SENATE BILL 461

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

INTRODUCED BY

John C. Ryan

AN ACT

RELATING TO PROCUREMENT; ENACTING THE TRANSPARENCY IN PRIVATE ATTORNEY CONTINGENCY CONTRACTS ACT; CREATING A FUND; MAKING AN APPROPRIATION.

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

     SECTION 1. [NEW MATERIAL] SHORT TITLE.--Sections 1 through 5 of this act may be cited as the "Transparency in Private Attorney Contingency Contracts Act".

     SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the Transparency in Private Attorney Contingency Contracts Act:

          A. "government attorney" means an attorney employed as a staff attorney by the state or a political subdivision thereof;

          B. "political subdivision" means any political subdivision within the state, including officers, departments, boards, commissions, divisions, bureaus, councils and units of organization, however designated, of the executive branch of the political subdivision, and any of its agents;

          C. "private attorney" means any private attorney or law firm; and

          D. "state" means the state of New Mexico, including officers, departments, boards, commissions, divisions, bureaus, councils and units of organization, however designated, of the executive branch of state government, and any of its agents.

     SECTION 3. [NEW MATERIAL] PROCUREMENT.--

          A. The state or a political subdivision shall not enter into a contingency fee contract with a private attorney unless the attorney general or the chief legal officer for the political subdivision makes a written determination prior to entering into such a contract that contingency fee representation is both cost-effective and in the public interest. Any written determination shall include specific findings regarding the following factors:

                (1) whether there exist sufficient and appropriate legal and financial resources within the office of the attorney general or of the chief legal officer to handle the matter;

                (2) the time and labor required;

                (3) the novelty, complexity and difficulty of the questions involved;

                (4) the skill requisite to perform the legal services properly;

                (5) the geographic area where the legal services are to be provided; and

                (6) the amount of experience desired for the particular kind of legal services to be provided and the nature of the private attorney's experience with similar issues or cases.

          B. If the attorney general or chief legal officer of a political subdivision makes the determination set forth in Subsection A of this section, the attorney general or chief legal officer shall request proposals from private attorneys to represent the government on a contingency fee basis unless the attorney general or chief legal officer determines that requesting proposals is not feasible under the circumstances and sets forth the basis for such determination in writing.

          C. The state or a political subdivision shall not enter into a contingency fee contract that provides for the private attorney to receive an aggregate contingency fee in excess of:

                (1) twenty-five percent of any damages recovered up to ten million dollars ($10,000,000); plus

                (2) twenty percent of any portion of any damages recovered greater than ten million dollars ($10,000,000) up to fifteen million dollars ($15,000,000); plus

                (3) fifteen percent of any portion of any damages recovered greater than fifteen million dollars ($15,000,000) up to twenty million dollars ($20,000,000); plus

                (4) ten percent of any portion of any damages recovered greater than twenty million dollars ($20,000,000) up to twenty-five million dollars ($25,000,000); plus

                (5) five percent of any portion of any damages recovered greater than twenty-five million dollars ($25,000,000). In no event shall the aggregate contingency fee exceed fifty million dollars ($50,000,000) exclusive of reasonable costs and expenses, irrespective of the number of actions filed or the number of private attorneys retained to achieve the recovery.

          D. The state or a political subdivision and the private attorney shall comply with the following requirements throughout the course of the contract for contingency fee representation:

                (1) government attorneys shall retain complete control over the course and conduct of the action;

                (2) a government attorney with supervisory authority shall be personally involved in overseeing the action;

                (3) government attorneys shall retain veto power over any decisions made by contingency fee counsel;

                (4) any defendant that is the subject of such an action may contact the lead government attorneys directly, without having to confer with contingency fee counsel;

                (5) a government attorney with supervisory authority for the matter shall attend and participate in all settlement conferences;

                (6) decisions regarding settlement of the action shall be reserved exclusively to the discretion of government attorneys and the state or political subdivision; and

                (7) a private attorney licensed to practice law in this state and whose principal place of business is in this state shall be included as counsel of record.

          E. The attorney general or chief legal officer of a political subdivision shall develop a standard addendum to every contract for contingency fee attorney services that shall be used in all actions, describing in detail what is expected of both the contracted private attorney and the state or political subdivision, including the requirements set forth in Paragraphs (1) through (6) of Subsection D of this section. Any contract that does not include such an addendum is against public policy and is void and unenforceable.

          F. All contingency fee contracts shall be subject to the provisions of the Procurement Code regarding competitive sealed proposals. No contingency fee contract shall be procured pursuant to the provisions of Section 13-1-126, 13-1-127 or 13-1-129 NMSA 1978.

          G. Copies of any executed contingency fee contract and the written determination to enter into a contingency fee contract with the private attorney pursuant to Subsection A of Section 3 of the Transparency in Private Attorney Contingency Contracts Act shall be posted on the web site maintained by the attorney general or the web site maintained by the executive branch of the political subdivision for public inspection within five business days after the date on which the contract is executed and shall remain posted on the web site for the duration of the contingency fee contract, including any extensions or amendments thereto. Any payment of contingency fees shall be posted on the web site within fifteen days after the payment of the contingency fees to the private attorney and shall remain posted on the web site for at least three hundred sixty-five days thereafter.

          H. Any private attorney under contract to provide services to the state or a political subdivision on a contingency fee basis shall, from the inception of the contract until at least four years after the contract expires or is terminated, maintain detailed current records, including documentation of all expenses, disbursements, charges, credits, underlying receipts and invoices and other financial transactions that concern the provision of such attorney services. The private attorney shall make all such records available for inspection and copying upon request in accordance with Inspection of Public Records Act. In addition, the private attorney shall maintain detailed contemporaneous time records for the attorneys and legal assistants working on the matter in increments of no greater than one-tenth of an hour and shall promptly provide these records to the attorney general or chief legal officer of the political subdivision upon request.

          I. 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 contingency fee contracts with private attorneys in the preceding calendar year. The chief legal officers of any political subdivisions that entered into such contracts shall submit a report to the head of the political subdivision's legislative governing body. At a minimum, such reports shall:

                (1) identify all new contingency fee contracts entered into during the preceding calendar year and all previously executed contingency fee contracts that remain current during any part of the year, and for each contract describe:

                     (a) the name of the private attorney with whom the state or political subdivision has contracted, including the name of the attorney's law firm;

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

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

                     (d) the amount of any recovery; and

                     (e) the amount of any contingency fee paid; and

                (2) include copies of any written determinations made pursuant to Subsection A of this section during the preceding calendar year.

     SECTION 4. [NEW MATERIAL] STANDING.--Notwithstanding any other provision of law, persons who may file suit to enforce the provisions of the Transparency in Private Attorney Contingency Contracts Act include any party to a contract for contingency fee representation pursuant to that act and any party to the action for which the state or political subdivision has retained or is seeking to retain contingency fee representation.

     SECTION 5. [NEW MATERIAL] NO EXPANSION OF AUTHORITY.--Nothing in the Transparency in Private Attorney Contingency Contracts Act shall be construed to expand the authority of any state agency or state agent, or any political subdivision or its agent, to enter into contracts where no such authority previously existed.

     SECTION 6. A new section of Chapter 8, Article 5 NMSA 1978 is enacted to read:

     "[NEW MATERIAL] SUSPENSE FUND CREATED.--The "attorney general suspense fund" is created in the state treasury. Each contingency 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 attorney general 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."

     SECTION 7. SEVERABILITY.--If any part of the Transparency in Private Attorney Contingency Contracts Act is held invalid, the remainder or its application to other situations or persons shall not be affected.

     SECTION 8. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2011.

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