R E S O L U T I O N
1-1 BE IT RESOLVED by the House of Representatives of the State
1-2 of Texas, 76th Legislature, Regular Session, 1999, That House Rule
1-3 13, Section 9(a), be suspended in part as provided by House Rule
1-4 13, Section 9(f), to enable the conference committee appointed to
1-5 resolve the differences on Senate Bill No. 178, relating to state
1-6 agency practices and duties, including codification of certain
1-7 state agency practices and duties currently prescribed by the
1-8 General Appropriations Act, to consider and take action on the
1-9 following matters:
1-10 (1) House Rule 13, Section 9(a)(3), is suspended to permit
1-11 the committee to add the following Subsection (c) to Section
1-12 2161.004, Government Code, as added by the bill:
1-13 (c) Section 2161.003 and Subsections (a) and (b) of this
1-14 section do not apply to a project or contract subject to Section
1-15 201.702, Transportation Code.
1-16 Explanation: This addition is necessary to clarify that the
1-17 historically underutilized businesses provisions of Sections
1-18 2161.003 and 2161.004, Government Code, as added by the bill, that
1-19 are generally applicable to state agencies do not override the
1-20 disadvantaged businesses provisions of current law in Section
1-21 201.702, Transportation Code, that are applicable to the Texas
1-22 Department of Transportation.
1-23 (2) House Rule 13, Section 9(a)(1), is suspended to permit
1-24 the committee to amend Section 2161.122(d), Government Code, as
2-1 redesignated by the bill, as follows:
2-2 (d) A state agency participating in a group purchasing
2-3 program [described under Section 2155.139(b)] shall send to the
2-4 commission in the agency's report under Section 2161.121 a separate
2-5 list of purchases from historically underutilized businesses that
2-6 are made through the group purchasing program, including the dollar
2-7 amount of each purchase allocated to the reporting agency.
2-8 Explanation: This amendment is necessary to clarify that a
2-9 state agency shall report its purchases from historically
2-10 underutilized businesses under any group purchasing program.
2-11 (3) House Rule 13, Section 9(a)(3), is suspended to permit
2-12 the committee to add the following Subdivision (4) to Section
2-13 2170.010, Government Code, as added by the bill:
2-14 (4) in the investigation of motor fuels tax fraud.
2-15 Explanation: This addition is necessary to allow the use of
2-16 unlisted telephone numbers in the investigation of motor fuels tax
2-17 fraud.
2-18 (4) House Rule 13, Section 9(a)(4), is suspended to permit
2-19 the committee to add a new Article 2 to the bill to read as
2-20 follows:
2-21 ARTICLE 2. CERTAIN OTHER PROVISIONS
2-22 RELATED TO STATE AGENCY CONTRACTING WITH
2-23 HISTORICALLY UNDERUTILIZED BUSINESSES
2-24 SECTION 2.01. Section 2155.074(g), Government Code, as added
2-25 by Chapter 508, Acts of the 75th Legislature, Regular Session,
2-26 1997, is amended to read as follows:
2-27 (g) A state agency shall post in the business daily either
3-1 the entire bid or proposal solicitation package or a notice that
3-2 includes all information necessary to make a successful bid,
3-3 proposal, or other applicable expression of interest for the
3-4 procurement contract, including at a minimum the following
3-5 information for each procurement that the state agency will make
3-6 that is estimated to exceed $25,000 in value:
3-7 (1) a brief description of the goods or services to be
3-8 procured and any applicable state product or service codes for the
3-9 goods and services;
3-10 (2) the last date on which bids, proposals, or other
3-11 applicable expressions of interest will be accepted;
3-12 (3) the estimated quantity of goods or services to be
3-13 procured;
3-14 (4) if applicable, the previous price paid by the
3-15 state agency for the same or similar goods or services;
3-16 (5) the estimated date on which the goods or services
3-17 to be procured will be needed; and
3-18 (6) the name, business mailing address, and business
3-19 telephone number of the state agency employee a person may contact
3-20 to inquire about [obtain] all necessary information related to
3-21 making a bid or proposal or other applicable expression of interest
3-22 for the procurement contract.
3-23 SECTION 2.02. Subchapter A, Chapter 2161, Government Code,
3-24 is amended by adding Section 2161.0015 to read as follows:
3-25 Sec. 2161.0015. DETERMINING SIZE STANDARDS FOR HISTORICALLY
3-26 UNDERUTILIZED BUSINESSES. The commission may establish size
3-27 standards that a business may not exceed if it is to be considered
4-1 a historically underutilized business under this chapter. In
4-2 determining the size standards, the commission shall determine the
4-3 size at which a business should be considered sufficiently large
4-4 that the business probably does not significantly suffer from the
4-5 effects of past discriminatory practices.
4-6 SECTION 2.03. Sections 2161.061(b) and (c), Government Code,
4-7 are amended to read as follows:
4-8 (b) As one [part] of its certification procedures, the
4-9 commission may:
4-10 (1) approve the [another] certification program of one
4-11 or more local governments in this state that certify [certifies]
4-12 historically underutilized businesses, minority business
4-13 enterprises, women's business enterprises, or disadvantaged
4-14 business enterprises under substantially the same definition, to
4-15 the extent applicable, used by Section 2161.001; and
4-16 (2) certify a business certified under the local
4-17 government program as a historically underutilized business under
4-18 this chapter.
4-19 (c) To maximize the number of certified historically
4-20 underutilized businesses, the commission shall enter into
4-21 agreements with local governments in this state that conduct
4-22 certification programs described by Subsection (b). The agreements
4-23 must take effect immediately and:
4-24 (1) allow for automatic certification of businesses
4-25 certified under the local government program;
4-26 (2) provide for the efficient updating of the
4-27 commission database containing information about historically
5-1 underutilized businesses and potential historically underutilized
5-2 businesses; and
5-3 (3) provide for a method by which the commission may
5-4 efficiently communicate with businesses certified under the local
5-5 government program and provide those businesses with information
5-6 about the state historically underutilized business program. [A
5-7 municipality, in certifying historically underutilized businesses,
5-8 may adopt the certification program of the commission, of the
5-9 federal Small Business Administration, or of another political
5-10 subdivision or other governmental entity.]
5-11 SECTION 2.04. Section 2161.062, Government Code, is amended
5-12 by adding Subsections (d) and (e) to read as follows:
5-13 (d) The commission shall send historically underutilized
5-14 businesses an orientation package on certification or
5-15 recertification. The package shall include:
5-16 (1) a certificate issued in the historically
5-17 underutilized business's name;
5-18 (2) a description of the significance and value of
5-19 certification;
5-20 (3) a list of state purchasing personnel;
5-21 (4) information regarding electronic commerce
5-22 opportunities;
5-23 (5) information regarding the Texas Marketplace
5-24 website; and
5-25 (6) additional information about the state procurement
5-26 process.
5-27 (e) A state agency with a biennial budget that exceeds $10
6-1 million shall designate a staff member to serve as the historically
6-2 underutilized businesses coordinator for the agency during the
6-3 fiscal year. The procurement director may serve as the
6-4 coordinator. In agencies that employ a historically underutilized
6-5 businesses coordinator, the position of coordinator, within the
6-6 agency's structure, must be at least equal to the position of
6-7 procurement director. In addition to any other responsibilities,
6-8 the coordinator shall:
6-9 (1) coordinate training programs for the recruitment
6-10 and retention of historically underutilized businesses;
6-11 (2) report required information to the commission; and
6-12 (3) match historically underutilized businesses with
6-13 key staff within the agency.
6-14 SECTION 2.05. Section 2161.063(b), Government Code, is
6-15 amended to read as follows:
6-16 (b) The commission shall assist the Texas Department of
6-17 Economic Development [Commerce] in performing the department's
6-18 duties under Section 481.0068 [481.103].
6-19 SECTION 2.06. Section 2161.064(b), Government Code, is
6-20 amended to read as follows:
6-21 (b) The commission at least semiannually shall update the
6-22 directory and provide access to the directory electronically or in
6-23 another form [a copy of the directory] to each state agency.
6-24 SECTION 2.07. Sections 2161.121(a) and (e), Government Code,
6-25 are amended to read as follows:
6-26 (a) The commission shall prepare a consolidated report that:
6-27 (1) includes the number and dollar amount of contracts
7-1 awarded and paid to historically underutilized businesses certified
7-2 by the commission; [and]
7-3 (2) analyzes the relative level of opportunity for
7-4 historically underutilized businesses for various categories of
7-5 acquired goods and services; and
7-6 (3) tracks, by vendor identification number and, to
7-7 the extent allowed by federal law, by social security number, the
7-8 graduation rates for historically underutilized businesses that
7-9 grew to exceed the size standards determined by the commission.
7-10 (e) The commission shall send on October 15 of each year a
7-11 report on the preceding fiscal year to the presiding officer of
7-12 each house of the legislature[, the members of the legislature,]
7-13 and the joint committee.
7-14 SECTION 2.08. Subchapter B, Chapter 2161, Government Code,
7-15 is amended by adding Sections 2161.065 and 2161.066 to read as
7-16 follows:
7-17 Sec. 2161.065. MENTOR-PROTEGE PROGRAM. (a) The commission
7-18 shall design a mentor-protege program to foster long-term
7-19 relationships between prime contractors and historically
7-20 underutilized businesses and to increase the ability of
7-21 historically underutilized businesses to contract with the state or
7-22 to receive subcontracts under a state contract. Each state agency
7-23 with a biennial appropriation that exceeds $10 million shall
7-24 implement the program designed by the commission.
7-25 (b) Participation in the program must be voluntary for both
7-26 the contractor and the historically underutilized business
7-27 subcontractor.
8-1 Sec. 2161.066. HISTORICALLY UNDERUTILIZED BUSINESS FORUMS.
8-2 (a) The commission shall design a program of forums in which
8-3 historically underutilized businesses are invited by state agencies
8-4 to deliver technical and business presentations that demonstrate
8-5 their capability to do business with the agency:
8-6 (1) to senior managers and procurement personnel at
8-7 state agencies that acquire goods and services of a type supplied
8-8 by the historically underutilized businesses; and
8-9 (2) to contractors with the state who may be
8-10 subcontracting for goods and services of a type supplied by the
8-11 historically underutilized businesses.
8-12 (b) The forums shall be held at state agency offices.
8-13 (c) Each state agency with a biennial appropriation that
8-14 exceeds $10 million shall participate in the program by sending
8-15 senior managers and procurement personnel to attend relevant
8-16 presentations and by informing the agency's contractors about
8-17 presentations that may be relevant to anticipated subcontracting
8-18 opportunities.
8-19 (d) Each state agency that has a historically underutilized
8-20 businesses coordinator shall:
8-21 (1) design its own program and model the program to
8-22 the extent appropriate on the program developed by the commission
8-23 under this section; and
8-24 (2) sponsor presentations by historically
8-25 underutilized businesses at the agency.
8-26 (e) The commission and each state agency that has a
8-27 historically underutilized businesses coordinator shall
9-1 aggressively identify and notify individual historically
9-2 underutilized businesses regarding opportunities to make a
9-3 presentation regarding the types of goods and services supplied by
9-4 the historically underutilized business and shall advertise in
9-5 appropriate trade publications that target historically
9-6 underutilized businesses regarding opportunities to make a
9-7 presentation.
9-8 SECTION 2.09. Subchapter C, Chapter 2161, Government Code,
9-9 is amended by adding Sections 2161.126 and 2161.127 to read as
9-10 follows:
9-11 Sec. 2161.126. EDUCATION AND OUTREACH BY COMMISSION. Before
9-12 September 1 of each year, the commission shall report to the
9-13 governor, the lieutenant governor, and the speaker of the house of
9-14 representatives on the education and training efforts that the
9-15 commission has made toward historically underutilized businesses.
9-16 The report must include the following as related to historically
9-17 underutilized businesses:
9-18 (1) the commission's vision, mission, and philosophy;
9-19 (2) marketing materials and other educational
9-20 materials distributed by the commission;
9-21 (3) the commission's policy regarding education,
9-22 outreach, and dissemination of information;
9-23 (4) goals that the commission has attained during the
9-24 fiscal year;
9-25 (5) the commission's goals, objectives, and expected
9-26 outcome measures for each outreach and education event; and
9-27 (6) the commission's planned future initiatives on
10-1 education and outreach.
10-2 Sec. 2161.127. LEGISLATIVE APPROPRIATIONS REQUESTS. Each
10-3 state agency must include as part of its legislative appropriations
10-4 request a detailed report for consideration by the budget
10-5 committees of the legislature that shows the extent to which the
10-6 agency complied with this chapter and rules of the commission
10-7 adopted under this chapter during the two calendar years preceding
10-8 the calendar year in which the request is submitted. To the extent
10-9 the state agency did not comply, the report must demonstrate the
10-10 reasons for that fact. The extent to which a state agency complies
10-11 with this chapter and rules of the commission adopted under this
10-12 chapter is considered a performance measure for purposes of the
10-13 appropriations process.
10-14 SECTION 2.10. Chapter 2161, Government Code, is amended by
10-15 adding Subchapter F to read as follows:
10-16 SUBCHAPTER F. SUBCONTRACTING
10-17 Sec. 2161.251. APPLICABILITY. (a) This subchapter applies
10-18 to all contracts entered into by a state agency with an expected
10-19 value of $100,000 or more, including:
10-20 (1) contracts for the acquisition of a good or
10-21 service; and
10-22 (2) contracts for or related to the construction of a
10-23 public building, road, or other public work.
