Bill Text: NJ S933 | 2014-2015 | Regular Session | Introduced


Bill Title: Establishes best practices for procurement and payment of legal services by local governments and school districts.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2014-01-27 - Introduced in the Senate, Referred to Senate Community and Urban Affairs Committee [S933 Detail]

Download: New_Jersey-2014-S933-Introduced.html

SENATE, No. 933

STATE OF NEW JERSEY

216th LEGISLATURE

 

INTRODUCED JANUARY 27, 2014

 


 

Sponsored by:

Senator  JENNIFER BECK

District 11 (Monmouth)

 

 

 

 

SYNOPSIS

     Establishes best practices for procurement and payment of legal services by local governments and school districts.

 

CURRENT VERSION OF TEXT

     As introduced.

  


An Act concerning best practices for the procurement and payment of legal services by local governments and school districts and amending and supplementing various parts of the statutory law.

 

     Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

     1.    (New section) The Director of the Division of Local Government Services, in consultation with the Commissioner of Education and the State Comptroller, shall promulgate rules and regulations identifying best practices for local units and school districts concerning the procurement, use, and management of both in-house salaried attorneys and outside legal counsel, which shall include, but not be limited to:

     a.     Policies and procedures for procuring outside legal counsel which identify personnel responsible for developing requests for qualifications and requests for proposals, set forth criteria and personnel to evaluate responses, and explain the scoring and documentation of responses;

     b.    Procedures designed to ensure that the procurement process complies with State and local pay-to-play laws;

     c.     Clearly defined job descriptions or job duties for in-house salaried attorneys to help ensure adequate supervision and to distinguish between tasks to be performed by in-house attorneys and those to be delegated to outside legal counsel;

     d.    Methods for ensuring appropriate supervision of legal counsel;

     e.     Identifying personnel responsible for determining whether work should be performed by outside or in-house legal counsel and personnel responsible for delegating work to outside counsel;

     f.     Processes for requesting legal advice which specify personnel authorized to contact outside counsel to request legal advice and internal documentation to be preserved memorializing those contacts; and

     g.     Timeframes for the periodic review of operating practices and the structure of legal counsel arrangements to ensure that those practices are in compliance with stated policies and procedures and to determine whether costs savings or other improvements can be achieved.

 

     2.    (New section) The Director of the Division of Local Government Services, in consultation with the Commissioner of Education and the State Comptroller, shall promulgate rules and regulations concerning best practices for procuring legal services, which shall include, but not be limited to:

     a.     Ensuring that the pool of potential law firms or attorneys submitting proposals is as expansive as possible;

     b.    Ensuring that the eligibility requirements for a vendor seeking to compete for a legal services contract are limited only by concerns related to the vendor's responsibility;

     c.     Ensuring that solicitations for legal services contracts are clear and unambiguous and contain a clear and detailed statement of the legal work to be undertaken, and if a solicitation for legal services anticipates awarding multiple contracts for legal services in various designated areas of law, the solicitation shall describe the process for the allocation of legal work among pooled attorneys and law firms.  The solicitation shall clearly distinguish which services, if any, shall be covered under a retainer and which services the attorney may bill for at an hourly rate;

     d.    Ensuring that the school district includes a clear, complete, and specific statement of the legal work in the final executed contract which is consistent with the statement set forth in the solicitation, and that both the contract and solicitation emphasize the result to be achieved, rather than detailing the process for accomplishing that goal;

     e.     Ensuring that proposals are judged on the basis of predetermined, merit-based evaluative criteria, which are made known to vendors before proposals are submitted, and disclosed to prospective vendors as early as possible in the procurement process, such as in the request for proposals or other solicitation document;

     f.     Ensuring that weighing of evaluative criteria is used if some criteria are determined to be more important than others. The weight assigned to each criterion generally shall be disclosed in the request for proposals;

