Malpractice Insurance Coverage
Outside counsel are required to maintain adequate malpractice coverage when representing the FDIC in all matters, with certain limited exceptions including: where the firm is retained solely to represent the FDIC on appeal or in connection with asset liquidation-related proceedings where the aggregate value (e.g., claim amount) of the asset(s) is less than $250,000; or as the Division may otherwise determine. Outside counsel must advise the Legal Division of the identity of its malpractice insurance carrier, the extent and duration of the firm's coverage, and limitations on the firm's coverage that may affect the FDIC. The Legal Division or the Office of Inspector General may request a copy of the malpractice insurance policy.
Conflicts of Interest
FDIC policies and procedures governing outside counsel conflicts of interest are found in the "Statement of Policies Concerning Outside Counsel Conflicts of Interest" and "Outside Counsel Conflicts of Interest Procedures" (collectively, "Conflicts Policies and Procedures"). Outside counsel should refer to the Conflicts Policies and Procedures, as they may be amended, for specific guidance on conflicts of interest.
When outside counsel submits its application materials, it must provide the Legal Division with a list of all actual or potential conflicts of interest and matters that may present the appearance of a conflict. Thereafter outside counsel must disclose in writing any actual or potential conflict, or appearance of a conflict, to the Legal Division as soon as outside counsel learns of its existence. Outside counsel must be free of any such conflict of interest unless the Legal Division waives it in writing. Outside counsel is required to provide information about its system for tracking conflicts and its policy regarding the resolution of conflicts.
Failure to disclose promptly actual or potential conflicts of interest, or matters that may present the appearance of a conflict, may result in termination of the firm's services, suspension of new referrals, disallowance in whole or in part of fee bill(s) for services rendered, denial of a conflict waiver, imposition of a bar to application, or other corrective actions. Outside counsel will not be permitted to go forward with representation adverse to the FDIC until the situation has been waived or otherwise
resolved to the satisfaction of the Legal Division.
It is solely within the discretion of the Legal Division to determine whether an actual or potential conflict exists. Moreover, even the appearance of a conflict may result in the denial of a waiver or other corrective actions.
Outside counsel also must observe applicable state bar rules of professional responsibility with respect to conflicts of interest and confidentiality and the American Bar Association Model Rules of Professional Conduct to the extent that these are not contrary to applicable state bar rules. Additionally, there may be other situations that could,give rise to actual or potential conflicts of interest, or the appearance of a conflict, peculiar to the representation of the FDIC, of which it must be informed promptly, such as those set forth in 12 C.F.R. Part 366, as amended or superseded. Information concerning potential or actual conflicts of interest, or the appearance of a conflict, that must be reported to the FDIC includes, but is not limited to the following:
- Whether outside counsel currently represents any interest adverse to: the FDIC (or the former RTC) in any of its capacities, the former FSLIC, a subsidiary of a failed insured depository institution, or an FDIC bridge bank.
- Whether outside counsel previously represented an open insured depository institution that subsequently failed or previously represented any interest adverse to such an institution.
- Whether there exists an actual or potential conflict or the appearance of a conflict of interest between the firm and the Board of Governors of the Federal Reserve System, Office of Thrift Supervision, Office of the Comptroller of the Currency, the National Credit Union Administration, or the Department of Justice (on matters involving failed insured depository institutions or their directors, officers or related third parties).
- Whether the firm or any of its attorneys or employees currently has any outstanding debt, whether performing or in default, owed to any failed insured depository institution (excluding debts assumed by an operating insured depository institution).
- Whether any attorney or employee of the firm has served or serves as an officer or director of any insured depository institution.
- Whether any attorney or employee of the firm has served or serves as a trustee in bankruptcy or as a receiver in any Federal or state court or administrative proceeding, and whether the firm has represented or represents a debtor-in-possession, trustee in bankruptcy, or a receiver in a proceeding in which the FDIC or RTC has an interest as a creditor or otherwise.
- Whether the firm represents a creditor in a bankruptcy, receivership, or other litigation proceeding where the FDIC or RTC has asserted claims against the same debtor in either the same or an unrelated proceeding.
- Whether the firm represents any insurance carrier or any stockholder or class of stockholders in an action against a director or officer of an
insured depository institution.
- Whether the firm represents any insured depository institution in regulatory matters, assistance transactions, or prospective bids for troubled or failed institutions or the assets of such institutions.
