LITIGATION MANAGEMENT GUIDELINES

Transcription

1 LITIGATION MANAGEMENT GUIDELINES I. General Statement Church Mutual Insurance Company is committed to providing professional and responsive legal counsel who provide effective and efficient representation to our insureds. Establishing and maintaining effective partnered relationships with claims defense counsel is an integral element of our claims service offering. We believe that a strong relationship with our customers and claims defense counsel will lead to a successful conclusion of each litigated matter. * To strengthen our partnership with claims defense counsel and provide ever-increasing levels of service for our customers, we have prepared these Litigation Management Guidelines, which are based on the Recommended Case Handling Guidelines for Insurers created by The Defense Research Institute. We believe these Guidelines represent a reasonable and effective framework for working together in the management of both litigated claims and non-litigated claims. * These Guidelines serve our claims defense counsel partners by ensuring consistency in claim litigation management expectations. They assist our claims professionals by ensuring that defense counsel possess an awareness of our claim and litigation management expectations. Ultimately, the Guidelines create a more closely aligned partnership between claims defense counsel and our claims professionals. This enhanced level of partnership translates into a higher level of service for our insureds. Please communicate these Guidelines to all counsel and staff in your office who may be involved in the defense, billing, or administration of our insured's matters. We look forward to partnering with your firm to serve the legal needs of our policyholders. II. Defense Counsel's Ethical Duty Nothing contained herein is intended to nor shall restrict counsel's exercise of professional judgment in rendering legal services for the insured. We expect counsel to represent our insured clients with the utmost loyalty and honesty. We understand that individual case circumstances or jurisdictional rules and practices may require some deviation from these guidelines. We expect you to follow these guidelines and conduct prior consultation where required deviation is needed from these guidelines. If, at any time, you feel that any part of these guidelines raise a potential conflict with your fiduciary or ethical responsibilities, please bring it to the immediate attention of the claim handler responsible for the case for further consideration. Defense counsel is required to complete a conflict of interest review immediately upon receipt of the assignment. Defense counsel is required to affirmatively confirm that no conflicts exist and that the firm is able to handle the matter or that any conflicts have been waived by the necessary parties. Defense counsel must continue to review conflicts throughout the representation. Any conflict identified is to be reported immediately via phone and/or to the claims professional and insured client. III. Case Development An effective and strategically sound legal defense is the responsibility of counsel in consultation with Church Mutual Insurance Company and should be developed in a timely manner. * A. From commencement of a claim until resolution, the claims professional and counsel should discuss and pursue the earliest opportunities to achieve the preferred outcome. * Claim and litigation management must, by its nature, be a flexible process. Different parties will have different views on how issues should be resolved. Effective claim management requires Page 1 of 11

2 Page 2 of Identification of the issues that need to be resolved. 2. Identification of a preferred resolution. 3. A strategy to achieve the preferred resolution. 4. An understanding of costs to be incurred, e.g., a budget. By agreeing in advance on a strategy, the claims professional and counsel share a common understanding of the steps required to implement the case strategy. B. Early resolution of claims and lawsuits is generally desirable when appropriate, and the use of alternative dispute resolution methods is encouraged as appropriate. C. In those instances where defense counsel is involved in settlement negotiations, settlement authority must be obtained from Church Mutual Insurance Company and requests for authority should be made timely. IV. Staffing Philosophy Your firm will designate one attorney to have primary responsibility for each case on which services are requested. The lead attorney assigned to the case should supervise all aspects of it. The case should be staffed economically and effectively. Our expectation is that assignments will be made based on the degree of difficulty of the case matched with the experience of the attorney assigned. Duplication of effort within the firm should be avoided. Church Mutual should be notified immediately of any proposed change of Lead Attorney. To achieve the best efficiency and value, the roles and responsibilities of the staff members should be clearly defined and appropriate to each individual's