10-24 (b) This subchapter applies to the contract without regard
10-25 to:
10-26 (1) whether the contract is otherwise subject to this
10-27 subtitle; or
11-1 (2) the source of funds for the contract, except that
11-2 to the extent federal funds are used to pay for the contract, this
11-3 subchapter does not apply if federal law prohibits the application
11-4 of this subchapter in relation to the expenditure of federal funds.
11-5 Sec. 2161.252. AGENCY DETERMINATION REGARDING SUBCONTRACTING
11-6 OPPORTUNITIES; BUSINESS SUBCONTRACTING PLAN. (a) Each state
11-7 agency that considers entering into a contract with an expected
11-8 value of $100,000 or more shall, before the agency solicits bids,
11-9 proposals, offers, or other applicable expressions of interest for
11-10 the contract, determine whether there will be subcontracting
11-11 opportunities under the contract. If the state agency determines
11-12 that there is that probability, the agency shall require that each
11-13 bid, proposal, offer, or other applicable expression of interest
11-14 for the contract include a historically underutilized business
11-15 subcontracting plan.
11-16 (b) When a state agency requires a historically
11-17 underutilized business subcontracting plan under Subsection (a), a
11-18 bid, proposal, offer, or other applicable expression of interest
11-19 for the contract must contain a plan to be considered responsive.
11-20 Sec. 2161.253. GOOD FAITH COMPLIANCE WITH BUSINESS
11-21 SUBCONTRACTING PLAN. (a) When a state agency requires a
11-22 historically underutilized business subcontracting plan under
11-23 Section 2161.252, the awarded contract shall contain, as a
11-24 provision of the contract that must be fulfilled, the plan that the
11-25 contractor submitted in its bid, proposal, offer, or other
11-26 applicable expression of interest for the contract. The contractor
11-27 shall make good faith efforts to implement the plan.
12-1 (b) To the extent that subcontracts are not contracted for
12-2 as originally submitted in the historically underutilized business
12-3 subcontracting plan, the contractor shall report to the state
12-4 agency all the circumstances that explain that fact and describe
12-5 the good faith efforts made to find and subcontract with another
12-6 historically underutilized business.
12-7 (c) The state agency shall audit the contractor's compliance
12-8 with the historically underutilized business subcontracting plan.
12-9 In determining whether the contractor made the required good faith
12-10 effort, the agency may not consider the success or failure of the
12-11 contractor to subcontract with historically underutilized
12-12 businesses in any specific quantity. The agency's determination is
12-13 restricted to considering factors indicating good faith.
12-14 (d) If a determination is made that the contractor failed to
12-15 implement the plan in good faith, the agency, in addition to any
12-16 other remedies, may bar the contractor from further contracting
12-17 opportunities with the agency.
12-18 (e) The commission shall adopt rules to administer this
12-19 subchapter.
12-20 SECTION 2.11. Subchapter F, Chapter 2161, Government Code,
12-21 as added by this Act, applies only to subcontracting under a
12-22 contract entered into by a state agency for which the request for
12-23 bids, proposals, offers, or other applicable expressions of
12-24 interest is disseminated on or after April 1, 2000.
12-25 Explanation: This addition is necessary to make changes in
12-26 the state's historically underutilized businesses purchasing
12-27 program.
13-1 (5) House Rule 13, Section 9(a)(4), is suspended to permit
13-2 the committee to add a new Article 3 to the bill to read as
13-3 follows:
13-4 ARTICLE 3. PROVISIONS RELATING TO STATE AGENCY
13-5 CONTINGENCY FEE CONTRACTS FOR
13-6 LEGAL SERVICES
13-7 SECTION 3.01.(a) The legislature finds that:
13-8 (1) a payment to a private attorney or law firm under
13-9 a contingent fee contract for legal services entered into by a
13-10 state governmental entity constitutes compensation paid to a public
13-11 contractor for which the legislature must provide by law under
13-12 Section 44, Article III, Texas Constitution; and
13-13 (2) funds recovered by a state governmental entity in
13-14 litigation or in settlement of a matter that could have resulted in
13-15 litigation are state funds that must be deposited in the state
13-16 treasury and made subject to the appropriations process.
13-17 (b) It is the policy of this state that all funds recovered
13-18 by a state governmental entity from an opposing party in litigation
13-19 or in settlement of a matter that could have resulted in
13-20 litigation, including funds designated as damages, amounts adjudged
13-21 or awarded, attorney's fees, costs, interest, settlement proceeds,
13-22 or expenses, are the property of the state governmental entity that
13-23 must be deposited in the manner that public funds of the entity
13-24 must be deposited. Legal fees and expenses may be paid from the
13-25 recovered funds under a contingent fee contract for legal services
13-26 only after the funds have been appropriately deposited and only in
13-27 accordance with applicable law.