     g.     Ensuring that the evaluative criteria are judged by a qualified evaluation committee, which is established before proposals are received, and which is sufficiently qualified to evaluate the strengths and weaknesses of the proposals submitted.  Potential evaluation committee members should be screened meticulously for conflicts of interest;

     h.    Ensuring that the evaluation process is explainable to evaluators and competing vendors, and capable of withstanding scrutiny under a protest challenge, and ensuring that the meaning of each criterion and the reason each criterion is part of the evaluative analysis is explained to evaluators before judging;

     i.     Ensuring that each member of the qualified evaluation committee scores each proposal and provides comments that explain the score assigned to each criterion, and that the scoring process and award recommendations should be well-documented and retained;

     j.     Ensuring that every step in the evaluative process is documented through scoring sheets, a written record of what transpired during any permitted negotiations between vendors and procurement officials, a written comparative analysis of competing proposals, and a written award recommendation;

     k.    Ensuring that the written award recommendation explains the factors that led to the award decision, offers qualitative discussion of the leading competing proposals, and describes the specific characteristics of the winning vendor's proposal that resulted in its selection over the others; and

     l. Ensuring that the period of time for the preservation of procurement materials is set by the school district.

 

     3.    N.J.S.18A:18A-40 is amended to read as follows:

     18A:18A-40. Form and execution of contracts and bonds.  All contracts for the provision or performance of goods or services shall be in writing.  The State Board of Education may, subject to the requirements of law, prescribe the forms and manner in which contracts shall be made and executed, and the form and manner of execution and approval of all guarantee, indemnity, fidelity and other bonds.

     The Director of the Division of Local Government Services, in consultation with the Commissioner of Education and the State Comptroller, shall promulgate rules and regulations concerning best practices for formal written contracts between school districts and outside legal counsel, which shall address, at a minimum, the following matters:

     a. (1) Clearly define the scope of services to be performed by legal counsel and any objectives or deliverables to be achieved, and

     (2) Clearly define the fee arrangements to ensure that there is no overlap between services included as fixed compensation under a retainer agreement and those billed at an hourly rate;

     b.    Clearly set forth the billing rate and terms;

     c.     Clearly provide that administrative work and secretarial services shall not be billed at an hourly rate;

     d. Address ancillary expenses and disbursements by listing reimbursable expenses and requiring vendor to submit itemized bills that detail disbursements;

     e. Address billing for travel time so that hourly outside legal counsel are compensated at no more than 50 percent of the contracted hourly billing rate for non-productive travel;

     f.     Set forth general staffing parameters including designation of a specific attorney or attorneys as primary contact under the contract;

     g. Require legal counsel to submit detailed monthly billing invoices, which contain the following information:

     (1) the name of the specific matter for which service was rendered,

     (2) the date on which service was rendered,

     (3) the name or identification number of the attorney who rendered the service,

     (4) the hourly rate of that attorney or the specific method by which the rate for that attorney was determined,

     (5) the total charge for each particular service, task, or billing entry,

     (6) a description of each particular service rendered or task performed and the names of each individual involved,

     (7) the amount of time spent on each particular service rendered or task performed, and

     (8) an itemized list of the expenses and disbursements for each particular service rendered or task performed, with specific notes on which expenses are reimbursable;

     h. Prohibit "block billing," which is the practice of grouping together multiple activities or tasks under one time entry.

(cf: P.L.1999, c.440, s.74)

 

     4.    N.J.S.18A:19-2 is amended to read as follows:

     18A:19-2.  No claim or demand against a school district shall be paid by the secretary or treasurer of school moneys, as appropriate, unless it is authorized by law and the rules of the board of education of the district, is fully itemized and verified, has been duly audited as required by law, has been presented to, and approved by, the board at a meeting thereof, or, with regard to claims or demands other than those for legal services, presented to, and approved by, a person designated by the board for that purpose, and the amount required to pay the same is available for said purpose.

