By: Ratliff S.R. No. 1189
SENATE RESOLUTION
1-1 BE IT RESOLVED by the Senate of the State of Texas, 76th
1-2 Legislature, Regular Session, 1999, That Senate Rule 12.03 be
1-3 suspended in part as provided by Senate Rule 12.08 to enable the
1-4 conference committee appointed to resolve the differences on Senate
1-5 Bill No. 178, relating to state agency practices and duties,
1-6 including codification of certain state agency practices and duties
1-7 currently prescribed by the General Appropriations Act, to consider
1-8 and take action on the following matters:
1-9 (1) Senate Rule 12.03(3) is suspended to permit the
1-10 committee to add the following Subsection (c) to Section 2161.004,
1-11 Government Code, as added by the bill:
1-12 (c) Section 2161.003 and Subsections (a) and (b) of this
1-13 section do not apply to a project or contract subject to Section
1-14 201.702, Transportation Code.
1-15 Explanation: This addition is necessary to clarify that the
1-16 historically underutilized businesses provisions of Sections
1-17 2161.003 and 2161.004, Government Code, as added by the bill, that
1-18 are generally applicable to state agencies do not override the
1-19 disadvantaged businesses provisions of current law in Section
1-20 201.702, Transportation Code, that are applicable to the Texas
1-21 Department of Transportation.
1-22 (2) Senate Rule 12.03(1) is suspended to permit the
1-23 committee to amend Section 2161.122(d), Government Code, as
1-24 redesignated by the bill, as follows:
2-1 (d) A state agency participating in a group purchasing
2-2 program [described under Section 2155.139(b)] shall send to the
2-3 commission in the agency's report under Section 2161.121 a separate
2-4 list of purchases from historically underutilized businesses that
2-5 are made through the group purchasing program, including the dollar
2-6 amount of each purchase allocated to the reporting agency.
2-7 Explanation: This amendment is necessary to clarify that a
2-8 state agency shall report its purchases from historically
2-9 underutilized businesses under any group purchasing program.
2-10 (3) Senate Rule 12.03(3) is suspended to permit the
2-11 committee to add the following Subdivision (4) to Section 2170.010,
2-12 Government Code, as added by the bill:
2-13 (4) in the investigation of motor fuels tax fraud.
2-14 Explanation: This addition is necessary to allow the use of
2-15 unlisted telephone numbers in the investigation of motor fuels tax
2-16 fraud.
2-17 (4) Senate Rule 12.03(4) is suspended to permit the
2-18 committee to add a new Article 2 to the bill to read as follows:
2-19 ARTICLE 2. CERTAIN OTHER PROVISIONS
2-20 RELATED TO STATE AGENCY CONTRACTING WITH
2-21 HISTORICALLY UNDERUTILIZED BUSINESSES
2-22 SECTION 2.01. Subsection (g), Section 2155.074, Government
2-23 Code, as added by Chapter 508, Acts of the 75th Legislature,
2-24 Regular Session, 1997, is amended to read as follows:
2-25 (g) A state agency shall post in the business daily either
2-26 the entire bid or proposal solicitation package or a notice that
3-1 includes all information necessary to make a successful bid,
3-2 proposal, or other applicable expression of interest for the
3-3 procurement contract, including at a minimum the following
3-4 information for each procurement that the state agency will make
3-5 that is estimated to exceed $25,000 in value:
3-6 (1) a brief description of the goods or services to be
3-7 procured and any applicable state product or service codes for the
3-8 goods and services;
3-9 (2) the last date on which bids, proposals, or other
3-10 applicable expressions of interest will be accepted;
3-11 (3) the estimated quantity of goods or services to be
3-12 procured;
3-13 (4) if applicable, the previous price paid by the
3-14 state agency for the same or similar goods or services;
3-15 (5) the estimated date on which the goods or services
3-16 to be procured will be needed; and
3-17 (6) the name, business mailing address, and business
3-18 telephone number of the state agency employee a person may contact
3-19 to inquire about [obtain] all necessary information related to
3-20 making a bid or proposal or other applicable expression of interest
3-21 for the procurement contract.
