing with the assignment of the case, or sooner if the billing exceeds $5,000 during that 90 day cycle. Invoices submitted thereafter should resume the quarterly billing cycle, on the new quarterly cycle. Invoices should be billed every 90 days and not held to accumulate higher dollars levels. “Final invoices” should be submitted promptly (i.e., within 90 days).

b. Timeliness of Billing: All invoices are required to be submitted within 90 days following the end of the billing cycle. The end of the billing cycle is the last day of service appearing on an invoice. Invoices received in excess of 90 days, without an adequate explanation for the lateness appearing in the Invoice Description Field on the invoice, may not be paid. We ask that you do not have overlapping dates of service between invoices.

c. Final Bills: Final Bills must be clearly marked as FINAL. Final bills submitted in paper form must have the word “FINAL” clearly marked near the heading information. Electronically submitted final bills should have the word “FINAL” appear in the Invoice Description Field of the invoice following the Case Caption and Claim Number.

2. Invoice Submission:

a. Electronic: LMG is committed to electronic submission of legal services invoices through a secure web based process. All invoices must be submitted electronically. Only specific exceptions granted to the firm, for specific customer related issues will be honored. LMG uses Bottomline Technologies and its Legal Exchange system for e-billing, but the firm is not responsible for paying Bottomline’s fee.

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1. Specific technical requirements and all other information will be provided by Bottomline Technologies. LMG requires that law firms are Uniform Task-Based Management System (UTBMS) compliant and able to provide UTBMS information in an industry format similar to LEDES. Activity and Expense codes should also be included in addition to the phase and task codes to describe the legal action being performed or expenses incurred. More information about these codes is available at:

http://www.dri.org/ContentDirectory/Public/SpecialCom mittees/UTBMS/UTBMS%20-%20Code%20Set%20with%20Practice%20Tips%20Guide.pd f

2. Regular invoices must be submitted with the case caption and LIU or LMG claim number appearing in the Invoice Description

field on every invoice.                      Invoices failing to contain this
information will be rejected.

1. Invoices must also include daily entries showing: (a) the date the work was performed; (b) the initials of the person providing the service; (c) a description of the work performed, by single activity, with the associated UTBMS phase, task, activity and/or expense code; and (d) the actual time in tenths of an hour for each single activity.
2. A PDF copy of any document related to time billed on an invoice must also be included with all submitted invoices if the total amount billed for work on that document exceeds $1,000. Use the applicable feature in Legal eXchange to include scanned images with your electronic invoices or attach them to the back of any paper invoices.

3. Invoices submitted with incorrect rates or time keeper levels will be automatically rejected and must be corrected before re­submitting electronically. If you have an invoice rejected, and you believe you are billing the correct rate, please contact your Liberty Group Enterprise Legal Services Regional Manager.

b. Non-electronic:

2. Paper Billing Format: Submittal of paper invoices is an exception to the LMG process and must be approved in advance based on unique circumstances. All Paper invoices will be returned unless they comply with the following:

i. Heading: The first page of the invoice must state: (a) the firm’s IRS number; (b) the caption of the case including the full name of the plaintiff/claimant; (c) the name of the

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insured/customer; (d) the LMG claim number; and (e) the start and end dates of the quarter or an indication that the invoice is final.

1. Task Codes: LMG requires that law firms are Uniform Task-Based Management System (UTBMS) compliant and able to provide UTBMS information in an industry format similar to LEDES. Activity and Expense codes should also be included in addition to the phase and task codes to describe the legal

action being performed or expenses incurred.                  More
information about these codes is available at:

http://www.dri.org/ContentDirectory/Public/SpecialC ommittees/UTBMS/UTBMS%20-%20Code%20Set%20with%20Practice%20Tips%20Guide .pdf

1. Body: The invoice must be prepared with daily entries showing: (a) the date the work was performed; (b) the initials of the person providing the service; (c) a description of the work performed, by single activity, with the associated UTBMS phase, task, activity and/or expense code; and (d) the actual time in tenths of an hour for each single activity.
2. End of Invoice Summary: The invoice must include: (a) the full name of each attorney/paralegal; (b) the status of each timekeeper (i.e., partner, associate, paralegal); (c) the hourly rate of each timekeeper; (d) the total hours and total amount charged for each timekeeper during the billing period; (e) summary level UTBMS data; and subtotal amounts for both fees and expenses.
3. All paper invoices (except as indicated below) for legal fees and disbursements should be submitted to the following Central Legal Billing Unit (CLBU) of LMG:

Liberty Mutual Group

Enterprise Legal Services, CLBU Mail Stop 01E

P.O. Box 1525

Dover, NH 03821-1525

OR as an e-mail attachment to: CLBU-Dover Intake@Libertymutual.com

OR Faxed to: CLBU Intake (603) 334-7758

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vi. CLBU Help desk email address:

CLBUHelpDesk-Dover@LibertyMutual.com Telephone number is the same 800-371-9248,

3. Credits: Credits due LIU should be submitted to the CLBU address as noted above in “Invoice Submission” in the form of a check made payable to “Liberty Mutual Group,” accompanied by a brief explanation for the credit, including the claim number.