14-1 SECTION 3.02. Subchapter F, Chapter 404, Government Code, is
14-2 amended by adding Section 404.097 to read as follows:
14-3 Sec. 404.097. DEPOSIT OF FUNDS RECOVERED BY LITIGATION OR
14-4 SETTLEMENT. (a) Notwithstanding Section 404.093, this section
14-5 applies by its terms to each state governmental entity.
14-6 (b) In this section, "contingent fee contract" and "state
14-7 governmental entity" have the meanings assigned by Section
14-8 2254.101.
14-9 (c) All funds recovered by a state governmental entity in
14-10 litigation or in settlement of a matter that could have resulted in
14-11 litigation, including funds designated as damages, amounts adjudged
14-12 or awarded, attorney's fees, costs, interest, settlement proceeds,
14-13 or expenses, are public funds of the state or the state
14-14 governmental entity and shall be deposited in the state treasury to
14-15 the credit of the appropriate fund or account.
14-16 (d) Legal fees and expenses may be paid from the recovered
14-17 funds under a contingent fee contract for legal services only:
14-18 (1) after the funds are deposited in accordance with
14-19 this section; and
14-20 (2) in accordance with Subchapter C, Chapter 2254.
14-21 SECTION 3.03. Chapter 2254, Government Code, is amended by
14-22 adding Subchapter C to read as follows:
14-23 SUBCHAPTER C. CONTINGENT FEE CONTRACT FOR LEGAL SERVICES
14-24 Sec. 2254.101. DEFINITIONS. In this subchapter:
14-25 (1) "Contingent fee" means that part of a fee for
14-26 legal services, under a contingent fee contract, the amount or
14-27 payment of which is contingent on the outcome of the matter for
15-1 which the services were obtained.
15-2 (2) "Contingent fee contract" means a contract for
15-3 legal services under which the amount or the payment of the fee for
15-4 the services is contingent in whole or in part on the outcome of
15-5 the matter for which the services were obtained.
15-6 (3) "State governmental entity":
15-7 (A) means the state or a board, commission,
15-8 department, office, or other agency in the executive branch of
15-9 state government created under the constitution or a statute of the
15-10 state, including an institution of higher education as defined by
15-11 Section 61.003, Education Code;
15-12 (B) includes the state when a state officer is
15-13 bringing a parens patriae proceeding in the name of the state; and
15-14 (C) does not include a state agency or state
15-15 officer acting as a receiver, special deputy receiver, liquidator,
15-16 or liquidating agent in connection with the administration of the
15-17 assets of an insolvent entity under Article 21.28, Insurance Code,
15-18 or Chapter 36, 66, 96, or 126, Finance Code.
15-19 Sec. 2254.102. APPLICABILITY. (a) This subchapter applies
15-20 only to a contingent fee contract for legal services entered into
15-21 by a state governmental entity.
15-22 (b) The legislature by this subchapter is providing, in
15-23 accordance with Section 44, Article III, Texas Constitution, for
15-24 the manner in which and the situations under which a state
15-25 governmental entity may compensate a public contractor under a
15-26 contingent fee contract for legal services.
15-27 Sec. 2254.103. CONTRACT APPROVAL; SIGNATURE. (a) A state
16-1 governmental entity that has authority to enter into a contract for
16-2 legal services in its own name may enter into a contingent fee
16-3 contract for legal services only if:
16-4 (1) the governing body of the state governmental
16-5 entity approves the contract and the approved contract is signed by
16-6 the presiding officer of the governing body; or
16-7 (2) for an entity that is not governed by a
16-8 multimember governing body, the elected or appointed officer who
16-9 governs the entity approves and signs the contract.
16-10 (b) The attorney general may enter into a contingent fee
16-11 contract for legal services in the name of the state in relation to
16-12 a matter that has been referred to the attorney general under law
16-13 by another state governmental entity only if the other state
16-14 governmental entity approves and signs the contract in accordance
16-15 with Subsection (a).
16-16 (c) A state governmental entity, including the state, may
16-17 enter into a contingent fee contract for legal services that is not
16-18 described by Subsection (a) or (b) only if the governor approves
16-19 and signs the contract.