3-22 SECTION 2.02. Subchapter A, Chapter 2161, Government Code,
3-23 is amended by adding Section 2161.0015 to read as follows:
3-24 Sec. 2161.0015. DETERMINING SIZE STANDARDS FOR HISTORICALLY
3-25 UNDERUTILIZED BUSINESSES. The commission may establish size
3-26 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. Subsections (b) and (c), Section 2161.061,
4-7 Government Code, 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
5-1 commission database containing information about historically
5-2 underutilized businesses and potential historically underutilized
5-3 businesses; and
5-4 (3) provide for a method by which the commission may
5-5 efficiently communicate with businesses certified under the local
5-6 government program and provide those businesses with information
5-7 about the state historically underutilized business program. [A
5-8 municipality, in certifying historically underutilized businesses,
5-9 may adopt the certification program of the commission, of the
5-10 federal Small Business Administration, or of another political
5-11 subdivision or other governmental entity.]
5-12 SECTION 2.04. Section 2161.062, Government Code, is amended
5-13 by adding Subsections (d) and (e) to read as follows:
5-14 (d) The commission shall send historically underutilized
5-15 businesses an orientation package on certification or
5-16 recertification. The package shall include:
5-17 (1) a certificate issued in the historically
5-18 underutilized business's name;
5-19 (2) a description of the significance and value of
5-20 certification;
5-21 (3) a list of state purchasing personnel;
5-22 (4) information regarding electronic commerce
5-23 opportunities;
5-24 (5) information regarding the Texas Marketplace
5-25 website; and
5-26 (6) additional information about the state procurement
6-1 process.
6-2 (e) A state agency with a biennial budget that exceeds $10
6-3 million shall designate a staff member to serve as the historically
6-4 underutilized businesses coordinator for the agency during the
6-5 fiscal year. The procurement director may serve as the
6-6 coordinator. In agencies that employ a historically underutilized
6-7 businesses coordinator, the position of coordinator, within the
6-8 agency's structure, must be at least equal to the position of
6-9 procurement director. In addition to any other responsibilities,
6-10 the coordinator shall:
6-11 (1) coordinate training programs for the recruitment
6-12 and retention of historically underutilized businesses;
6-13 (2) report required information to the commission; and
6-14 (3) match historically underutilized businesses with
6-15 key staff within the agency.
6-16 SECTION 2.05. Subsection (b), Section 2161.063, Government
6-17 Code, is amended to read as follows:
6-18 (b) The commission shall assist the Texas Department of
6-19 Economic Development [Commerce] in performing the department's
6-20 duties under Section 481.0068 [481.103].
6-21 SECTION 2.06. Subsection (b), Section 2161.064, Government
6-22 Code, is amended to read as follows:
6-23 (b) The commission at least semiannually shall update the
6-24 directory and provide access to the directory electronically or in
6-25 another form [a copy of the directory] to each state agency.
6-26 SECTION 2.07. Subsections (a) and (e), Section 2161.121,
7-1 Government Code, are amended to read as follows:
7-2 (a) The commission shall prepare a consolidated report that:
7-3 (1) includes the number and dollar amount of contracts
7-4 awarded and paid to historically underutilized businesses certified
7-5 by the commission; [and]
7-6 (2) analyzes the relative level of opportunity for
7-7 historically underutilized businesses for various categories of
7-8 acquired goods and services; and
7-9 (3) tracks, by vendor identification number and, to
7-10 the extent allowed by federal law, by social security number, the
7-11 graduation rates for historically underutilized businesses that
7-12 grew to exceed the size standards determined by the commission.
7-13 (e) The commission shall send on October 15 of each year a
7-14 report on the preceding fiscal year to the presiding officer of
7-15 each house of the legislature[, the members of the legislature,]
7-16 and the joint committee.
7-17 SECTION 2.08. Subchapter B, Chapter 2161, Government Code,
7-18 is amended by adding Sections 2161.065 and 2161.066 to read as
7-19 follows:
7-20 Sec. 2161.065. MENTOR-PROTEGE PROGRAM. (a) The commission
7-21 shall design a mentor-protege program to foster long-term
7-22 relationships between prime contractors and historically
7-23 underutilized businesses and to increase the ability of
7-24 historically underutilized businesses to contract with the state or
7-25 to receive subcontracts under a state contract. Each state agency
7-26 with a biennial appropriation that exceeds $10 million shall
8-1 implement the program designed by the commission.
