Bill Text: TX HB2826 | 2019-2020 | 86th Legislature | Enrolled

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Bill Title: Relating to procurement of a contingent fee contract for legal services by certain governmental entities.

Spectrum: Partisan Bill (Republican 80-4)

Status: (Passed) 2019-06-10 - Effective on 9/1/19 [HB2826 Detail]

Download: Texas-2019-HB2826-Enrolled.html

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H.B. No. 2826

AN ACT
relating to procurement of a contingent fee contract for legal
services by certain governmental entities.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2254.101, Government Code, is amended by
adding Subdivision (2-a) to read as follows:
(2-a) "Political subdivision" means an entity
described by Section 2254.002(1)(B), (C), or (D).
SECTION 2. Section 2254.102, Government Code, is amended by
amending Subsections (a), (b), and (c) and adding Subsection (e) to
read as follows:
(a) This subchapter applies only to a contingent fee
contract for legal services entered into by a state governmental
entity or political subdivision.
(b) The legislature by this subchapter is providing, in
accordance with Sections [Section] 44 and 53, Article III, Texas
Constitution, for the manner in which and the situations under
which a state governmental entity or political subdivision may
compensate a public contractor under a contingent fee contract for
legal services.
(c) This subchapter does not apply to a contract:
(1) with a state agency to collect an obligation under
Section 2107.003(b), (c), or (c-1); [or]
(2) for legal services entered into by an institution
of higher education under Section 153.006, Education Code; or
(3) for legal services provided to a school district
under Subchapter M, Chapter 403.
(e) This subchapter does not apply to a contract for legal
services entered into under Section 6.30, Tax Code, Article
103.0031, Code of Criminal Procedure, or Section 1201.027 of this
code except that Sections 2254.1032, 2254.1034, 2254.1036, and
2254.1037 do apply to the contract.
SECTION 3. The heading to Section 2254.103, Government
Code, is amended to read as follows:
Sec. 2254.103. STATE GOVERNMENTAL ENTITY: CONTRACT
APPROVAL; SIGNATURE.
SECTION 4. Subchapter C, Chapter 2254, Government Code, is
amended by adding Sections 2254.1032, 2254.1034, 2254.1036,
2254.1037, and 2254.1038 to read as follows:
Sec. 2254.1032. POLITICAL SUBDIVISION: SELECTION OF
PROVIDER. (a) A political subdivision may select an attorney or
law firm to award a contingent fee contract only in accordance with
Section 2254.003(a) and this section.
(b) In procuring legal services under a contingent fee
contract, a political subdivision shall:
(1) select a well-qualified attorney or law firm on
the basis of demonstrated competence, qualifications, and
experience in the requested services; and
(2) attempt to negotiate a contract with that attorney
or law firm for a fair and reasonable price.
Sec. 2254.1034. POLITICAL SUBDIVISION: INDEMNIFICATION.
(a) A political subdivision may require an attorney or law firm
selected under Section 2254.1032 to indemnify or hold harmless the
political subdivision from claims and liabilities resulting from
negligent acts or omissions of the attorney or law firm or persons
employed by the attorney or law firm.
(b) A political subdivision may not require an attorney or
law firm selected under Section 2254.1032 to indemnify, hold
harmless, or, subject to Subsection (c), defend the political
subdivision for claims or liabilities resulting from negligent acts
or omissions of the political subdivision or its employees.
(c) Subsection (b) does not prevent an attorney or law firm
selected under Section 2254.1032 from defending the political
subdivision or its employees in accordance with a contract for the
defense of negligent acts or omissions of the political subdivision
or its employees.
Sec. 2254.1036. POLITICAL SUBDIVISION: CONTRACT NOTICE;
APPROVAL BY GOVERNING BODY. (a) A political subdivision may enter
into a contingent fee contract for legal services only if the
political subdivision:
(1) before or at the time of giving the written notice
required by Section 551.041 for a meeting described by Subdivision
(2), also provides written notice to the public stating:
(A) the reasons for pursuing the matter that is
the subject of the legal services for which the attorney or law firm
would be retained and the desired outcome of pursuing the matter;
(B) the competence, qualifications, and
experience demonstrated by the attorney or law firm selected under
Section 2254.1032;
(C) the nature of any relationship, including the
beginning of the relationship, between the political subdivision or
governing body and the attorney or law firm selected under Section
2254.1032;
(D) the reasons the legal services cannot be