B.        Charges for Service:

1. 1. Time Charges: All charges for services by attorneys and paralegals must be recorded daily based upon their actual time in one-tenth hour increments. Time billed in excess of .1 hour should be billed by rounding up or down to the nearest higher or lower increment. The overall time billed should not exceed the actual time spent. Billing some lines at zero is the preferred way to indicate the task was included in the collective overall actual time it took to perform the task. Zero entries are allowed to be billed if the firm wants to account for the activity.
2. 2. Single Entry Timekeeping: Unless otherwise directed, the time for each activity should be separately stated. Grouping multiple activities under a single time charge greater than one-tenth of an hour (“block billing”) should not be employed. However, when billing similar work for sequential documents, such as five deposition notices, the work should be billed as a single entry (e.g., review 5 notices of deposition for x, x, x, x, x) if the actual time spent would be exceeded if billed individually on a single file.
3. 3. Descriptions of Services: Descriptions of services should provide the nature, purpose or subject of the work performed, and the specific activity or project to which it relates. Firms should be sure to include detail such as the numbers of pages or other information to quantify the volume or project reviewed to support the time billed. For example, entries for page-line deposition summaries or document analyses must contain the number of pages summarized or reviewed.
4. 4. Compensation: Rate agreements for firms, whether hourly, contingency fee, alternative fee, or subject to a particular rate policy, will be established by LMG and its Enterprise Legal Services department in collaboration with the LIU Claims. Requests by firms for consideration of a rate modification should be forwarded to the appropriate Regional Enterprise Legal Services Office well in advance of the requested effective date. The firm shall not unilaterally implement or bill for a rate increase, and any increase must be approved by LMG in writing. Any firm may also be subject to a payment discount or alternative program (firms will be notified of such and related information will be available for discussion with your LMG Enterprise Legal Services Regional Manager).

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1. 5. In-Firm Conferences: When counsel consults with another attorney in the firm to obtain specific advice or counsel on substantive or procedural aspects of the case that result in a more effective defense, said reasonable and necessary conference time will be reimbursed, for the senior biller only, provided that sufficient detail of the subject of the communication is set forth to demonstrate its relevance and value. The narrative detail in the invoice should include the specific participants in the in-firm conference, the nature/subject matter of the discussion and its contribution to an effective defense, and should be billed using UTBMS Activity Code A105.
2. 6. Multiple Attendances: Only one professional should attend trial, court appearances, meetings, depositions, witness interviews, inspections, and other functions. Defense counsel should consult with the LIU case handler where it is anticipated that more than one attorney’s attendance is necessary. Please provide the LIU case handler’s name in the billing line.
3. 7. Non-compensable Fees: Activities that LMG considers to be support/clerical or administrative in nature are non-compensable and should not be billed by the firm. Such tasks, which LMG will not pay for, include, but are not limited to:

• preparing, reviewing and/or following up on vendor and firm invoices; preparing responses to billing disputes;
• opening or closing files;
• initial time taken for internal file assignment to staff;
• attending seminars or continuing education;
• Reviewing advance sheets or other publications to stay abreast of the law;
• Filing of documents/pleadings with the court, administrative agency, or other ruling or governing body.
• Secretarial and clerical activity including but not limited to receipt and distribution of mail, maintenance of office or attorney calendars, transcribing, copying, faxing, posting, e-mailing, inserting documents into and retrieving documents from a file, maintaining file order, stamping or numbering documents, tabbing sub-files and assembling materials;
• Invoice and audit preparation; and
• Conflict of interest checks, including all related activity as addressed in Section I. B., above.

8. Depositions: Defense counsel should consult with their LIU case handler before initiating and attending depositions other than that of the plaintiff(s), the insured/customer and other depositions already planned for in previous consultation with the LIU case handler. If multiple personnel attend a deposition, please include the LIU case handler’s name in the line item. Billing should use UTBMS Code L330 with Activity Code A109.