8-2 (b) Participation in the program must be voluntary for both
8-3 the contractor and the historically underutilized business
8-4 subcontractor.
8-5 Sec. 2161.066. HISTORICALLY UNDERUTILIZED BUSINESS FORUMS.
8-6 (a) The commission shall design a program of forums in which
8-7 historically underutilized businesses are invited by state agencies
8-8 to deliver technical and business presentations that demonstrate
8-9 their capability to do business with the agency:
8-10 (1) to senior managers and procurement personnel at
8-11 state agencies that acquire goods and services of a type supplied
8-12 by the historically underutilized businesses; and
8-13 (2) to contractors with the state who may be
8-14 subcontracting for goods and services of a type supplied by the
8-15 historically underutilized businesses.
8-16 (b) The forums shall be held at state agency offices.
8-17 (c) Each state agency with a biennial appropriation that
8-18 exceeds $10 million shall participate in the program by sending
8-19 senior managers and procurement personnel to attend relevant
8-20 presentations and by informing the agency's contractors about
8-21 presentations that may be relevant to anticipated subcontracting
8-22 opportunities.
8-23 (d) Each state agency that has a historically underutilized
8-24 businesses coordinator shall:
8-25 (1) design its own program and model the program to
8-26 the extent appropriate on the program developed by the commission
9-1 under this section; and
9-2 (2) sponsor presentations by historically
9-3 underutilized businesses at the agency.
9-4 (e) The commission and each state agency that has a
9-5 historically underutilized businesses coordinator shall
9-6 aggressively identify and notify individual historically
9-7 underutilized businesses regarding opportunities to make a
9-8 presentation regarding the types of goods and services supplied by
9-9 the historically underutilized business and shall advertise in
9-10 appropriate trade publications that target historically
9-11 underutilized businesses regarding opportunities to make a
9-12 presentation.
9-13 SECTION 2.09. Subchapter C, Chapter 2161, Government Code,
9-14 is amended by adding Sections 2161.126 and 2161.127 to read as
9-15 follows:
9-16 Sec. 2161.126. EDUCATION AND OUTREACH BY COMMISSION. Before
9-17 September 1 of each year, the commission shall report to the
9-18 governor, the lieutenant governor, and the speaker of the house of
9-19 representatives on the education and training efforts that the
9-20 commission has made toward historically underutilized businesses.
9-21 The report must include the following as related to historically
9-22 underutilized businesses:
9-23 (1) the commission's vision, mission, and philosophy;
9-24 (2) marketing materials and other educational
9-25 materials distributed by the commission;
9-26 (3) the commission's policy regarding education,
10-1 outreach, and dissemination of information;
10-2 (4) goals that the commission has attained during the
10-3 fiscal year;
10-4 (5) the commission's goals, objectives, and expected
10-5 outcome measures for each outreach and education event; and
10-6 (6) the commission's planned future initiatives on
10-7 education and outreach.
10-8 Sec. 2161.127. LEGISLATIVE APPROPRIATIONS REQUESTS. Each
10-9 state agency must include as part of its legislative appropriations
10-10 request a detailed report for consideration by the budget
10-11 committees of the legislature that shows the extent to which the
10-12 agency complied with this chapter and rules of the commission
10-13 adopted under this chapter during the two calendar years preceding
10-14 the calendar year in which the request is submitted. To the extent
10-15 the state agency did not comply, the report must demonstrate the
10-16 reasons for that fact. The extent to which a state agency complies
10-17 with this chapter and rules of the commission adopted under this
10-18 chapter is considered a performance measure for purposes of the
10-19 appropriations process.
10-20 SECTION 2.10. Chapter 2161, Government Code, is amended by
10-21 adding Subchapter F to read as follows:
10-22 SUBCHAPTER F. SUBCONTRACTING
10-23 Sec. 2161.251. APPLICABILITY. (a) This subchapter applies
10-24 to all contracts entered into by a state agency with an expected
10-25 value of $100,000 or more, including:
10-26 (1) contracts for the acquisition of a good or
11-1 service; and
11-2 (2) contracts for or related to the construction of a
11-3 public building, road, or other public work.
