D.03 CONTRACTOR LEGAL_MANAGEMENT REQUIREMENTS.docx

ATTACHMENT

D.3 CONTRACTOR LEGAL MANAGEMENT REQUIREMENTS

The requirements set forth herein facilitate management of retained counsel and contractor legal costs, including litigation and legal matter costs. The Department of Energy (DOE) payment of legal costs are subject to compliance with these requirements. Contractor failure to follow these requirements, or other requirements incorporated herein, may result in disallowance of legal costs resulting in contractor responsibility for legal costs. Further, compliance with these requirements does not guarantee that legal costs will be determined to be allowable.

I. Required Elements for Engagement Agreements The following sets forth the required elements for engagement agreements between the Contractor and retained legal counsel. The engagement agreement must include:

1. A process for review and documented approval of all invoices by legal counsel, including the timing and scope of invoice reviews.

2. A statement that provision of records to the Government is not intended to constitute a waiver of any applicable legal privilege, protection, or immunity with respect to disclosure of these records to third parties.

3. A requirement that the Contractor, DOE, and the Government Accountability Office, have the right upon request, at reasonable times and locations, to inspect, copy, and audit all records documenting billable fees and costs.

4. A requirement that all records must be retained for a period of six (6) years and three (3) months after the final payment under this Contract.

5. The Contractor shall obtain the following information from the retained counsel:

a. Identification of all attorneys and staff who are assigned to the matter and the rate and basis of their compensation (i.e., hourly rates, fixed fees, contingency arrangement) and a process for obtaining approval of temporary adjustments in staffing levels or identified attorneys.

b. An initial assessment of each matter or case assigned to legal counsel, along with a commitment to provide updates as necessary. This assessment may be separate from the engagement agreement.

c. A description of invoicing procedures, including frequency of invoices and invoice statement format.

6. The Contractor shall obtain retained counsel's agreement to the following:

a. That in significant matters, a staffing and resource plan for the conduct of the matter must be submitted by the retained legal counsel to the Contractor. Significant matters means legal matters involving significant issues as determined by Department Counsel and identified to the contractor in writing, and any legal matters where the amount of legal fees and costs (including experts) over the life of the matter is expected to exceed $50,000.

Solicitation # 89303923REM000008 DOE-HANFORD Workers' Compensation Third-Party Administrator

Section D Attachment D.3

b. That alternative dispute resolution must be considered at as early a stage as possible where litigation is involved.

c. That retained counsel must comply with the cost guidelines identified in the contract or elsewhere herein.

d. That professional conflicts of interest issues must be identified and addressed promptly.

e. That any increases in hourly rates, fees, or contingency arrangements must be approved in advance by the Contractor and Department Counsel.

f. That legal counsel will track costs on each case, and will provide notice to the Contractor and Department Counsel on any case in which the costs are approaching or likely to exceed $50,000 in legal fees and costs (including expert costs). The notice must include a summary of legal actions taken on the case to date, and a description of further legal action required in order to protect the interests of the Contractor and DOE.

g. That legal counsel will provide quarterly reports to the Contractor and Department Counsel on the status of pending cases. The quarterly reports shall include the name of the claimant, the claim number, claimant’s counsel, the name of the Contractor’s adjuster assigned to the claim, the date of injury, legal fees incurred to date, costs incurred to date, total fees and costs incurred to date, and a brief summary of the status of the case. At the end of each fiscal year, legal counsel shall also provide a cumulative report identifying total legal fees and costs for each case for the past fiscal year. Both reports shall include a field to specify any applicable statutory presumptions applied such that the costs can be easily segregable.

7. The engagement agreement must include a requirement that retained legal counsel will provide a certification concerning the costs submitted for reimbursement. The certification must be included in bills or invoices submitted by retained legal counsel, and must appear as follows:

Under penalty of law, [the representative] acknowledges the expectation that the bill will be paid by the Contractor and that the Contractor will be reimbursed by the Federal Government through the U.S. Department of Energy, and, based on personal knowledge and a good faith belief, certifies that the bill is truthful and accurate, and that the services and charges set forth herein comply with the terms of engagement and the policies set forth in the Department of Energy's guidance on Contractor Legal Management Requirements, and that the costs and charges set forth herein are appropriate and related to the representation of the client.

The certification must be signed and dated by a representative of the retained legal counsel. Invoices must also contain all elements (e.g., date of service, description of service, name of attorney, etc.) set forth in the model invoice format below:

Contractor Litigation and Legal Costs Invoice Format

FOR FEES

Initials of Attorney

(Rate * Time)

See Note 1

FOR DISBURSEMENTS

See Note 2

Note 1—Description of Service:

All fees must be itemized and described in sufficient detail and specificity to reflect the purpose and nature of the work performed (e.g., subject matter researched or discussed; names of participants of calls/meetings; type of documents reviewed/drafted).

Note 2—Description of Disbursement:

Description should be in sufficient detail to determine that the disbursement expense was in accordance with all applicable Department policies on reimbursement of Contractor legal costs and the terms of engagement between the Contractor and the retained legal counsel. The date the expense was incurred or disbursed should be listed rather than the date the expense was processed. The following should be itemized: copy charge (i.e., number of pages times a maximum of 10 cents per page); fax charges (date, phone number and actual amount); overnight delivery (date and amount); electronic research (date and amount); extraordinary postage (i.e., bulk or certified mail); court reporters; expert witness fees; investigation services; filing fees; outside copying or binding charges; temporary help (assuming prior approval).

Note 3—Receipts:

Receipts for all expenses equal to or above $75 must be attached.

II. Allowability of Legal and Other Associated Costs

This section sets forth guidance and criteria for the allowability of legal and other costs related to retention of legal counsel.

1. All costs for legal services representing the self-insured employer or DOE determined to be allowable are reimbursable for actual costs only, with no overhead or surcharge adjustments. All costs incurred for legal services are subject to audit by the DOE, its designated representative, or the Government Accountability Office. The standard for cost reasonableness determinations, one of the criteria for an allowability determination, is contained in the Federal Acquisition Regulation (FAR) 31.201-3.

2. The following categories of costs are unallowable and the Contractor shall not be reimbursed:

a. Specific categories of unallowable costs contained in the cost principles at FAR Part 31 and Department of Energy Acquisition Regulation (DEAR) Part 931. See also 41 U.S.C. Chapter 43, specifically, 41 U.S.C. §§ 4301-4310.

b. Costs incurred for entertainment or alcoholic beverages. See FAR 31.205-14 and 31.205-51 and 41 U.S.C. § 4304.

c. Costs that are customarily or already included in billed hourly rates are not separately reimbursable.

d. Interest charges that a Contractor incurs on any outstanding (unpaid) bills from retained legal counsel are not reimbursable.

3. Costs for the following require specific justification and advance written approval from Department Counsel before incurrence to be considered for reimbursement:

a. Costs and fees incurred related to the defense of DOE or the Contractor or to protesting fines or penalties assessed against DOE or the Contractor, if the Contractor may ultimately be responsible for the cost of the fine or penalty;

b. Computers or general application software, or non-routine computerized databases specifically created for a particular matter;

c. Charges for materials or non-attorney services exceeding $5,000;

d. Secretarial and support services, word processing, or temporary support personnel;

e. Attendance by more than one person at a deposition, court hearing, interview or meeting;

f. Expert witnesses and consultants;

g. Trade publications, books, treatises, background materials, and other similar documents;

h. Professional or educational seminars and conferences;

i. Preparation of bills or time spent responding to questions about bills from either the Department or the Contractor;

j. Food and beverages when the attorney or consultant is not on travel status and away from the home office;

k. Pro hac vice admissions; and

l. Time charged for law students’ or interns’ services.

4. Travel

a. Travel and related expenses must at a minimum comply with the restrictions set forth in 48 CFR § 31.205-46, or 48 CFR (DEAR) § 970.3102-05-46, as appropriate, to be reimbursable.

b. Travel time may be allowed at a full hourly rate for the portion of time during which retained legal counsel performs legal work for which it was retained; any remaining travel time shall be reimbursed at 50 percent of the full hourly rate, except that in no event will travel time spent working for other clients be allowable. In addition, for long distance travel that could be completed by various methods of transportation, e.g., car, train, or plane, costs charged by retained legal counsel or any agent of retained legal counsel will be considered reasonable only if the individuals charge no more travel time than it would take to utilize the fastest mode of transportation that is cost-effective.

III. Requirements for the Contractor’s Legal Management Plan

The Legal Management Plan (LMP) describes the contractor’s practices for managing legal costs and legal matters for which it procures the services of retained legal counsel. The LMP must include the following items:

1. A description of the type of legal matters that may necessitate handling by retained legal counsel;

2. A discussion of the factors the Contractor must consider in determining whether to handle a particular matter utilizing retained legal counsel;

3. An outline of the factors the Contractor must consider in selecting legal counsel, including:

a. Competition;

b. Past performance and proficiency shown by previously retained counsel;

c. Particular experience in a specific area of the law or type of representation;

d. Familiarity with the Department's activity at the Hanford Site and the prevalent issues associated with facility history and current operations;

e. Location of retained legal counsel relative to:

1. The Hanford Site,

2. Any forum in which the matter will be processed, and

3. Where a significant portion of the work will be performed;

f. Experience as an advocate in alternative dispute resolution procedures such as mediation;

g. Actual or potential conflicts of interest; and

h. The means and rate of compensation (e.g., hourly billing, fixed fee, blended fees, etc.); and

4. A description of:

a. The system that the Contractor will use to review each case to determine whether and when alternative dispute resolution is appropriate;

b. The role of the Contractor in legal cost management;

c. The Contractor's process for review and approval of invoices from outside law firms or consultants;

d. The Contractor's strategy for interaction with, and supervision of, retained legal counsel;

e. How appropriate interaction with the Contracting Officer and Department Counsel will be ensured; and

f. The procedures the contractor will employ in order to seek timely approval from Department Counsel to settle legal matters, rate or fee increases, assignment of a matter to legal counsel, or for incurrence of certain costs.