16-20 (d) Before approving the contract, the governing body,
16-21 elected or appointed officer, or governor, as appropriate, must
16-22 find that:
16-23 (1) there is a substantial need for the legal
16-24 services;
16-25 (2) the legal services cannot be adequately performed
16-26 by the attorneys and supporting personnel of the state governmental
16-27 entity or by the attorneys and supporting personnel of another
17-1 state governmental entity; and
17-2 (3) the legal services cannot reasonably be obtained
17-3 from attorneys in private practice under a contract providing only
17-4 for the payment of hourly fees, without regard to the outcome of
17-5 the matter, because of the nature of the matter for which the
17-6 services will be obtained or because the state governmental entity
17-7 does not have appropriated funds available to pay the estimated
17-8 amounts required under a contract providing only for the payment of
17-9 hourly fees.
17-10 (e) Before entering into a contingent fee contract for legal
17-11 services in which the estimated amount that may be recovered
17-12 exceeds $100,000, a state governmental entity that proposes to
17-13 enter into the contract in its own name or in the name of the state
17-14 must also notify the Legislative Budget Board that the entity
17-15 proposes to enter into the contract, send the board copies of the
17-16 proposed contract, and send the board information demonstrating
17-17 that the conditions required by Subsection (d)(3) exist. If the
17-18 state governmental entity finds under Subsection (d)(3) that the
17-19 state governmental entity does not have appropriated funds
17-20 available to pay the estimated amounts required under a contract
17-21 for the legal services providing only for the payment of hourly
17-22 fees, the state governmental entity may not enter into the proposed
17-23 contract in its own name or in the name of the state unless the
17-24 Legislative Budget Board finds that the state governmental entity's
17-25 finding with regard to available appropriated funds is correct.
17-26 (f) A contingent fee contract for legal services that is
17-27 subject to Subsection (e) and requires a finding by the Legislative
18-1 Budget Board is void unless the board has made the finding required
18-2 by Subsection (e).
18-3 Sec. 2254.104. TIME AND EXPENSE RECORDS REQUIRED; FINAL
18-4 STATEMENT. (a) The contract must require that the contracting
18-5 attorney or law firm keep current and complete written time and
18-6 expense records that describe in detail the time and money spent
18-7 each day in performing the contract.
18-8 (b) The contracting attorney or law firm shall permit the
18-9 governing body or governing officer of the state governmental
18-10 entity, the attorney general, and the state auditor each to inspect
18-11 or obtain copies of the time and expense records at any time on
18-12 request.
18-13 (c) On conclusion of the matter for which legal services
18-14 were obtained, the contracting attorney or law firm shall provide
18-15 the contracting state governmental entity with a complete written
18-16 statement that describes the outcome of the matter, states the
18-17 amount of any recovery, shows the contracting attorney's or law
18-18 firm's computation of the amount of the contingent fee, and
18-19 contains the final complete time and expense records required by
18-20 Subsection (a). The complete written statement required by this
18-21 subsection is public information under Chapter 552 and may not be
18-22 withheld from a requestor under that chapter under Section 552.103
18-23 or any other exception from required disclosure.
18-24 (d) This subsection does not apply to the complete written
18-25 statement required by Subsection (c). All time and expense records
18-26 required under this section are public information subject to
18-27 required public disclosure under Chapter 552. Information in the
19-1 records may be withheld from a member of the public under Section
19-2 552.103 only if, in addition to meeting the requirements of Section
19-3 552.103, the chief legal officer or employee of the state
19-4 governmental entity determines that withholding the information is
19-5 necessary to protect the entity's strategy or position in pending
19-6 or reasonably anticipated litigation. Information withheld from
19-7 public disclosure under this subsection shall be segregated from
19-8 information that is subject to required public disclosure.
19-9 Sec. 2254.105. CERTAIN GENERAL CONTRACT REQUIREMENTS. The
19-10 contract must:
19-11 (1) provide for the method by which the contingent fee
19-12 is computed;
19-13 (2) state the differences, if any, in the method by
19-14 which the contingent fee is computed if the matter is settled,
19-15 tried, or tried and appealed;
19-16 (3) state how litigation and other expenses will be
19-17 paid and, if reimbursement of any expense is contingent on the
19-18 outcome of the matter or reimbursable from the amount recovered in
19-19 the matter, state whether the amount recovered for purposes of the
19-20 contingent fee computation is considered to be the amount obtained
19-21 before or after expenses are deducted;
19-22 (4) state that any subcontracted legal or support
19-23 services performed by a person who is not a contracting attorney or
19-24 a partner, shareholder, or employee of a contracting attorney or
19-25 law firm is an expense subject to reimbursement only in accordance
19-26 with this subchapter; and
19-27 (5) state that the amount of the contingent fee and
20-1 reimbursement of expenses under the contract will be paid and
20-2 limited in accordance with this subchapter.
