Texas 2019 - 86th Regular

Texas House Bill HB2826 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	H.B. No. 2826
	1	+	By: Bonnen of Galveston, et al. H.B. No. 2826
	2	+	(Senate Sponsor - Huffman)
	3	+	(In the Senate - Received from the House May 2, 2019;
	4	+	May 7, 2019, read first time and referred to Committee on State
	5	+	Affairs; May 14, 2019, reported favorably by the following vote:
	6	+	Yeas 9, Nays 0; May 14, 2019, sent to printer.)
	7	+	Click here to see the committee vote
2	8
3	9
	10	+	A BILL TO BE ENTITLED
4	11		AN ACT
5	12		relating to procurement of a contingent fee contract for legal
6	13		services by certain governmental entities.
7	14		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
8	15		SECTION 1. Section 2254.101, Government Code, is amended by
9	16		adding Subdivision (2-a) to read as follows:
10	17		(2-a) "Political subdivision" means an entity
11	18		described by Section 2254.002(1)(B), (C), or (D).
12	19		SECTION 2. Section 2254.102, Government Code, is amended by
13	20		amending Subsections (a), (b), and (c) and adding Subsection (e) to
14	21		read as follows:
15	22		(a) This subchapter applies only to a contingent fee
16	23		contract for legal services entered into by a state governmental
17	24		entity or political subdivision.
18	25		(b) The legislature by this subchapter is providing, in
19	26		accordance with Sections [Section] 44 and 53, Article III, Texas
20	27		Constitution, for the manner in which and the situations under
21	28		which a state governmental entity or political subdivision may
22	29		compensate a public contractor under a contingent fee contract for
23	30		legal services.
24	31		(c) This subchapter does not apply to a contract:
25	32		(1) with a state agency to collect an obligation under
26	33		Section 2107.003(b), (c), or (c-1); [or]
27	34		(2) for legal services entered into by an institution
28	35		of higher education under Section 153.006, Education Code; or
29	36		(3) for legal services provided to a school district
30	37		under Subchapter M, Chapter 403.
31	38		(e) This subchapter does not apply to a contract for legal
32	39		services entered into under Section 6.30, Tax Code, Article
33	40		103.0031, Code of Criminal Procedure, or Section 1201.027 of this
34	41		code except that Sections 2254.1032, 2254.1034, 2254.1036, and
35	42		2254.1037 do apply to the contract.
36	43		SECTION 3. The heading to Section 2254.103, Government
37	44		Code, is amended to read as follows:
38	45		Sec. 2254.103. STATE GOVERNMENTAL ENTITY: CONTRACT
39	46		APPROVAL; SIGNATURE.
40	47		SECTION 4. Subchapter C, Chapter 2254, Government Code, is
41	48		amended by adding Sections 2254.1032, 2254.1034, 2254.1036,
42	49		2254.1037, and 2254.1038 to read as follows:
43	50		Sec. 2254.1032. POLITICAL SUBDIVISION: SELECTION OF
44	51		PROVIDER. (a) A political subdivision may select an attorney or
45	52		law firm to award a contingent fee contract only in accordance with
46	53		Section 2254.003(a) and this section.
47	54		(b) In procuring legal services under a contingent fee
48	55		contract, a political subdivision shall:
49	56		(1) select a well-qualified attorney or law firm on
50	57		the basis of demonstrated competence, qualifications, and
51	58		experience in the requested services; and
52	59		(2) attempt to negotiate a contract with that attorney
53	60		or law firm for a fair and reasonable price.
54	61		Sec. 2254.1034. POLITICAL SUBDIVISION: INDEMNIFICATION.
55	62		(a) A political subdivision may require an attorney or law firm
56	63		selected under Section 2254.1032 to indemnify or hold harmless the
57	64		political subdivision from claims and liabilities resulting from
58	65		negligent acts or omissions of the attorney or law firm or persons
59	66		employed by the attorney or law firm.
60	67		(b) A political subdivision may not require an attorney or
61	68		law firm selected under Section 2254.1032 to indemnify, hold
62	69		harmless, or, subject to Subsection (c), defend the political
63	70		subdivision for claims or liabilities resulting from negligent acts
64	71		or omissions of the political subdivision or its employees.
65	72		(c) Subsection (b) does not prevent an attorney or law firm
66	73		selected under Section 2254.1032 from defending the political
67	74		subdivision or its employees in accordance with a contract for the
68	75		defense of negligent acts or omissions of the political subdivision
69	76		or its employees.
