Restrictions were placed on the attorney generals ability to hire outside lawyers on a contingency fee basis. The contingency fee restrictions were approved in response to the ongoing controversy over former Attorney General Dan Morales hiring of private lawyers in the Texas tobacco case and the whopping $3.3 billion in fees lawyers stand to collect. The new measure assures that taxpayer exposure is limited, a fair fee is paid, and the publics interest is served through a contingency fee arrangement.
Specifically, the new language clarifies when, how, and on what terms state governmental entities may enter into contingent fee contracts with outside lawyers.
The filing of the contingency fee contract must first be approved by the Legislative Budget Board if the states anticipated recovery is greater than $100,000 and adequate funds have not been budgeted to prosecute the case.
The contracting attorney or law firm must keep current and complete time and expense records. Expenses must be reasonable, proper, necessary and actually incurred. In most cases, time and expense records are subject to public disclosure. Effective hourly rates are capped at $1,000 an hour. Attorney fees may not exceed 35 percent of the recovery. Risk and difficulty multipliers may not exceed four times the base rate without prior approval by the Legislature.
All litigation and settlement funds recovered by the state are the property of the state. Payment of fees and expenses must specifically be approved by the governing body. A state or local officer, employee or governing body, including the attorney general, may not waive any of the requirements of this law.
Local governmental entities such as cities, counties and hospital districts are not affected by this measure.
The contingency restrictions were attached as a rider to an appropriations bill. As such, the measure will expire in two years. So, it will have to be brought back to the legislature for a permanent fix.