We do, however, recognize that deposition transcripts are needed to support dispositive motions and trial. When ordering transcripts, please order an electronic transcript (E-Tran). LMG has in place cost and billing arrangements

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with several national court reporter service providers. They have been instructed to deliver an E-Tran of proceedings if a transcript of a proceeding is ordered. Unless required by court rule or unique circumstances, we will only reimburse firms for the cost of an E-Tran.

1. 9. Legal Research: Defense counsel should consult with their LIU case handler before undertaking a legal research project requiring over three hours of research, and include the LIU case handler’s name in the line item, and bill using UTBMS Activity Code A102. Copies of all research memoranda shall be provided to LIU upon request. Research considered routine or elementary by the LIU case handler or other LMG representative reviewing such, including research on issues considered to be common knowledge among reasonably experienced counsel in your area, will not be reimbursed.
2. 10. Motions: Defense counsel should consult with their LIU case handler before filing any motions not previously identified and approved by the LIU case handler.
3. 11. Revising Standardized Forms/Pleadings: Only the actual time spent in personalizing standardized pleadings, documents, or discovery responses or requests to the case at hand should be billed, rather than the time originally spent drafting standard language.
4. 12. Travel time: Travel time should be handled differently depending on whether it is local or non-local travel.

Local travel is defined as any travel within a 50 mile radius (100 miles round-trip) from the firm’s office. Non-local travel is defined as any travel exceeding a 50 mile radius (100 miles round-trip) from the firm’s office. All travel, attendance, and preparation time, should be billed as separate entries.

Local travel should be billed at full actual time and full hourly rate.

Liberty will reimburse non-local travel time at half the normal hourly rate, unless the traveler is able to perform actual Liberty billable legal work. Actual legal work should be billed at the full hourly rate, just as if it was performed in your office. The total amount of travel time where no legal work was performed should be billed as “Non Local Travel time” and should not include any time where actual work was performed.

“Non Local Travel time” should be identified using the A112 code and billed at half of your regular hourly rate, reflecting the actual amount of time. For example: for an attorney with a regular hourly rate of $100, where a trip involved driving to an airport, waiting, flight time and time from the airport, that took a total of 8 hours, but involved only 3 hours of actual legal work being performed (e.g., work conducted while waiting or on the plane), the attorney would bill the 3 hours at the full $100/hour regular rate for a total of $300, but would bill the remaining 5 hours as Travel Time at half the regular hourly rate, i.e., $50/hour

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for a total of $250. The total trip time (8 hours in this example) should also be indicated in the travel line item description.

13. Pro-Rating: Law firms must pro-rate their time when performing work for multiple carriers or insureds/customers. When dividing work across multiple files/cases or insureds/customers the task description should contain a reference to the overall time spent and the numbers of files included in the proration. (2.6 hrs/3 files)

C.       Disbursements:

1. Overhead Expenses: LMG-LIU anticipates that incidental expenses and routine or recurrent tasks are considered law firm overhead. Any associated cost or expense is assumed to have been incorporated within the firm’s agreed to hourly rate or legal fee structure.

The following items, though not exclusive, are included in this category:

• Books, magazines, subscriptions, and educational materials;
• Computer software, hardware, programming, system usage and maintenance;
• Continuing education seminars;
• Courier charges, including in-house messenger service;
• Equipment purchase or rental (e.g., copier, fax, postal machine, etc.);
• Facsimile charges (incoming and outgoing);
• Group outings/hospitality;
• Legal research resources, including Lexis and Westlaw usage;
• Local travel related expenses <100 miles round trip;
• Mark-ups or surcharges added by the firm;
• Meals unless related to non-local travel, including refreshments during meetings;
• Next day air/overnight mail;
• Office supplies;
• Overtime;
• Photocopies (in excess of 10 cents per page)
• Postage;
• Professional associations or other fees;
• Rent on facilities;
• Support staff service charges, including internal word processing;
• Telephone bills (including cell phones and long distance);
• Temporary help;
• Training materials or sessions; and
• Utilities.

2. External Expenses: LMG-LIU will reimburse you for:

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• Court filing fees - provide sufficient detail about fees to eliminate a possibility that multiple fees could be considered as duplicates, and bill using UTBMS Expense Code E112;
• Jury fees – bill using UTBMS Expense Code E112;
• Subpoenaed records – bill using UTBMS Expense Code E113; and
• Witness fees – bill using UTBMS Expense Code E114.

The law firm will be reimbursed without mark-ups or surcharges for the following when agreed to following consultation with your primary LIU case contact:

• Consultants – bill using UTBMS Code E123;
• Expert witness fees – bill using UTBMS Code E119;
• Imaging; and
• Overnight travel.