qualification, level of experience, and billing rate. Lead counsel should delegate work to subordinates wherever possible and appropriate to achieve efficiency and cost-effectiveness without compromising quality. V. Reporting Requirements * Unless otherwise instructed by the claims professional, reporting and communication to Church Mutual is required for the following events: Acknowledgment, Initial Teleconference, Budget, Initial Case Assessment, Case Evaluation Conference, Significant Developments, Pre-trial or Pre-hearing Report and Post-trial or Post-hearing Report. Counsel should provide copies of reports to the insured as he deems necessary and keep the insured advised of the status of the matter. Litigated files for work comp purposes are those where the outcome is uncertain and an attorney is assigned. The reporting requirements and budget requirements do not apply to claims files that are not litigated files. On non-litigated files, counsel shall provide such reports as directed by the claims professional in the initial assignment or subsequent updated instructions. Counsel shall provide an initial status report on non-litigated files within 60 days unless the claims professional has requested a more prompt report or a later report. A. Acknowledgment: Within three days of receipt of a new case, counsel should send an acknowledgment letter or to the Church Mutual representative and the insured regarding receipt of the file and designating the attorney assigned to the case. Any matters of immediate concern or information that may result in early resolution of the case should be addressed in the acknowledgment letter. * B. Initial Discussion: This Initial discussion of the matter between the claims professional and defense counsel should ideally occur within 15 days of the referral of the matter. In some instances, the claims handler may request earlier discussion. In other instances, additional time may be necessary, due to scheduling conflicts, but the discussion must take place no later than 30 days of referral. This discussion should involve whether the matter is one to try or one to settle and the basic discovery items needed to move towards assisting with that initial decision. C. Budget: Budgets are required on all matters except insurance coverage opinion services and situations where counsel is retained in advance of litigation. Once these types of matters go into litigation, a budget is required. Since the decisions made during litigation have financial consequences, it is helpful to know those consequences before the decisions are made.

3 Legal fees and expenses in the context of the entire case and legal services anticipated during an upcoming phase of the Litigation Plan timeframe should be considered. The budget should address all legal services, which are addressed within the Litigation Plan, and should include activities not only to be initiated by counsel but also those anticipated by other counsel or third parties, as well as activities mandated by the court or workers' compensation commission. The budget should be a financial translation of the Litigation Plan. Budgets should not forecast legal services beyond the latest Litigation Plan timeframe unless specifically instructed by the claims professional. The budget section of the Litigation Plan should be completed, showing prior budgeted amounts, and a cumulative total as well. The level of detail required for budgeting should be established by the claims professional at the initial planning conversation and whenever the dynamics of the case warrant a change. The budget should be sufficiently completed to represent the approximate legal costs that are likely to be incurred. Budgets that exceed the scope of the Litigation Plan, in terms of legal services anticipated during the Litigation Plan timeframe, may be rejected by the claims professional. Similarly, legal services in excess of a well-defined budget, or in the absence of a budget, may be rejected. Each budget and budget update should address: 1. Legal tasks that counsel will initiate. 2. Legal tasks that opponents are anticipated to initiate. 3. Legal tasks that the court or workers' compensation commission or others involved in the case are anticipated to initiate. 4. Legal tasks relating to case management, reporting, and communications. 5. Legal tasks that carry over from prior timeframes. 6. Estimated legal expenses related to the tasks (including attorney fees and other vendor fees). Once the budget is established, it must be approved by the claims professional in writing or via electronic budget programs (where applicable). For litigation matters being handled in LEX, an electronic budget must be submitted in LEX and approved by the file handler. Failure to do so will result in delay in payment on invoices until a budget has been submitted. The initial budget should be submitted within 90 days after receipt of the assignment. It is up to both counsel and the claims professional to manage legal expenses within the agreed to budget. * D. Initial Case Assessment and Litigation Plan: Within 90 days after receipt of the assignment of a litigated file, unless an earlier time is requested by the claims professional, counsel should provide an initial case assessment with the following information: 1. A summary of the allegations in the complaint, the factual basis for the litigation, a summary of the information developed during the preliminary investigation, and a preliminary evaluation of liability and damages. It is understood that a preliminary evaluation may be based on incomplete information and this will need to be revised as additional information is obtained. 