70	77		Sec. 2254.1036. POLITICAL SUBDIVISION: CONTRACT NOTICE;
71	78		APPROVAL BY GOVERNING BODY. (a) A political subdivision may enter
72	79		into a contingent fee contract for legal services only if the
73	80		political subdivision:
74	81		(1) before or at the time of giving the written notice
75	82		required by Section 551.041 for a meeting described by Subdivision
76	83		(2), also provides written notice to the public stating:
77	84		(A) the reasons for pursuing the matter that is
78	85		the subject of the legal services for which the attorney or law firm
79	86		would be retained and the desired outcome of pursuing the matter;
80	87		(B) the competence, qualifications, and
81	88		experience demonstrated by the attorney or law firm selected under
82	89		Section 2254.1032;
83	90		(C) the nature of any relationship, including the
84	91		beginning of the relationship, between the political subdivision or
85	92		governing body and the attorney or law firm selected under Section
86	93		2254.1032;
87	94		(D) the reasons the legal services cannot be
88	95		adequately performed by the attorneys and supporting personnel of
89	96		the political subdivision;
90	97		(E) the reasons the legal services cannot be
91	98		reasonably obtained from attorneys in private practice under a
92	99		contract providing for the payment of hourly fees without
93	100		contingency; and
94	101		(F) the reasons entering into a contingent fee
95	102		contract for legal services is in the best interest of the residents
96	103		of the political subdivision; and
97	104		(2) approves the contract in an open meeting called
98	105		for the purpose of considering the matters listed in Subsection
99	106		(a)(1).
100	107		(b) On approval of a contingent fee contract, the governing
101	108		body of a political subdivision shall state in writing that the
102	109		political subdivision finds that:
103	110		(1) there is a substantial need for the legal
104	111		services;
105	112		(2) the legal services cannot be adequately performed
106	113		by the attorneys and supporting personnel of the political
107	114		subdivision; and
108	115		(3) the legal services cannot reasonably be obtained
109	116		from attorneys in private practice under a contract providing only
110	117		for the payment of hourly fees, without regard to the outcome of the
111	118		matter, because of the nature of the matter for which the services
112	119		will be obtained or because the political subdivision does not have
113	120		funds to pay the estimated amounts required under a contract
114	121		providing only for the payment of hourly fees.
115	122		Sec. 2254.1037. POLITICAL SUBDIVISION: CONTRACT AS PUBLIC
116	123		INFORMATION. A contingent fee contract approved under Section
117	124		2254.1036 is public information under Chapter 552 and may not be
118	125		withheld from a requestor under Section 552.103 or any other
119	126		exception from required disclosure.
120	127		Sec. 2254.1038. POLITICAL SUBDIVISION: ATTORNEY GENERAL
121	128		REVIEW OF CONTRACT. (a) Before a contingent fee contract for legal
122	129		services approved under Section 2254.1036 is effective and
123	130		enforceable, the political subdivision must receive attorney
124	131		general approval of the contract. The political subdivision shall
125	132		file the contract with the attorney general along with:
126	133		(1) a description of the matter to be pursued by the
127	134		political subdivision;
128	135		(2) a copy of the notice required by Section
129	136		2254.1036(a) and a statement of the method and date of the provision
130	137		of the notice; and
131	138		(3) a copy of the statement required by Section
132	139		2254.1036(b).
133	140		(b) Within 90 days after receiving a contract from a
134	141		political subdivision, the attorney general may:
135	142		(1) approve the contract;
136	143		(2) refuse to approve the contract because the
137	144		requirements of this subchapter were not fulfilled; or
138	145		(3) refuse to approve the contract because:
139	146		(A) the legal matter that is the subject of the
140	147		contract presents one or more questions of law or fact that are in
141	148		common with a matter the state has already addressed or is pursuing;
142	149		and
143	150		(B) pursuit of the matter by the political
144	151		subdivision will not promote the just and efficient resolution of
145	152		the matter.
146	153		(c) A contract submitted to the attorney general by a
147	154		political subdivision under Subsection (a) is considered approved
148	155		by the attorney general unless, not later than the 90th day after
149	156		the date the attorney general receives the request to approve the
150	157		contract, the attorney general notifies the political subdivision
151	158		that the attorney general is refusing to approve the contract.
152	159		(d) If the attorney general refuses to approve a contract
153	160		under Subsection (b)(2), the attorney general shall specifically
154	161		identify the provisions of this subchapter with which the contract
155	162		fails to comply or the political subdivision failed to comply.
156	163		Nothing in this section prohibits a political subdivision from
157	164		correcting a failure to comply with this subchapter.
158	165		(e) If the attorney general refuses to approve a contract
159	166		under Subsection (b)(3), the attorney general shall inform the
160	167		political subdivision of the factual and legal basis for the
161	168		decision.
162	169		(f) A political subdivision may contest the attorney
163	170		general's refusal to approve the contract under Subsection (b)(3)
164	171		in the manner provided for contested cases under Chapter 2001.
165	172		(g) The State Office of Administrative Hearings shall
166	173		establish procedures to govern a contest to the attorney general's
167	174		refusal to approve a contract under Subsection (b)(3) and for in
168	175		camera review and protection from disclosure of information
169	176		excepted from disclosure under Chapter 552 in a contested case
170	177		under this subsection.
171	178		(h) The refusal to approve a contract under Subsection
172	179		(b)(3) is subject to substantial evidence judicial review as
173	180		provided in Subchapter G, Chapter 2001.
174	181		(i) A political subdivision may request expedited review of
175	182		a contract under Subsection (a).
176	183		SECTION 5. Sections 2254.104(b), (c), and (d), Government
177	184		Code, are amended to read as follows:
178	185		(b) The contracting attorney or law firm shall permit the
179	186		governing body or governing officer of the state governmental
180	187		entity or political subdivision, the attorney general, and the
181	188		state auditor or the political subdivision's auditor, as
182	189		applicable, each to inspect or obtain copies of the time and expense
183	190		records at any time on request.
184	191		(c) On conclusion of the matter for which legal services
185	192		were obtained, the contracting attorney or law firm shall provide
186	193		the contracting state governmental entity or political subdivision
187	194		with a complete written statement that describes the outcome of the
188	195		matter, states the amount of any recovery, shows the contracting
189	196		attorney's or law firm's computation of the amount of the contingent
190	197		fee, and contains the final complete time and expense records
191	198		required by Subsection (a). The complete written statement
192	199		required by this subsection is public information under Chapter 552
193	200		and may not be withheld from a requestor under that chapter under
194	201		Section 552.103 or any other exception from required disclosure.
195	202		(d) This subsection does not apply to the complete written
196	203		statement required by Subsection (c). All time and expense records
197	204		required under this section are public information subject to
198	205		required public disclosure under Chapter 552. Information in the
199	206		records may be withheld from a member of the public under Section
200	207		552.103 only if, in addition to meeting the requirements of Section
201	208		552.103, the chief legal officer or employee of the state
202	209		governmental entity or political subdivision determines that
203	210		withholding the information is necessary to protect the entity's
204	211		strategy or position in pending or reasonably anticipated
205	212		litigation. Information withheld from public disclosure under this
206	213		subsection shall be segregated from information that is subject to
207	214		required public disclosure.
208	215		SECTION 6. Section 2254.108(d), Government Code, is amended
209	216		to read as follows:
210	217		(d) Litigation and other expenses payable under the
211	218		contract, including expenses attributable to attorney, paralegal,
212	219		accountant, expert, or other professional work performed by a
213	220		person who is not a contracting attorney or a partner, shareholder,
214	221		or employee of a contracting attorney or law firm, may be reimbursed
215	222		only if the state governmental entity or political subdivision and,
216	223		if applicable, the entity's or subdivision's [state] auditor
217	224		determine that the expenses were reasonable, proper, necessary,
218	225		actually incurred on behalf of the state governmental entity or
219	226		political subdivision, and paid for by the contracting attorney or
220	227		law firm. The contingent fee may not be paid until the entity's or
221	228		subdivision's [state] auditor or the governing body of a political
222	229		subdivision without an auditor, as applicable, has reviewed the
223	230		relevant time and expense records and verified that the hours of
224	231		work on which the fee computation is based were actually worked in
225	232		performing reasonable and necessary services for the state
226	233		governmental entity or political subdivision under the contract.
227	234		SECTION 7. Sections 2254.109(a) and (c), Government Code,
228	235		are amended to read as follows:
229	236		(a) This subchapter does not limit the right of a state
230	237		governmental entity or political subdivision to recover fees and
231	238		expenses from opposing parties under other law.
232	239		(c) An [A state] officer, employee, or governing body of a
233	240		state governmental entity or political subdivision, including the
234	241		attorney general, may not waive the requirements of this subchapter
235	242		or prejudice the interests of the state governmental entity or
236	243		political subdivision [state] under this subchapter. This
237	244		subchapter does not waive the state's sovereign immunity or a
238	245		political subdivision's governmental immunity from suit or the
239	246		state's [its] immunity from suit in federal court under the
240	247		Eleventh Amendment to the federal constitution.
241	248		SECTION 8. Subchapter C, Chapter 2254, Government Code, is
242	249		amended by adding Section 2254.110 to read as follows:
243	250		Sec. 2254.110. VOID CONTRACT. A contract entered into or an
244	251		arrangement made in violation of this subchapter is void as against
245	252		public policy, and no fees may be paid to any person under the
246	253		contract or under any theory of recovery for work performed in
247	254		connection with a void contract. A contract that is submitted to
248	255		and approved by the attorney general under Section 2254.1038 cannot
249	256		later be declared void under this section.
250	257		SECTION 9. Section 403.0305, Government Code, is repealed.
251	258		SECTION 10. Subchapter C, Chapter 2254, Government Code, as
252	259		amended by this Act, applies only to a contract entered into on or
253	260		after the effective date of this Act.
254	261		SECTION 11. This Act takes effect September 1, 2019.
255		-	______________________________ ______________________________
256		-	President of the Senate Speaker of the House
257		-	I certify that H.B. No. 2826 was passed by the House on May 2,
258		-	2019, by the following vote: Yeas 103, Nays 39, 2 present, not
259		-	voting.
260		-	______________________________
261		-	Chief Clerk of the House
262		-	I certify that H.B. No. 2826 was passed by the Senate on May
263		-	21, 2019, by the following vote: Yeas 27, Nays 4.
264		-	______________________________
265		-	Secretary of the Senate
266		-	APPROVED: _____________________
267		-	Date
268		-	_____________________
269		-	Governor
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