20-3 Sec. 2254.106. CONTRACT REQUIREMENTS: COMPUTATION OF
20-4 CONTINGENT FEE; REIMBURSEMENT OF EXPENSES. (a) The contract must
20-5 establish the reasonable hourly rate for work performed by an
20-6 attorney, law clerk, or paralegal who will perform legal or support
20-7 services under the contract based on the reasonable and customary
20-8 rate in the relevant locality for the type of work performed and on
20-9 the relevant experience, demonstrated ability, and standard hourly
20-10 billing rate, if any, of the person performing the work. The
20-11 contract may establish the reasonable hourly rate for one or more
20-12 persons by name and may establish a rate schedule for work
20-13 performed by unnamed persons. The highest hourly rate for a named
20-14 person or under a rate schedule may not exceed $1,000 an hour.
20-15 This subsection applies to subcontracted work performed by an
20-16 attorney, law clerk, or paralegal who is not a contracting attorney
20-17 or a partner, shareholder, or employee of a contracting attorney or
20-18 law firm as well as to work performed by a contracting attorney or
20-19 by a partner, shareholder, or employee of a contracting attorney or
20-20 law firm.
20-21 (b) The contract must establish a base fee to be computed as
20-22 follows. For each attorney, law clerk, or paralegal who is a
20-23 contracting attorney or a partner, shareholder, or employee of a
20-24 contracting attorney or law firm, multiply the number of hours the
20-25 attorney, law clerk, or paralegal works in providing legal or
20-26 support services under the contract times the reasonable hourly
20-27 rate for the work performed by that attorney, law clerk, or
21-1 paralegal. Add the resulting amounts to obtain the base fee. The
21-2 computation of the base fee may not include hours or costs
21-3 attributable to work performed by a person who is not a contracting
21-4 attorney or a partner, shareholder, or employee of a contracting
21-5 attorney or law firm.
21-6 (c) Subject to Subsection (d), the contingent fee is
21-7 computed by multiplying the base fee by a multiplier. The contract
21-8 must establish a reasonable multiplier based on any expected
21-9 difficulties in performing the contract, the amount of expenses
21-10 expected to be risked by the contractor, the expected risk of no
21-11 recovery, and any expected long delay in recovery. The multiplier
21-12 may not exceed four without prior approval by the legislature.
21-13 (d) In addition to establishing the method of computing the
21-14 fee under Subsections (a), (b), and (c), the contract must limit
21-15 the amount of the contingent fee to a stated percentage of the
21-16 amount recovered. The contract may state different percentage
21-17 limitations for different ranges of possible recoveries and
21-18 different percentage limitations in the event the matter is
21-19 settled, tried, or tried and appealed. The percentage limitation
21-20 may not exceed 35 percent without prior approval by the
21-21 legislature. The contract must state that the amount of the
21-22 contingent fee will not exceed the lesser of the stated percentage
21-23 of the amount recovered or the amount computed under Subsections
21-24 (a), (b), and (c).
21-25 (e) The contract also may:
21-26 (1) limit the amount of expenses that may be
21-27 reimbursed; and
22-1 (2) provide that the amount or payment of only part of
22-2 the fee is contingent on the outcome of the matter for which the
22-3 services were obtained, with the amount and payment of the
22-4 remainder of the fee payable on a regular hourly rate basis without
22-5 regard to the outcome of the matter.
22-6 (f) Except as provided by Section 2254.107, this section
22-7 does not apply to a contingent fee contract for legal services:
22-8 (1) in which the expected amount to be recovered and
22-9 the actual amount recovered do not exceed $100,000; or
22-10 (2) under which a series of recoveries is contemplated
22-11 and the amount of each individual recovery is not expected to and
22-12 does not exceed $100,000.
22-13 (g) This section applies to a contract described by
22-14 Subsection (f) for each individual recovery under the contract that
22-15 actually exceeds $100,000, and the contract must provide for
22-16 computing the fee in accordance with this section for each
22-17 individual recovery that actually exceeds $100,000.
22-18 Sec. 2254.107. MIXED HOURLY AND CONTINGENT FEE CONTRACTS;
22-19 REIMBURSEMENT FOR SUBCONTRACTED WORK. (a) This section applies
22-20 only to a contingent fee contract:
22-21 (1) under which the amount or payment of only part of
22-22 the fee is contingent on the outcome of the matter for which the
22-23 services were obtained, with the amount and payment of the
22-24 remainder of the fee payable on a regular hourly rate basis without
22-25 regard to the outcome of the matter; or
22-26 (2) under which reimbursable expenses are incurred for
22-27 subcontracted legal or support services performed by a person who
23-1 is not a contracting attorney or a partner, shareholder, or
23-2 employee of a contracting attorney or law firm.