2. A litigation plan providing the following: a. Counsel's recommendations regarding additional investigation. b. Recommendations on discovery that should be conducted including recommended depositions. c. Anticipated motions to be filed. d. Estimated completion date and expense for each activity. Page 3 of 11

4 3. Discussion of the potential for early disposition of the case by settlement, and recommendations with regard to arbitration, mediation, or direct settlement negotiations. 4. Discussion of the potential success of dispositive motions prior to, or after, the commencement of discovery and whether motions to dismiss or for summary judgment are appropriate. 5. An estimate of the probable trial/hearing date. * E. Case Evaluation Discussion: After receipt of defense counsel's initial report on litigated files (but not more than 120 days from the date of initial matter referral unless a longer time period is specified by the claims professional), a discussion should be held between the claims professional and defense counsel. This discussion should focus on defense counsel's initial report and is a strategy session to confirm that both are in agreement as to how the matter is to proceed. This is a time to make necessary modifications to the initial Litigation Plan and Budget. F. Significant Developments: Defense counsel should communicate with and appraise the claims handler of significant developments as soon as practical. It should contain updates and not regurgitate previously reported information. This includes but is not limited to: 1. Recommendations regarding settlement options and/or dispositive motions. 2. Updated evaluations of liability and damages. 3. Suggestions for updated litigation plan and budget. 4. Depositions of key witnesses. 5. Hearing/conference reports. 6. The settlement value of a fair and reasonable resolution of the claim, when applicable. 7. Analysis of injuries, medical treatments, and reports, including ratings. 8. Analysis of contribution from other parties, if applicable, and apportionment. 9. Discussion of vocational rehabilitation, if applicable. 10. Medicare eligibility status, including recommendations for acquiring necessary releases and recommendations for future handling. 11. Notification of subpoenas to Church Mutual or its insureds. * G. Mediation/Pre-trial/Pre-hearing Report: Thirty days before a case will proceed to mediation, trial or hearing (unless the claims professional has requested a different reporting period), defense counsel must provide a report. This report should include the following as applicable to the particular proceeding: 1. Facts - disputed and undisputed. 2. Liability - win/loss probability. 3. Plaintiff damages and description of injury(ies), including current conditions and any expected permanency. 4. Plaintiff witnesses with summary of expected testimony and effectiveness (fact/expert witnesses). 5. Defense witnesses with summary of expected testimony and effectiveness (fact/expert witnesses). 6. Anticipated pre-trial/pre-hearing motions, discussion of any recent case/statutory law that may impact case (if applicable). 7. Estimated length of trial/hearing. Page 4 of 11

5 8. Trial/hearing strategy including defenses available. 9. Status of settlement negotiations - demands/offers (if any). 10. Anticipated reasonable verdict range. 11. Anticipated jury/panel makeup. 12. Assessment of trial/hearing judge and venue. 13. Plaintiff attorney trial experience and capabilities. 14. Other considerations (if any). 15. Budget (through trial/hearing). For workers' compensation claims, also include the following: 16. Analysis of Compensability - review facts anew to determine if compensable. Provide any analysis of case law and its impact on the decision of compensability under the present factual case. 17. Issues - state the outstanding issues. Also, alert handler to any other issues that may be anticipated. 18. Claimant Background - provide information about the claimant and impression will make as a witness. 19. AWW/Comp Rates and Benefits Paid. a. State the AWW and comp rate. If values are in controversy, then state the different values and not the arguments for each. (1) AWW (2) TTD Rate (3) PPD Rate b. If benefits are an issue, then review and provide amounts paid and/or state values in controversy. If not applicable, state not applicable. (1) Medical (2) TTD (3) TPD (4) PPD (5) PTD H. Post-trial/Post-hearing Report: If the matter has been resolved at the hearing or tried to verdict, defense counsel must provide a post-trial/post-hearing report no more than seven days after the conclusion of the trial/hearing unless the claims professional has agreed to additional time. This report should include: 1. Significant trial or hearing developments. 2. Final outcome or verdict. Page 5 of 11