11-4 (b) This subchapter applies to the contract without regard
11-5 to:
11-6 (1) whether the contract is otherwise subject to this
11-7 subtitle; or
11-8 (2) the source of funds for the contract, except that
11-9 to the extent federal funds are used to pay for the contract, this
11-10 subchapter does not apply if federal law prohibits the application
11-11 of this subchapter in relation to the expenditure of federal funds.
11-12 Sec. 2161.252. AGENCY DETERMINATION REGARDING SUBCONTRACTING
11-13 OPPORTUNITIES; BUSINESS SUBCONTRACTING PLAN. (a) Each state
11-14 agency that considers entering into a contract with an expected
11-15 value of $100,000 or more shall, before the agency solicits bids,
11-16 proposals, offers, or other applicable expressions of interest for
11-17 the contract, determine whether there will be subcontracting
11-18 opportunities under the contract. If the state agency determines
11-19 that there is that probability, the agency shall require that each
11-20 bid, proposal, offer, or other applicable expression of interest
11-21 for the contract include a historically underutilized business
11-22 subcontracting plan.
11-23 (b) When a state agency requires a historically
11-24 underutilized business subcontracting plan under Subsection (a), a
11-25 bid, proposal, offer, or other applicable expression of interest
11-26 for the contract must contain a plan to be considered responsive.
12-1 Sec. 2161.253. GOOD FAITH COMPLIANCE WITH BUSINESS
12-2 SUBCONTRACTING PLAN. (a) When a state agency requires a
12-3 historically underutilized business subcontracting plan under
12-4 Section 2161.252, the awarded contract shall contain, as a
12-5 provision of the contract that must be fulfilled, the plan that the
12-6 contractor submitted in its bid, proposal, offer, or other
12-7 applicable expression of interest for the contract. The contractor
12-8 shall make good faith efforts to implement the plan.
12-9 (b) To the extent that subcontracts are not contracted for
12-10 as originally submitted in the historically underutilized business
12-11 subcontracting plan, the contractor shall report to the state
12-12 agency all the circumstances that explain that fact and describe
12-13 the good faith efforts made to find and subcontract with another
12-14 historically underutilized business.
12-15 (c) The state agency shall audit the contractor's compliance
12-16 with the historically underutilized business subcontracting plan.
12-17 In determining whether the contractor made the required good faith
12-18 effort, the agency may not consider the success or failure of the
12-19 contractor to subcontract with historically underutilized
12-20 businesses in any specific quantity. The agency's determination is
12-21 restricted to considering factors indicating good faith.
12-22 (d) If a determination is made that the contractor failed to
12-23 implement the plan in good faith, the agency, in addition to any
12-24 other remedies, may bar the contractor from further contracting
12-25 opportunities with the agency.
12-26 (e) The commission shall adopt rules to administer this
13-1 subchapter.
13-2 SECTION 2.11. Subchapter F, Chapter 2161, Government Code,
13-3 as added by this Act, applies only to subcontracting under a
13-4 contract entered into by a state agency for which the request for
13-5 bids, proposals, offers, or other applicable expressions of
13-6 interest is disseminated on or after April 1, 2000.
13-7 Explanation: This addition is necessary to make changes in
13-8 the state's historically underutilized businesses purchasing
13-9 program.
13-10 (5) Senate Rule 12.03(4) is suspended to permit the
13-11 committee to add a new Article 3 to the bill to read as follows:
13-12 ARTICLE 3. PROVISIONS RELATING TO STATE AGENCY
13-13 CONTINGENCY FEE CONTRACTS FOR LEGAL SERVICES
13-14 SECTION 3.01. (a) The legislature finds that:
13-15 (1) a payment to a private attorney or law firm under
13-16 a contingent fee contract for legal services entered into by a
13-17 state governmental entity constitutes compensation paid to a public
13-18 contractor for which the legislature must provide by law under
13-19 Section 44, Article III, Texas Constitution; and
13-20 (2) funds recovered by a state governmental entity in
13-21 litigation or in settlement of a matter that could have resulted in
13-22 litigation are state funds that must be deposited in the state
13-23 treasury and made subject to the appropriations process.