- Whether the firm represents any officer, director, debtor, creditor, or stockholder of any failed or assisted insured depository institution in a matter relating to the FDIC, the RTC, or the former FSLIC.
- Whether any attorney or employee of the firm is closely related to any person who is employed by the FDIC or the RTC, is in litigation with the FDIC or RTC, has outstanding debt owed to any failed depository institution or an ownership interest in such an institution. This includes spouse, dependent child or member of the immediate household.
- Whether the firm has been or is currently subject to any prior or pending claims or investigations by the FDIC or RTC.
In the event the services of outside counsel are terminated, outside counsel must follow FDIC policies and procedures, return all files, and otherwise cooperate fully in the orderly transfer of cases as the Legal Division directs.
Rate Structure
The Legal Division expects to receive legal representation at fees and rates that reflect substantial discounts from outside counsel's usual rate structures. The Division also welcomes offers involving alternative rate structures such as blended, flat, contingent, and other innovative rate proposals. Rates charged for travel time shall be reduced by fifty percent. The Legal Division also may employ competitive bidding within defined geographic areas for legal services involving certain routine
representations, including nonjudicial foreclosures and collection litigation.
It is the Division's policy not to pay for educational or developmental costs of outside counsel becoming familiar with pertinent statutory and case law affecting the FDIC. Outside counsel must therefore agree to absorb the cost of developing an understanding of specialty issues, Federal law and judicial precedent in which expertise is required to represent the FDIC adequately. A list of these issues is attached as Appendix C to this Guide.
Rates for the firm's attorneys and paraprofessionals set forth in the fee schedule(s) attached to the LSA on file with the Legal Division shall be the maximum rates outside counsel may charge the FDIC during the effective period of the LSA. The hourly rate charged by an attorney or paraprofessional may not vary from one matter type to another. Thus, outside counsel are required to charge the same hourly rate for all FDIC matters. Such matters include all work performed for the FDIC Legal Division, entities in conservatorship or receivership, FDIC bridge banks, or other matters the legal fees for which are reimbursed by the FDIC, such as work performed for asset servicers.
In the event the FDIC retains outside counsel to handle more than one matter, the rates charged by outside counsel shall be the lowest of: (a) the fee schedule(s) attached to the LSA, (b) the rates negotiated with any FDIC office for any matter, or (c) the rates charged by outside counsel for similar work performed on behalf of clients other than the FDIC.
Outside counsel and the FDIC Legal Division may negotiate rates for a matter that are lower than those set forth in the fee schedule(s) attached to the LSA. Outside counsel must submit a revised fee schedule reflecting such lower rates to be attached to the LSA. Any discounts in hourly rates that outside counsel offers for routine volume work shall be applicable in every instance to such work performed by outside counsel on behalf of the FDIC. There is an exception for alternative billing arrangements, such as: fixed flat rates, contingency fees, or a combination of such rates, for specified matters. Outside counsel must obtain Legal Division approval for such alternative billing arrangements and submit a revised fee schedule to be attached to the LSA.
Staffing
Outside counsel must consult with the FDIC supervising attorney on all decisions pertaining to staffing for FDIC matters. If it should become necessary over time for outside counsel to adjust the number of attorneys or paraprofessionals assigned to work on FDIC matters, outside counsel shall ensure that the matters are under the general supervision of attorneys experienced in handling FDIC matters. Outside counsel also shall strive to further the FDIC's goals to provide equal opportunity for minority and women attorneys and other professional staff by referring FDIC matters to these attorneys and paraprofessionals within the firm.
Attorneys and paraprofessionals listed on the fee schedule attached to the LSA may be assigned to and charge for work performed on an FDIC matter. Attorneys and paraprofessionals whose names do not appear on the fee schedule of the firm's existing LSA may be authorized by the FDIC supervising attorney to bill on a matter where the firm submits a written request, the request is approved by the FDIC supervising attorney, and the hourly rate of any newly assigned attorney or paraprofessional does not exceed the range of rates evidenced by the existing fee schedule. The approved revised fee schedule must be forwarded to the Legal Division to be attached to the LSA.
Outside counsel should consult with the FDIC supervising attorney for guidance on minimizing staffing costs. The Legal Division reserves the right to require outside counsel to make use of its in-house resources.
Billing
Outside counsel who provide legal services to the FDIC are required to submit invoices for their legal services and expenses in accordance with the policies and procedures of the Legal Division. The LSA, this Guide, and a separate manual, the "Legal Services Invoice Payment Program Manual," ("Fee Bill Manual"), which is furnished to outside counsel upon retention, as well as additional instructional materials that from time to time may be provided to outside counsel, govern the billing process.