To the extent Liberty has established a preferred vendor program, nationally or otherwise, these services should be used whenever possible. Liberty will pay for services provided by these preferred vendors directly as their invoices are automatically submitted to the CLBU via a direct feed, so they should not be paid for by the firm and your firm should not receive an invoice for these services. If you have any questions regarding whether a vendor is a preferred vendor, please contact your LMG Enterprise Legal Services Regional Manager

For all court reporter services which are not subject to a preferred vendor program, your firm (and not the court reporter) is responsible to obtain and validate the invoice (accuracy of expense and claim number) and must send the court reporter’s invoice to Liberty for payment with a cover letter from your firm confirming the validity. Such services may include appearance or cancellation fees or deposition transcripts (for transcripts, see also Section B. 8, above). These court reporter bills must reference the case caption, the vendor’s Tax Identification Number and the LIU claim number.

For any and all other vendor services outside of a preferred vendor program, it is expected that your law firm shall pay individual vendor bills under $300 and include the disbursement on the firm’s next invoice by itemizing, along with the case caption and LIU claim number, (a) the name of the vendor, (b) the date incurred, and (c) a specific description of the expense.

For any and all other vendor services outside of a preferred vendor program where the individual vendor bill is over $300, your firm is responsible to obtain and validate the invoice (accuracy of expense and claim number) and must send the invoice to Liberty for payment with a cover letter from your firm confirming the validity. These vendor bills must reference the case caption, the vendor’s Tax Identification Number and the LIU claim number. If your law firm chooses to pay such individual vendor bills, it shall include the disbursement on the firm’s next invoice by itemizing, along with the case caption and LIU claim number, (a)

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the name of the vendor, (b) the date incurred, and (c) a specific description of the expense.

3. Travel Expenses:

1. a. Local Travel: Expenses and disbursements incurred in local travel are considered overhead and within the firm’s rate structure. Travel within a 50 mile radius of the firm (100 mile round trip) is considered local travel.
2. b. Non-local Travel: Defense counsel should consult with the LIU case handler prior to incurring non-local travel expenses to secure agreement that LIU will reimburse defense counsel for reasonable travel expenses. What constitutes reasonable reimbursement for hotel accommodations, meals, and ground transportation depends upon the locale visited. However, examples would be coach airfare and business class hotels. Mileage will be reimbursed at the lesser of the IRS rate prevailing on the date of travel or the actual rate of reimbursement paid by the law firm to the traveling employee. Invoice information should contain the numbers of miles (billed as # of units) and rate (billed under hourly rate) per mile charged.
3. c. All travel must include the destination, reason for travel, number of nights, number of meals and method of travel with applicable detail. Receipts for each expense over $300 must also be included. These need to be detailed receipts, not credit card statements.

4. Professional Services: Defense counsel should consult with the LIU case handler prior to incurring expenses for experts, consultants, investigators, temporary attorneys or outside paralegals, or other professional services. Expenses for professional services will be reimbursed at actual cost.

5.   Receipts: Copies of receipts for all items over $300 should be included with the applicable legal bills. Use the applicable feature in Legal eXchange to include scanned images of the receipts with your electronic invoices or attach them to the back of any paper invoices. While not all itemized receipts for expenses billed and costs advanced need to accompany invoices, they need be retained by the firm. We may request itemized receipts prior to issuing payment for certain expenses. Attaching copies does not preclude the requirement to include sufficient line item information in the invoice description field to provide a full understanding of the nature of the expense.

6. Administrative Activities: Secretarial and clerical work is considered overhead within the firm’s rate structure. A list of examples appears in subsection B.7., above.

D.        Firm Changes: Any changes made to a firm name (whether due to a merger, acquisition, partner change, or otherwise), address, phone, fax, email, tax

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identification number (IRS identifying number) should be provided to your LMG Regional Legal Services Office.

VII. INVOICE AND FILE REVIEW

1. The Firm recognizes that LMG-LIU has the right to review all legal invoices for services and disbursements pertaining to the matter for which the firm has been engaged by LMG-LIU, and, further, that LMG-LIU has the right to review counsel’s file for issues including, but not limited to invoice review and substantive quality. However, such invoice and file review, including the review of documents, must be done in a manner that does not compromise the attorney-client privilege, reveal client confidences or diminish the protection afforded defense counsel’s work product unless appropriate written consent is first obtained from the insured.
2. B. Audit: Payment of legal invoices and expenses on a file does not constitute a waiver of any of LMG-LIU’s rights to request reimbursement resulting from an evaluation or audit of your firm's invoices. This includes normal review while processing invoices and a variety of audits, both remote and on-site audits. LMG-LIU may

periodically conduct audits at your firm.                   These audits will generally review
information related to processed invoices and any financial findings may be extrapolated over all work billed during the period being covered by the audit. These audits would include files your firm has handled or is handling for LMG-LIU. An evaluation may be made of your work quality, reporting and time and cost disbursements to assess firm capabilities, capacity and staffing related issues. You may be asked to produce the original complete timesheets, pre-bills and a monthly/yearly summary for your attorneys, paralegals, law clerks, or anyone else that has billed time to LMG-LIU. These timesheets should account for all time billed by the timekeeper for the period requested, including non-Liberty work. Non-Liberty work should be fully redacted. Your law firm should maintain notes, e-mails, drafts, telephone messages, and other documents which support your billing on those files.