adequately performed by the attorneys and supporting personnel of
the political subdivision;
(E) the reasons the legal services cannot be
reasonably obtained from attorneys in private practice under a
contract providing for the payment of hourly fees without
contingency; and
(F) the reasons entering into a contingent fee
contract for legal services is in the best interest of the residents
of the political subdivision; and
(2) approves the contract in an open meeting called
for the purpose of considering the matters listed in Subsection
(a)(1).
(b) On approval of a contingent fee contract, the governing
body of a political subdivision shall state in writing that the
political subdivision finds that:
(1) there is a substantial need for the legal
services;
(2) the legal services cannot be adequately performed
by the attorneys and supporting personnel of the political
subdivision; and
(3) the legal services cannot reasonably be obtained
from attorneys in private practice under a contract providing only
for the payment of hourly fees, without regard to the outcome of the
matter, because of the nature of the matter for which the services
will be obtained or because the political subdivision does not have
funds to pay the estimated amounts required under a contract
providing only for the payment of hourly fees.
Sec. 2254.1037. POLITICAL SUBDIVISION: CONTRACT AS PUBLIC
INFORMATION. A contingent fee contract approved under Section
2254.1036 is public information under Chapter 552 and may not be
withheld from a requestor under Section 552.103 or any other
exception from required disclosure.
Sec. 2254.1038. POLITICAL SUBDIVISION: ATTORNEY GENERAL
REVIEW OF CONTRACT. (a) Before a contingent fee contract for legal
services approved under Section 2254.1036 is effective and
enforceable, the political subdivision must receive attorney
general approval of the contract. The political subdivision shall
file the contract with the attorney general along with:
(1) a description of the matter to be pursued by the
political subdivision;
(2) a copy of the notice required by Section
2254.1036(a) and a statement of the method and date of the provision
of the notice; and
(3) a copy of the statement required by Section
2254.1036(b).
(b) Within 90 days after receiving a contract from a
political subdivision, the attorney general may:
(1) approve the contract;
(2) refuse to approve the contract because the
requirements of this subchapter were not fulfilled; or
(3) refuse to approve the contract because:
(A) the legal matter that is the subject of the
contract presents one or more questions of law or fact that are in
common with a matter the state has already addressed or is pursuing;
and
(B) pursuit of the matter by the political
subdivision will not promote the just and efficient resolution of
the matter.
(c) A contract submitted to the attorney general by a
political subdivision under Subsection (a) is considered approved
by the attorney general unless, not later than the 90th day after
the date the attorney general receives the request to approve the
contract, the attorney general notifies the political subdivision
that the attorney general is refusing to approve the contract.
(d) If the attorney general refuses to approve a contract
under Subsection (b)(2), the attorney general shall specifically
identify the provisions of this subchapter with which the contract
fails to comply or the political subdivision failed to comply.
Nothing in this section prohibits a political subdivision from
correcting a failure to comply with this subchapter.
(e) If the attorney general refuses to approve a contract
under Subsection (b)(3), the attorney general shall inform the
political subdivision of the factual and legal basis for the
decision.
(f) A political subdivision may contest the attorney
general's refusal to approve the contract under Subsection (b)(3)
in the manner provided for contested cases under Chapter 2001.
(g) The State Office of Administrative Hearings shall
establish procedures to govern a contest to the attorney general's
refusal to approve a contract under Subsection (b)(3) and for in
camera review and protection from disclosure of information
excepted from disclosure under Chapter 552 in a contested case
under this subsection.
(h) The refusal to approve a contract under Subsection
(b)(3) is subject to substantial evidence judicial review as
provided in Subchapter G, Chapter 2001.
(i) A political subdivision may request expedited review of
a contract under Subsection (a).
SECTION 5. Sections 2254.104(b), (c), and (d), Government
Code, are amended to read as follows:
(b) The contracting attorney or law firm shall permit the
governing body or governing officer of the state governmental
entity or political subdivision, the attorney general, and the