Outside counsel are required to submit the required materials to the appropriate FDIC office on a monthly basis for each separate FDIC matter. Invoices with amounts less than $500 should be submitted on a quarterly basis unless this would cause undue hardship to outside counsel.
Outside counsel must submit all "Fee Bill Packages" to the address indicated by the FDIC. Formats of the required forms are described in Appendices E and F of this Guide, and the Fee Bill Manual, as from time to time amended.
Fees and expenses should appear separately on the itemized fee bill. Each individual activity billed shall be itemized separately, and the time billed for each such activity shall be identified separately. "Block Billing" of fees is not acceptable.
Itemized fee bills should not be resubmitted, unless the firm is instructed to do so. Itemized fee bills should not include past due amounts. Inquiries concerning past due fee bills should be directed to the Legal Fees Technician at the FDIC office to which the Fee Bill Package was sent.
Failure to follow the format, certification requirements, or other procedures, as instructed, may result in delays of the payment process.
All litigation related expenses must be advanced by outside counsel and must be authorized by the FDIC supervisory attorney. Reimbursement will be made as part of the payment of monthly billings. In exceptional cases, advance approval may be granted for direct billings by authorized experts or other vendors or suppliers. All invoices from suppliers of goods or services, even if first paid by outside counsel, must conform to the formats prescribed for outside counsel fee bills.
The FDIC supervisory attorney will review outside counsel fee bills to determine both the reasonableness of the charges, and the cost effectiveness of the representation. Occasionally, the FDIC may ask for additional support documentation regarding your services. The FDIC may disallow, in whole or in part, fees that are unsupported or that otherwise do not conform to FDIC policies and procedures.
Outside counsel must permit the FDIC, the FDIC Office of Inspector General, and the General Accounting Office, or their representatives, to conduct an audit or review of the firm's billing on FDIC matters, including previously paid invoices. For purposes of subsequent audits, outside counsel are required to retain copies of all FDIC-related bills and original underlying support documentation, including time sheets and time and expense adjustment records, for at least four years after final payment. The FDIC reserves the right to obtain additional information upon review of any itemized fee bill or support documentation.
The submission of erroneous bills or requests for reimbursement of
inappropriate charges may result in sanctions. Under no circumstances may
outside counsel attempt a set-off or recoupment, obtain a charging or retaining
a lien, or withhold files in the event of a dispute over payment for services
rendered.
It is outside counsel's responsibility to provide their billing department or clerks with a copy of this Guide and the Fee Bill Manual and to ensure that the required procedures are followed. It is the Division's expectation that undisputed itemized fee bills, which are submitted in the proper format with the requisite certifications and supporting documentation, will be promptly paid.
For matters previously referred to outside counsel by the RTC or for FRF matters referred to outside counsel by FDIC, outside counsel should refer to the "RLIS Forms and Procedures Deskbook for Outside Counsel" for budgeting and billing procedures applicable to such matters.
Fees and Expenses
Outside counsel must include in its fees and rates for legal services provided to the FDIC its costs of doing business, including all "overhead," general and administrative costs, fringe benefits, and profit. Outside counsel may not submit and the FDIC will not pay invoices for such costs of doing business. For example, non-reimbursable "overhead" that we do not pay includes, without limitation: business operating expenses not directly and solely attributable to the FDIC such as rent, electricity, local telephone charges, or administrative support; secretarial or clerical overtime (unless such overtime is requested by the Legal Division or occasioned by an emergency situation created by the FDIC, and only upon consultation with the FDIC supervising attorney); charges for word processing or computer time (except actual charges for Westlaw or Lexis); and attorney or support staff time devoted to the preparation of bills, or to the generation of routine, non-narrative status reports.
"Markups" on any supplies or services procured by outside counsel for the Legal Division shall not be charged to the FDIC. The FDIC will only pay actual costs for services rendered or supplies provided in the course of representation.
Charges for photocopying shall not exceed the eight cents per page cost limitation set by the Legal Division. The FDIC has established criteria that outside counsel must satisfy to seek a waiver of the per page cost limitation and these criteria may be obtained from the FDIC supervising attorney. A cost study must be submitted in support of the requested waiver. As with all costs for supplies and services, local commercial rates will be used as a benchmark.
Outside counsel must consult with the FDIC supervising attorney concerning the use of temporary personnel, including part-time law clerks and summer associates. The FDIC may require that use of such personnel be conditioned on outside counsel's absorption of a portion of the cost.
The Division also requires outside counsel to reduce the hourly rate charged to the FDIC by 50% while an attorney or paraprofessional is traveling unless legal work is being performed.
Travel and Other Expenses
Outside counsel must conform its travel and expenses to applicable procedures and rules as set forth in the FDIC General Travel Regulations, and other FDIC memoranda, copies of which are available upon request. We expect our outside counsel to make every reasonable effort to minimize costs to the FDIC. Outside counsel must consult with the FDIC supervising attorney concerning overnight travel.
Most hotels and car rental companies, and some airlines, offer government discount rates to those traveling on official business for the government with supporting documentation. Individuals traveling on official business for the FDIC should request a letter from the FDIC supervising attorney acknowledging the travel is in connection with official government business to support requests for the government rates.
Where the government rate is not available for hotel, car rental, airline, rail or other common carrier expenses, the charges incurred should be reasonable. Hotel accommodations must be moderately priced; expenses for luxury hotels or special services are not to be charged to the FDIC and are not reimbursable. Air travel will be reimbursed at not more than the highest fare "coach" rate for the subject flight. The FDIC will not pay for air or other common carrier premium services.
Outside counsel must consult with the FDIC supervising attorney to incur reimbursable costs
for travel by more than one attorney on routine or other FDIC matters. In-town/local travel of outside counsel for FDIC matters may be billed in accordance with the FDIC General Travel Regulations. As required in the FDIC General Travel Regulations, original receipts or vendor invoices must be submitted in support of invoices for outside counsel expenses.
Reports
FDIC management procedures require that outside counsel keep the FDIC supervising attorney fully informed as to the status of each matter being handled by outside counsel. Reporting will vary by type and size of case, by region and by firm.
A status report shall be submitted quarterly (or more often if directed) to the FDIC supervising attorney for each matter being handled by outside counsel for the duration of the engagement.
The reports should be brief but meaningful. The status report should emphasize developments since the last report and review whether the case is proceeding in line with the case plan and budget. The Legal Division will require an explanation of why actual litigation costs differ from projected or budgeted amounts.
At the discretion of the Legal Division, annual status reports covering any matters being handled by outside counsel for the FDIC also may be required.
The Legal Division may require information concerning the firm's employment of minorities and women on FDIC matters. Outside counsel will be requested to provide information pursuant to 31 U.S.C. 1352, commonly referred to as the Byrd Amendment, which requires the disclosure of lobbying activities under certain specified conditions.
Outside counsel ceasing work on a case or other FDIC matter for any reason must notify the Legal Division promptly in writing.
Ethical Considerations
The FDIC expects outside counsel to observe the highest ethical standards and to comply with all applicable law, rules, and regulations governing ethical conduct or conflicts of interest. Neither outside counsel, nor any person associated with outside counsel shall provide (or seek reimbursement for) any gift, gratuity, favor, entertainment, loan, or other thing of monetary value to any employee of the FDIC not in conformity with such applicable law, rules, or regulations.
Outside counsel may not assign to any former FDIC/RTC Legal Division attorney who has joined the firm any matter referred to outside counsel where the matter was referred to the firm by the former FDIC attorney or where the former FDIC Legal Division attorney, while in the employ of the FDIC, had material or substantial involvement in the matter. Outside counsel may request a waiver to permit the assignment of such matters to former FDIC attorney(s) on a case-by-case basis.
Contacts with the Media and the Public
Extra-judicial statements regarding FDIC litigation matters are almost always inappropriate and often counterproductive. Outside counsel shall not discuss FDIC matters with representatives of the media. If media representatives contact outside counsel concerning cases that the firm is handling on behalf of the FDIC, the firm may confirm factual matters that are a matter of public record. Under no circumstances shall outside counsel comment to the media on other specifics of a case such as potential appeals or settlements, or on more general matters involving the FDIC's policies and procedures or decision-making.
All media inquiries concerning FDIC matters must be referred to the FDIC Office of Corporate Communications in Washington at (202) 898-6993 for response. Additionally, outside counsel promptly should advise the FDIC supervising attorney of the inquiry and referral.
Outside counsel who address the public at seminars or other functions on topics .pertaining to the FDIC or laws and regulations affecting it must disclose to the audience that it is making the presentation on its own behalf and not on behalf of the FDIC.