1. C. Internal Billing Dispute Resolution: If LMG-LIU adjusts a legal invoice, explanation for such action shall be given by LMG-LIU, and the firm shall be given the opportunity to explain the disputed items and appeal such adjustments in the following manner.

• The firm should send an e-mail to: litmanappeals@libertymutual.com within 45 days from date of payment. Requests for consideration shall include the firm name, address, claim number, invoice number and date, dates of service, and description of the issue. The firm must provide sufficient detail to allow reviewers to accurately access the activity. A bill appeal specialist at the appropriate CLBU will, upon due consideration, issue a written decision.
• Appeals submitted after 45 days from the date of payment may not be considered.

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• Repeated appeals, resulting from insufficient information in the original billing, where this requirement is clearly outlined in these Guidelines, may not be considered.
• An appeal from the decision of the bill appeal specialist may be taken, within 30 days of receipt of the decision, to the Regional Management offices of Enterprise Legal Services.

D.                      Arbitration: If a dispute cannot be resolved by such Internal Billing Dispute

Resolutions discussions, the parties agree that the dispute shall be submitted to binding arbitration. The arbitration shall comply with and be governed by the provisions of the American Arbitration Act. The parties agree that the dispute shall be governed and adjudicated under Massachusetts law. The parties shall mutually select a single neutral arbitrator, or, if they are unable to agree, each party shall appoint one arbitrator and the two arbitrators shall, in turn, appoint a third impartial arbitrator. The decision of the arbitrator(s) so selected shall be final and binding with no right of appeal. The cost of the arbitration shall be borne by the losing party or in such proportions as the arbitrator(s) may decide. The arbitration hearing shall be held in the county where the legal services were rendered or at such other location as the parties may agree. The arbitration proceedings and the results thereof shall remain completely confidential as between LMG-LIU, the insured, and defense counsel.

VIII. RECORD RETENTION REQUIREMENTS

The records retention requirements are media neutral and apply to both hard copy and electronic documents. The following record retention requirements reference minimum retention periods. If a longer time period is required by local rules the longer time period will apply.

Documents to be retained for duration of the case, plus two years:

1. Invoices.
2. All deposition transcripts, expert witness materials, court documents, or other case information, as well as electronic mail.
3. Expert witness: copies of engagement letter, curriculum vita, fee schedule, and confirmation authorizing the engagement of the expert.
4. Expenses advanced on behalf of other law firms (i.e., joint defense activities or repository expenses): a full accounting to the firms for their pro rata shares, including the calculation of the pro rata percentage; accounts receivable records showing the amounts billed/collected, with clear notations indicating the invoice date and number on which collections were credited back to LIU files; and correspondence documenting follow-up collection attempts on any pro rata billings outstanding more than 45 days.

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1. Original time sheets for all individuals billing time to LMG files. If the firm utilizes an electronic time and billing system, data must be retrievable that will substantially comply with these requirements.
2. Records showing the adjustments made to time sheet entries (including data entry documents from which any change was entered).
3. Supporting documentation for out of pocket expenses billed, including proof of payment.
   1. For expenses that require consultation, the letter, e-mail, or dated memorandum of the telephone conversation authorizing the expense.
   2. Original bills and invoices, with file numbers or case captions clearly identified.
   3. Canceled checks/other evidence of payment.
   4. Original receipts for all travel expenses.
   5. Expense accounts and supporting records when firm members are reimbursed through the filing of expense accounts.
   6. A cover/voucher sheet should be attached to the invoice itemizing the expenses distributed to each file when expenses are charged to multiple files.

IX.       ERRORS AND OMISSIONS COVERAGE

LMG requires maintenance of Errors and Omissions Insurance by our law firms that is underwritten by an “A” (A. M. Best rating) or better rated insurance company with minimum limits of one million dollars per occurrence, or as otherwise directed by Enterprise Legal Services, as a condition of doing business with LMG. Evidence of insurance, such as a declaration sheet specifying coverage amounts and the name of the insurance carrier, will remain with the firm and be available for our review.