state auditor or the political subdivision's auditor, as
applicable, each to inspect or obtain copies of the time and expense
records at any time on request.
(c) On conclusion of the matter for which legal services
were obtained, the contracting attorney or law firm shall provide
the contracting state governmental entity or political subdivision
with a complete written statement that describes the outcome of the
matter, states the amount of any recovery, shows the contracting
attorney's or law firm's computation of the amount of the contingent
fee, and contains the final complete time and expense records
required by Subsection (a). The complete written statement
required by this subsection is public information under Chapter 552
and may not be withheld from a requestor under that chapter under
Section 552.103 or any other exception from required disclosure.
(d) This subsection does not apply to the complete written
statement required by Subsection (c). All time and expense records
required under this section are public information subject to
required public disclosure under Chapter 552. Information in the
records may be withheld from a member of the public under Section
552.103 only if, in addition to meeting the requirements of Section
552.103, the chief legal officer or employee of the state
governmental entity or political subdivision determines that
withholding the information is necessary to protect the entity's
strategy or position in pending or reasonably anticipated
litigation. Information withheld from public disclosure under this
subsection shall be segregated from information that is subject to
required public disclosure.
SECTION 6. Section 2254.108(d), Government Code, is amended
to read as follows:
(d) Litigation and other expenses payable under the
contract, including expenses attributable to attorney, paralegal,
accountant, expert, or other professional work performed by a
person who is not a contracting attorney or a partner, shareholder,
or employee of a contracting attorney or law firm, may be reimbursed
only if the state governmental entity or political subdivision and,
if applicable, the entity's or subdivision's [state] auditor
determine that the expenses were reasonable, proper, necessary,
actually incurred on behalf of the state governmental entity or
political subdivision, and paid for by the contracting attorney or
law firm. The contingent fee may not be paid until the entity's or
subdivision's [state] auditor or the governing body of a political
subdivision without an auditor, as applicable, has reviewed the
relevant time and expense records and verified that the hours of
work on which the fee computation is based were actually worked in
performing reasonable and necessary services for the state
governmental entity or political subdivision under the contract.
SECTION 7. Sections 2254.109(a) and (c), Government Code,
are amended to read as follows:
(a) This subchapter does not limit the right of a state
governmental entity or political subdivision to recover fees and
expenses from opposing parties under other law.
(c) An [A state] officer, employee, or governing body of a
state governmental entity or political subdivision, including the
attorney general, may not waive the requirements of this subchapter
or prejudice the interests of the state governmental entity or
political subdivision [state] under this subchapter. This
subchapter does not waive the state's sovereign immunity or a
political subdivision's governmental immunity from suit or the
state's [its] immunity from suit in federal court under the
Eleventh Amendment to the federal constitution.
SECTION 8. Subchapter C, Chapter 2254, Government Code, is
amended by adding Section 2254.110 to read as follows:
Sec. 2254.110. VOID CONTRACT. A contract entered into or an
arrangement made in violation of this subchapter is void as against
public policy, and no fees may be paid to any person under the
contract or under any theory of recovery for work performed in
connection with a void contract. A contract that is submitted to
and approved by the attorney general under Section 2254.1038 cannot
later be declared void under this section.
SECTION 9. Section 403.0305, Government Code, is repealed.
SECTION 10. Subchapter C, Chapter 2254, Government Code, as
amended by this Act, applies only to a contract entered into on or
after the effective date of this Act.
SECTION 11. This Act takes effect September 1, 2019.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 2826 was passed by the House on May 2,
2019, by the following vote: Yeas 103, Nays 39, 2 present, not
voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 2826 was passed by the Senate on May
21, 2019, by the following vote: Yeas 27, Nays 4.
______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor