HOUSE JUDICIARY COMMITTEE SUBSTITUTE FOR

HOUSE BUSINESS AND INDUSTRY COMMITTEE SUBSTITUTE FOR

HOUSE BILL 386

50th legislature - STATE OF NEW MEXICO - first session, 2011

AN ACT

RELATING TO THE ATTORNEY GENERAL; AUTHORIZING THE ATTORNEY GENERAL TO ENTER INTO CONTINGENT FEE CONTRACTS UNDER CERTAIN CONDITIONS; CREATING A FUND; PROHIBITING CERTAIN CONTRIBUTIONS BY CONTRACTORS OR POTENTIAL CONTRACTORS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. A new Section 8-5-2.2 NMSA 1978 is enacted to read:

     "8-5-2.2. [NEW MATERIAL] CONTINGENT FEE CONTRACTS AUTHORIZED--SUSPENSE FUND CREATED.--

          A. If necessary to perform the duties of the attorney general, the attorney general may, pursuant to the provisions of this section, enter into contingent fee contracts with private attorneys to recover, through litigation or court-approved settlements, money due to the state or any of its departments, agencies, officers, instrumentalities, institutions or political subdivisions.

          B. The amount due to private attorneys pursuant to a contingent fee contract shall be negotiated between the parties; provided that, exclusive of reimbursement for reasonable costs and expenses and irrespective of the number of lawsuits filed or the number of private attorneys retained pursuant to the contract, the total amount payable to private attorneys shall not exceed the following amounts:

                (1) if the total amount recovered is less than twenty million dollars ($20,000,000), the fee shall not exceed twenty-five percent of the amount recovered;

                (2) if the total amount recovered is equal to or greater than twenty million dollars ($20,000,000) but less than thirty million dollars ($30,000,000), the fee shall not exceed five million dollars ($5,000,000) plus twenty percent of the amount recovered; and

                (3) if the total amount recovered is equal to or greater than thirty million dollars ($30,000,000), the fee shall not exceed seven million dollars ($7,000,000) plus fifteen percent of the amount recovered.

          C. Each contingent fee contract shall include a provision that mandates the termination of the contract with no additional payments due to the contractor if the contractor or any partner, associate or employee of the contractor is found guilty of violating the provisions of Section 1-19-34.8 NMSA 1978 or has been assessed a civil penalty for violating the provisions of that section.

          D. The "attorney general suspense fund" is created in the state treasury. Each contingent fee contract shall provide that all amounts received by the contractor as satisfaction of a claim shall be transferred to the attorney general and deposited into the suspense fund. Upon the direction of the attorney general, the compensation due to the contractor shall be disbursed from the suspense fund to the contractor. After a disbursement to a contractor, the balance of each deposit shall be distributed to the appropriate permanent fund or other appropriate fund from which the loss occurred that originated the claim pursued by the contractor.

          E. All contingent fee contracts shall be subject to the provisions of the Procurement Code regarding competitive sealed proposals.

          F. By the first day of February of each year, the attorney general shall submit a report to the president pro tempore of the senate and the speaker of the house of representatives describing the use of contingent fee contracts with private attorneys in the preceding calendar year. At a minimum, such reports shall identify all new contingent fee contracts entered into during the preceding calendar year and all previously executed contingent fee contracts that remain current during any part of the year, and for each contract describe:

                (1) the name of the private attorney with whom the attorney general has contracted, including the name of the attorney's law firm;

                (2) the nature and status of the legal matter;

                (3) the name of the parties to the action;

                (4) the amount of any recovery; and

                (5) the amount of any contingency fee paid."

     SECTION 2. A new section of the Campaign Reporting Act, Section 1-19-34.8 NMSA 1978, is enacted to read:

     "1-19-34.8. [NEW MATERIAL] CERTAIN CONTRIBUTIONS TO CANDIDATES FOR ATTORNEY GENERAL PROHIBITED--CERTAIN CONTRACTS PROHIBITED.--

          A. An attorney that has entered into a contingent fee contract with the attorney general pursuant to Section 8-5-2.2 NMSA 1978 shall not make a contribution to or solicit contributions on behalf of:

                (1) a candidate seeking reelection to the office of attorney general or a campaign committee established by the candidate; or

                (2) a political committee:

                     (a) established by the attorney general or an agent of the attorney general or in consultation with or at the request of the attorney general or an agent of the attorney general; or

                     (b) controlled by the attorney general or an agent of the attorney general to aid or promote the nomination or election of any candidate to a state office.

          B. A candidate or political committee described in Subsection A of this section shall not accept or solicit a contribution prohibited by that subsection.

          C. As used in this section, "attorney" includes a private attorney, a private business entity, the primary business of which is the practice of law, or any partner, associate or employee of such an attorney or business entity."

- 5 -