6 3. Likely outcome for any post-trial/post-hearing motions. 4. Recommendations on whether an appeal is warranted/viable or anticipated along with basis for recommendation. 5. Anticipated budget to proceed or resist an appeal, if warranted. For workers' compensation claims, also 6. Statute of limitations. 7. Future care considerations including Medicare, SSDI, other. I. Workers' Compensation Awards, Orders, or Stipulations for Payment: All reports that reference an order, award, or stipulation to issue any payment must include a clear and distinguishable notice indicating: 1. That an order, award, or stipulation to pay is attached. 2. A comprehensive breakdown of the award to include payment for TTD, PD, and medical. 3. The date by which the payment is due and any other instructions regarding the issuance of payment. 4. The tax ID and mailing address of the payee(s). 5. When applicable, beginning and ending dates of the period covered by the corresponding payments. J. Work Comp Penalties: Counsel should immediately advise the adjuster when counsel is aware of a likely exposure to penalties. K. Liens: In most instances, resolution of liens is the responsibility of adjusters. However, where a conference or settlement of a case provides the opportunity for counsel to resolve liens, then counsel should do so with adjuster's authorization. The fact of the authorization and the name of the person authorizing must be indicated on the line item in the invoices. Resolution of all known liens should take place within three months of case settlement. VI. Consultation Requirements After submission of the initial report and throughout the life of the file, counsel and the claims professional will discuss the litigation plan and update it as necessary. Counsel and Church Mutual Insurance Company will endeavor to agree on the proposed activities outlined in the litigation plan. In no event shall the litigation plan interfere with the independent professional judgment of defense counsel. During trial, defense counsel will report to the claims professional on a daily basis or as soon thereafter as practicable or otherwise agreed with the claims professional. VII. Professional Services Prior consultation and approval is required for the retention of experts, consultants, investigators, or local counsel. For workers' compensation matters, defense counsel should request insurer to coordinate medical bill review and vendor management expert witnesses. It is requested that a curriculum vitae or firm brochure (if applicable) and an estimate of cost, including any hourly rate applicable be provided if possible. VIII. Documentation Counsel should provide copies of substantive pleadings, memoranda, or legal research completed. Counsel should also provide copies of releases, orders, and judgments and any other reasonable requests for information and documents. Copies should be submitted electronically unless requested by the claims professional. Page 6 of 11

7 IX. Appeal X. Billing Counsel must obtain preapproval from Church Mutual Insurance Company to file an appeal (except where the insured has agreed to be responsible for all costs of an appeal). A. Billing Procedure. 1. E-Billing: Church Mutual Insurance Company utilizes Legal Exchange as our e-billing and litigation management tool. All invoices for legal services must be submitted electronically via Legal Exchange (or such other vendor used by Church Mutual) unless otherwise instructed or agreed by Church Mutual. 2. Frequency of Billing: Files may be invoiced on a monthly or quarterly basis from the date of receiving and opening of the claims file. a. If the total amount of unbilled fees and expenses is less than $500, the amount must be carried over to the next billing cycle. b. Once an invoice amount exceeds $7,500, it must be billed in the next monthly billing cycle. 3. Billing Format. a. Heading: The first page of the bill must state: (1) The firm's IRS number. (2) The caption of the case. (3) Name of the insured. (4) Claim number. b. Body: The bill must be prepared with daily entries showing: (1) Date the work was performed. (2) Initials of the person providing the service. (3) Description of the work performed (single activities - no block billing). (4) Actual time in tenths of an hour. c. End of Bill Summary: The bill must include: (1) Full name of each timekeeper billing for services. (2) Status of each timekeeper, e.g., partner, associate, paralegal, nurse paralegal. (3) Hourly rate of each timekeeper. (4) Total hours and total amount charged for each timekeeper during the billing period. d. Task Codes: Task coding is required. The uniform billing codes currently endorsed by the American Bar Association shall be used. Page 7 of 11

8 4. Final Bill: We require final billing within 90 days of receipt of final closing papers. Invoices received more than 180 days after receipt of the final closing papers will not be honored. B. Charges for Service: Agreed-upon hourly rates will apply. Hourly rates must be agreed to up front with Church Mutual Insurance Company. Billings will not be accepted if hourly rates have not been approved or previously agreed upon in advance by Church Mutual Insurance Company. In the event of nonapproved rates, the bill payer can reset the rate and pay at the approved rates. 1. Time Charges: Actual time in one-tenth increments. All charges for services by timekeepers must be recorded daily based upon their actual time in one-tenth hour increments. 2. Single Entry Timekeeping: Unless otherwise requested, the time for each activity should be separately stated. Grouping multiple activities under a single time charge greater than one-tenth of an hour or block billing is not acceptable. 3. Information Description of Services: Descriptions of services should inform Church Mutual Insurance Company of the nature, purpose, or subject of the work performed and the specific activity or project to which it relates. Sufficient documentation must be provided to support the time charge submitted. If there are questions regarding the time charged, additional information to support time charged may be requested. When billing for telephone conversations, specifically describe the parties and purpose of the telephone call. All correspondence, pleadings, and other documents reviewed must be distinctly identified. 4. Compensation: Counsel must consult with the authorized representative of Church Mutual Insurance Company regarding any increase in the rate of compensation. Rate increases taken without prior approval of Church Mutual Insurance Company will not be honored. Any deviations from the approved hourly rate must be preapproved. 5. In-Firm Conferences: Where 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, reasonable and necessary conference time will be reimbursed, provided that the participants and sufficient detail of the subject of the communication is set forth to demonstrate its relevance and value. Time may not be billed for in-firm conferences that are administrative, instructional, or supervisory in nature. 6. Internal File Reviews: Time spent to add or replace personnel handling the case, interoffice conferences to discuss general case matters, preparing or reviewing internal memos, or attorney time spent providing supervision or giving work assignments are not reimbursable charges. 7. Multiple Attendances: Unless otherwise agreed in advance, only one attorney should attend a trial, court appearances, meetings, depositions, witness interviews, inspections, and other functions. Prior approval must be obtained for a second attorney, paralegal, or other firm member to attend any of the above-referenced functions along with the primary attorney if there will be a charge for the second timekeeper's attendance. 8. Depositions: Counsel should consult with the claims professional before initiating and attending depositions other than that of the plaintiff(s), the insured, and other depositions already approved in the initial Litigation Plan or supplement thereto. 9. Legal Research: Counsel should consult with the claims professional before undertaking a legal research project requiring research time of ten hours or more. Copies of all research memoranda are to be provided upon request. Firms have been selected for their expertise in particular areas of law. Accordingly, we will not pay for research considered to be routine or elementary among reasonably experienced counsel. We do not pay for research designed to train a new associate on fundamental elements of tort and insurance law. Please identify all research on your invoice by the issues researched. 10. Motions: Counsel should consult with the claims professional before filing any motions not previously identified and approved in the initial report or supplement thereto. Page 8 of 11

9 Page 9 of Revising Standardized Forms/Pleadings: Only the actual time spent in revising standardized pleadings, documents, or discovery requests or responses to the case at hand should be billed, rather than the time originally spent drafting standard language. 12. Diary/General Status Reviews: Reviews not precipitated by any event or which do not result in tangible work product are not billable charges. We will not pay for time expended by senior personnel to perform a supervisory review of a file handled by another attorney. 13. Miscellaneous: Time spent reviewing or analyzing potential conflict issues, preparing invoices, negotiating billing questions, attending seminars/continuing education, or reviewing advance sheets/other publications to stay abreast of the law will not be reimbursed. 14. Secretarial/Clerical/Administrative Functions: We do not expect to be charged for and we will not pay anyone (attorney, paralegal, secretary) for secretarial/clerical/administrative functions, which are considered part of overhead. There are numerous functions, which are basically secretarial, clerical, or administrative in nature and do not involve the participation of legal personnel in their completion. Some of these functions are as follows: a. Administrative Activities. Church Mutual will not pay for time billed for activities that are part of the day-to-day operations of a law office. Such activities are part of law office overhead and, as such, are included in the negotiated hourly rates charged by counsel for professional services. As examples, and not as a complete list, administrative activities include: the preparation of invoices or responses to billing inquiries; opening or closing the file; staffing including charges directly related to the departure of a lawyer or paralegal; the organization and management of clerical work; and continuing legal education or training for any personnel. Conflict checks are also considered an administrative firm activity and Church Mutual will not pay for time spent checking and resolving conflicts of interest. b. Secretarial and Clerical Activities. Church Mutual will not pay for time billed for secretarial and clerical activities, i.e., tasks that do not require legal acumen and may be effectively performed by support staff, secretaries, file clerks, messengers, and other nonprofessional staff. As examples, and not as a complete list, secretarial and clerical activities include: receipt and distribution of mail; new file set up; maintenance of office and attorney calendars; transcribing; copying; posting; faxing; scanning; ing; inserting documents into and retrieving documents from the file; maintaining order in the file; word processing; proofreading; scheduling; arranging for court reporters; making travel arrangements; stamping documents; collating; velobinding; tabbing subfiles; and assembling materials. Such activities are considered to be part of law office overhead and are reflected in the hourly rates charged by counsel for professional services. Task descriptions for paralegals and other timekeepers should contain sufficient detail to demonstrate that time charges does not constitute such secretarial or clerical activity. 15. Proofreading/Review and Revision of Work Product: We will not reimburse you for time expended by the firm's personnel in proofreading documents for errors of typing or dictation and for making any corrections as a result. We will reimburse reasonable charges for revising substantial documents. 16. Qualified Professionals: Church Mutual Insurance Company will only pay the applicable professional rates for attorneys, law clerks, or qualified paralegal/nurse paralegal performing proper functions in relation to a particular file. An attorney doing paralegal type of activity on a file should only bill the paralegal rate. Except when an agreement has been reached with a law firm for the billing on a blended rate, Church Mutual will pay fees for certain activities only at a paralegal rate. If an attorney performs a paralegal-rate activity, the firm should bill for that activity at an approved paralegal rate. If no paralegal rate is approved for an attorney or the firm, Church Mutual will apply a default rate of $100 per hour for an attorney performing paralegal-rate activities. As examples, and not as a complete list, paralegal-rate activities include: drafting deposition notices, subpoena duces tecum, or notices of hearing; drafting a request for hearing at the Workers' Compensation Appeals Board; indexing, cataloging, and organizing discovery, including deposition, responses to interrogations, documents requests, and expert reports; shepardizing, cite-checking references to case law, statutes, rules, and regulations; preparing page line summaries or indexing of depositions; and organizing trial binders.

10 17. Travel: Necessary travel for one person will be reimbursed as detailed below. If any trip requires the presence of more than one person, preapproval must be obtained from Church Mutual Insurance Company. Church Mutual Insurance Company will not pay for local travel. Local travel is defined as travel of 25 miles or less, one way. For nonlocal travel, Church Mutual Insurance Company will pay travel time at 75% of agreed-upon hourly rate for legal services. Billed travel cannot exceed eight hours in one day unless there is prior approval. Alternatively, Church Mutual will pay the full hourly rate for legal work done during the travel. 18. Other Billing Guidelines: We will not reimburse you for the "value-added" billing. We will not pay for time to prepare or discuss a bill. We will not pay a flat fee for opening or closing a file. 19. Coverage Work: If coverage work will exceed ten hours, the coverage attorney should consult with the file coverage handler to discuss the anticipated scope of work. 20. No Double-Billing for Attending Conferences: When any attorney goes to the board or court to handle multiple cases, we expect the travel time, appearance time, and expenses to be split appropriately between the cases. We expect each case to be billed for the actual time spent on the case. 21. Appearances at the Board to obtain a signature may be billed by the attorney at his regular hourly rate for the time actually spent. C. Taxes: All state taxes will be calculated as appropriate and will be invoiced as a separate line item. XI. Disbursements A. Internal expenses. 1. Overhead: We will not pay any fees, charges, or expenses associated with law firm overhead expenses. 2. Telephone Charges: We will pay actual necessary long distance telephone charges. Local telephone charges are not reimbursable. Nonitemized long distance charges will not be reimbursed. 3. Postage: Postage expenses are considered part of overhead and will not be reimbursed. Use of express and overnight mail will be reimbursed when necessary, as will postage on one mailing that exceeds $ Facsimiles: Facsimile charges are considered part of overhead and will not be reimbursed. We will pay for long distance line charges associated with long distance taxes that are itemized to indicate the date of the call, the number, and the total cost. No per page or flat rate will be accepted. 5. Computerized Legal Research: We do not reimburse for the cost of online computer research services such as (Lexis and WestLaw). We will, however, pay for the timekeeper's research time as discussed above. 6. Photocopies: Per page charges for in-house photocopying should not exceed $0.10 for black and white copies or $0.50 per page for color copies. Any copying charge must indicate the rate and number of pages. Where the size of a project makes it cost-effective, please handle large photocopy jobs externally as a billable expense. B. External expenses. 1. Charges for service by outside vendors will be reimbursed at their actual cost. Expenses of over $500 may be forwarded to insurer for direct payment. Disbursements should be itemized on the law firm's statement with the following information, unless back-up documentation is provided: a. The name of the vendor; b. The date incurred; and c. A specific description of the expense. Page 10 of 11

11 Where back-up documentation is provided, the law firm statement need only set forth a description of the expense and amount incurred. 2. Travel Expense: Church Mutual Insurance Company will reimburse defense counsel for reasonable travel expenses. All expenditures of $25 or more should be supported with receipts attached to the law firm's statement. Automobile travel will be reimbursed at the current IRS rate. Air travel must be preapproved and be by economy/coach class. Hotels must be priced moderately. Reasonable reimbursement for meals will be made for trips requiring an overnight stay. Church Mutual Insurance Company will not pay for local travel. Local travel is defined as travel of 25 miles or less, one way. 3. Professional Services (experts, consultants): Counsel should consult with the claims professional for approval prior to incurring expenses for experts, consultants, investigators, surveillance, or other professional services. 4. Other Billing Guidelines: We will not reimburse you for "value-added" billing. We will not pay for time to prepare or discuss a bill. We will not pay a flat fee for opening or closing a file. C. Any entries for billing, which require prior approval, should indicate who at Church Mutual gave the approval. XII. Bill and File Review Church Mutual Insurance Company reserves the right to review all charges for services and disbursements, including without limitation charges paid by insurer, whether pursuant to self-insured retentions or deductibles under insurer policies or otherwise. Insurer reserves the right to conduct on-site audits and to review the defense file and/or defense bills, consistent with the defense attorney's ethical obligations, and in a manner that will not compromise the attorney-client or work product protection accorded material in the file or communications by and between counsel, the customer, or insurer. Counsel agrees to comply with all reasonable requests for information and documents, provided that such documents or information are not privileged. In such instance, insurer must obtain the consent of the insured. Church Mutual Insurance Company fully reserves all rights to decline to pay or to seek reductions and/or refunds with respect to charges that fail to comply with the requirements set forth herein, and which are not fully explained or documented by the firm after reasonable inquiry. Church Mutual Insurance Company shall allow the law firm to appeal any declination of payment by insurer. Insurer agrees to pay the undisputed portion of bills received from counsel. XIII. Legal Exchange Church Mutual Insurance Company presently utilizes Legal Exchange for e-billing and legal matter management. Legal Exchange is a litigation management tool. All panel counsel must establish profiles within Legal Exchange. All legal invoices must be submitted via Legal Exchange subject to very limited exceptions. Law firms should presume all matters they are handling must be billed electronically via Legal Exchange unless instructed otherwise. Counsel must accept assignment of matters via Legal Exchange and are required to submit budgets and other documents identified in these guidelines via Legal Exchange. Page 11 of 11