23-3 (b) Sections 2254.106(a) and (e) apply to the contract
23-4 without regard to the expected or actual amount of recovery under
23-5 the contract.
23-6 (c) The limitations prescribed by Section 2254.106 on the
23-7 amount of the contingent fee apply to the entire amount of the fee
23-8 under the contingent fee contract, including the part of the fee
23-9 the amount and payment of which is not contingent on the outcome of
23-10 the matter.
23-11 (d) The limitations prescribed by Section 2254.108 on
23-12 payment of the fee apply only to payment of the contingent portion
23-13 of the fee.
23-14 Sec. 2254.108. FEE PAYMENT AND EXPENSE REIMBURSEMENT.
23-15 (a) Except as provided by Subsection (b), a contingent fee and a
23-16 reimbursement of an expense under a contract with a state
23-17 governmental entity is payable only from funds the legislature
23-18 specifically appropriates to pay the fee or reimburse the expense.
23-19 An appropriation to pay the fee or reimburse the expense must
23-20 specifically describe the individual contract, or the class of
23-21 contracts classified by subject matter, on account of which the fee
23-22 is payable or expense is reimbursable. A general reference to
23-23 contingent fee contracts for legal services or to contracts subject
23-24 to this subchapter or a similar general description is not a
23-25 sufficient description for purposes of this subsection.
23-26 (b) If the legislature has not specifically appropriated
23-27 funds for paying the fee or reimbursing the expense, a state
24-1 governmental entity may pay the fee or reimburse the expense from
24-2 other available funds only if:
24-3 (1) the legislature is not in session; and
24-4 (2) the Legislative Budget Board gives its prior
24-5 approval for that payment or reimbursement under Section 69,
24-6 Article XVI, Texas Constitution, after examining the statement
24-7 required under Section 2254.104(c) and determining that the
24-8 requested payment and the contract under which payment is requested
24-9 meet all the requirements of this subchapter.
24-10 (c) A payment or reimbursement under the contract may not be
24-11 made until:
24-12 (1) final and unappealable arrangements have been made
24-13 for depositing all recovered funds to the credit of the appropriate
24-14 fund or account in the state treasury; and
24-15 (2) the state governmental entity and the state
24-16 auditor have received from the contracting attorney or law firm the
24-17 statement required under Section 2254.104(c).
24-18 (d) Litigation and other expenses payable under the
24-19 contract, including expenses attributable to attorney, paralegal,
24-20 accountant, expert, or other professional work performed by a
24-21 person who is not a contracting attorney or a partner, shareholder,
24-22 or employee of a contracting attorney or law firm, may be
24-23 reimbursed only if the state governmental entity and the state
24-24 auditor determine that the expenses were reasonable, proper,
24-25 necessary, actually incurred on behalf of the state governmental
24-26 entity, and paid for by the contracting attorney or law firm. The
24-27 contingent fee may not be paid until the state auditor has reviewed
25-1 the relevant time and expense records and verified that the hours
25-2 of work on which the fee computation is based were actually worked
25-3 in performing reasonable and necessary services for the state
25-4 governmental entity under the contract.
25-5 Sec. 2254.109. EFFECT ON OTHER LAW. (a) This subchapter
25-6 does not limit the right of a state governmental entity to recover
25-7 fees and expenses from opposing parties under other law.
25-8 (b) Compliance with this subchapter does not relieve a
25-9 contracting attorney or law firm of an obligation or responsibility
25-10 under other law, including under the Texas Disciplinary Rules of
25-11 Professional Conduct.
25-12 (c) A state officer, employee, or governing body, including
25-13 the attorney general, may not waive the requirements of this
25-14 subchapter or prejudice the interests of the state under this
25-15 subchapter. This subchapter does not waive the state's sovereign
25-16 immunity from suit or its immunity from suit in federal court under
25-17 the Eleventh Amendment to the federal constitution.
25-18 SECTION 3.04. The changes in law made by this article apply
25-19 only to a contract entered into on or after September 1, 1999.
25-20 Explanation: This addition is necessary to regulate matters
25-21 relating to contingent fee contracts for legal services entered
25-22 into by state agencies.
Junell
_______________________________
Speaker of the House
I certify that H.R. No. 1348 was adopted by the House on May
30, 1999, by a non-record vote.
_______________________________
Chief Clerk of the House