     The school business administrator shall review all claims and demands for payment for legal services submitted for payment to a school district or designate one employee as having primary responsibility for reviewing all claims and demands for payment for legal services.  The school business administrator or designated employee shall conduct a detailed and thorough review of all legal billing on a monthly basis to determine whether the billing complies with contractual requirements and whether all entries are appropriate. The school business administrator or designated employee shall notify the board of education of the district as to whether the bill has been fully itemized in accordance with the provisions of subsection g. of N.J.S.18A:18A-40.

(cf: P.L.2010, c.39, s.15)

 

     5.    (New section) The Director of the Division of Local Government Services, in consultation with the Commissioner of Education and the State Comptroller, shall promulgate rules and regulations concerning best practices for procuring legal services, which shall include, but not be limited to:

     a.     Ensuring that the pool of potential law firms or attorneys submitting proposals is as expansive as possible;

     b.    Ensuring that the eligibility requirements for a vendor seeking to compete for a legal services contract are limited only by concerns related to the vendor's responsibility;

     c.     Ensuring that solicitations for legal services contracts are clear and unambiguous and contain a clear and detailed statement of the legal work to be undertaken, and if a solicitation for legal services anticipates awarding multiple contracts for legal services in various designated areas of law, the solicitation shall describe the process for the allocation of legal work among pooled attorneys and law firms;

     d.    Ensuring that the contracting unit includes a clear, complete, and specific statement of the legal work in the final executed contract with the vendor, both of which emphasize the result to be achieved, rather than detailing the process for accomplishing that goal.  The solicitation shall clearly distinguish which services, if any, shall be covered under a retainer and which services the attorney may bill for at an hourly rate;

     e.     Ensuring that proposals are judged on the basis of predetermined, merit-based evaluative criteria, which are made known to vendors before proposals are submitted, and disclosed to prospective vendors as early as possible in the procurement process, such as in the request for proposals or other solicitation document;

     f. Ensuring that weighing of evaluative criteria is used if some criteria are determined to be more important than others. The weight assigned to each criterion generally shall be disclosed in the request for proposals;

     g. Ensuring that the evaluative criteria are judged by a qualified evaluation committee, which is established before proposals are received, and which is sufficiently qualified to evaluate the strengths and weaknesses of the proposals submitted.  Potential evaluation committee members should be screened meticulously for conflicts of interest;

     h. Ensuring that the evaluation process is explainable to evaluators and competing vendors, and capable of withstanding scrutiny under a protest challenge, and ensuring that the meaning of each criterion and the reason each criterion is part of the evaluative analysis is explained to evaluators before judging;

     i. Ensuring that each member of the qualified evaluation committee scores each proposal and provides comments that explain the score assigned to each criterion, and that the scoring process and award recommendations should be well-documented and retained;

     j. Ensuring that every step in the evaluative process is documented through scoring sheets, a written record of what transpired during any permitted negotiations between vendors and procurement officials, a written comparative analysis of competing proposals, and a written award recommendation;

     k. Ensuring that the written award recommendation explains the factors that led to the award decision, offers qualitative discussion of the leading competing proposals, and describes the specific characteristics of the winning vendor's proposal that resulted in its selection over the others; and

     l. Ensuring that the period of time for the preservation of procurement materials is set by the contracting unit.

 

     6.    Section 14 of P.L.1971, c.198 (C.40A:11-14) is amended to read as follows:

     14. All contracts for the provision or performance of goods or services shall be in writing.  The governing body of any contracting unit may, subject to the requirements of law, prescribe the form and manner in which contracts shall be made and executed, and the form and manner of execution and approval of all guarantee, indemnity, fidelity and other bonds.

     The Director of the Division of Local Government Services, in consultation with the Commissioner of Education and the State Comptroller, shall promulgate rules and regulations concerning best practices for formal written contracts between local units and outside legal counsel, which shall address, at a minimum, the following matters:

     a. (1) Clearly define the scope of services to be performed by legal counsel and any objectives or deliverables to be achieved, and

     (2) Clearly define the fee arrangements to ensure that there is no overlap between services included as fixed compensation under a retainer agreement and those billed at an hourly rate;

     b. Clearly set forth the billing rate and terms;

     c. Clearly provide that administrative work and secretarial services shall not be billed at an hourly rate;

     d. Address ancillary expenses and disbursements by listing reimbursable expenses and requiring vendor to submit itemized bills that detail disbursements;

     e. Address billing for travel time so that hourly outside legal counsel are compensated at no more than 50 percent of the contracted hourly billing rate for non-productive travel;

     f. Set forth general staffing parameters including designation of a specific attorney or attorneys as primary contact under the contract;

     g. Require legal counsel to submit detailed monthly billing invoices, which contain the following information:

     (1) the name of the specific matter for which service was rendered,

     (2) the date on which service was rendered,

     (3) the name or identification number of the attorney who rendered the service,

     (4) the hourly rate of that attorney or the specific method by which the rate for that attorney was determined,

     (5) the total charge for each particular service, task, or billing entry,

     (6) a description of each particular service rendered or task performed and the names of each individual involved,

     (7) the amount of time spent on each particular service rendered or task performed, and

     (8) an itemized list of the expenses and disbursements for each particular service rendered or task performed, with specific notes on which expenses are reimbursable; and

     h. Prohibit "block billing," which is the practice of grouping together multiple activities or tasks under one time entry.

(cf: P.L.1999, c.440, s.22)

 

     7.    (New section)  a.  The chief financial officer of the local unit shall review all claims and demands for legal services submitted for payment to a local unit, or designate one employee as having primary responsibility for reviewing all claims and demands for payment for legal services.  The chief financial officer or designated employee shall conduct a detailed and thorough review of all legal billing on a monthly basis to determine whether the billing complies with contractual requirements and whether all entries are appropriate.  The chief financial officer or designated employee shall notify the governing body as to whether the bill has been fully itemized in accordance with the provisions of subsection g. of section 14 of P.L.1971 c.198 (C.40A:11-14).

     b.  A local unit may establish an annual maximum dollar limit for legal services. The chief financial officer of the local unit shall monitor payments for legal services and notify the governing body as to whether claims for payments are approaching the maximum dollar limit.  The governing body of a local unit may adopt a dollar increase in the maximum dollar limit by adoption of a resolution.

 

     8.  This act shall take effect immediately.

 

 

STATEMENT

 

     This bill codifies the recommendations set forth in the June 2013 State Comptroller report titled "Legal Fees Paid by New Jersey Local Governments."  The report and bill, applicable to local units of government and school districts, focuses on four primary categories of guidance:

·      developing policies and procedures regarding the procurement, use and management of legal counsel,

·      conducting a competitive procurement for legal counsel,

·      drafting formal, written contracts with legal counsel, and

·      managing contracts with legal counsel.

     The bill directs the Director of the Division of Local Government Services in the Department of Community Affairs, in consultation with the Commissioner of Education and the State Comptroller, to promulgate rules and regulations identifying best practices for local units and school districts concerning the procurement, use, and management of both in-house salaried attorneys and outside legal counsel. 

     The bill specifies particular issues for the director to include in the rules and regulations establishing best practices for procuring legal services which further the goal of fostering competition, transparency, and accountability in the award of legal services contracts in order to promote public confidence in the contracting process and to ensure that government entities are obtaining cost-effective legal services.

     The bill identifies specific types of provisions for the director to include in the rules and regulations concerning best practices for formal written contracts with outside legal counsel which will enhance clarity, reduce ambiguity, and minimize or prevent abusive and fraudulent legal billing practices.

     To ensure effective management of legal services contracts, the bill requires each local unit and school district to designate a specific employee as having the primary responsibility for reviewing legal bills on a monthly basis for compliance with contractual requirements and to ascertain whether the bills are appropriate.

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