13-24 (b) It is the policy of this state that all funds recovered
13-25 by a state governmental entity from an opposing party in litigation
13-26 or in settlement of a matter that could have resulted in
14-1 litigation, including funds designated as damages, amounts adjudged
14-2 or awarded, attorney's fees, costs, interest, settlement proceeds,
14-3 or expenses, are the property of the state governmental entity that
14-4 must be deposited in the manner that public funds of the entity
14-5 must be deposited. Legal fees and expenses may be paid from the
14-6 recovered funds under a contingent fee contract for legal services
14-7 only after the funds have been appropriately deposited and only in
14-8 accordance with applicable law.
14-9 SECTION 3.02. Subchapter F, Chapter 404, Government Code, is
14-10 amended by adding Section 404.097 to read as follows:
14-11 Sec. 404.097. DEPOSIT OF FUNDS RECOVERED BY LITIGATION OR
14-12 SETTLEMENT. (a) Notwithstanding Section 404.093, this section
14-13 applies by its terms to each state governmental entity.
14-14 (b) In this section, "contingent fee contract" and "state
14-15 governmental entity" have the meanings assigned by Section
14-16 2254.101.
14-17 (c) All funds recovered by a state governmental entity in
14-18 litigation or in settlement of a matter that could have resulted in
14-19 litigation, including funds designated as damages, amounts adjudged
14-20 or awarded, attorney's fees, costs, interest, settlement proceeds,
14-21 or expenses, are public funds of the state or the state
14-22 governmental entity and shall be deposited in the state treasury to
14-23 the credit of the appropriate fund or account.
14-24 (d) Legal fees and expenses may be paid from the recovered
14-25 funds under a contingent fee contract for legal services only:
14-26 (1) after the funds are deposited in accordance with
15-1 this section; and
15-2 (2) in accordance with Subchapter C, Chapter 2254.
15-3 SECTION 3.03. Chapter 2254, Government Code, is amended by
15-4 adding Subchapter C to read as follows:
15-5 SUBCHAPTER C. CONTINGENT FEE CONTRACT FOR LEGAL SERVICES
15-6 Sec. 2254.101. DEFINITIONS. In this subchapter:
15-7 (1) "Contingent fee" means that part of a fee for
15-8 legal services, under a contingent fee contract, the amount or
15-9 payment of which is contingent on the outcome of the matter for
15-10 which the services were obtained.
15-11 (2) "Contingent fee contract" means a contract for
15-12 legal services under which the amount or the payment of the fee for
15-13 the services is contingent in whole or in part on the outcome of
15-14 the matter for which the services were obtained.
15-15 (3) "State governmental entity":
15-16 (A) means the state or a board, commission,
15-17 department, office, or other agency in the executive branch of
15-18 state government created under the constitution or a statute of the
15-19 state, including an institution of higher education as defined by
15-20 Section 61.003, Education Code;
15-21 (B) includes the state when a state officer is
15-22 bringing a parens patriae proceeding in the name of the state; and
15-23 (C) does not include a state agency or state
15-24 officer acting as a receiver, special deputy receiver, liquidator,
15-25 or liquidating agent in connection with the administration of the
15-26 assets of an insolvent entity under Article 21.28, Insurance Code,
16-1 or Chapter 36, 66, 96, or 126, Finance Code.
16-2 Sec. 2254.102. APPLICABILITY. (a) This subchapter applies
16-3 only to a contingent fee contract for legal services entered into
16-4 by a state governmental entity.
16-5 (b) The legislature by this subchapter is providing, in
16-6 accordance with Section 44, Article III, Texas Constitution, for
16-7 the manner in which and the situations under which a state
16-8 governmental entity may compensate a public contractor under a
16-9 contingent fee contract for legal services.
16-10 Sec. 2254.103. CONTRACT APPROVAL; SIGNATURE. (a) A state
16-11 governmental entity that has authority to enter into a contract for
16-12 legal services in its own name may enter into a contingent fee
16-13 contract for legal services only if:
16-14 (1) the governing body of the state governmental
16-15 entity approves the contract and the approved contract is signed by
16-16 the presiding officer of the governing body; or
16-17 (2) for an entity that is not governed by a
16-18 multimember governing body, the elected or appointed officer who
16-19 governs the entity approves and signs the contract.
16-20 (b) The attorney general may enter into a contingent fee
16-21 contract for legal services in the name of the state in relation to
16-22 a matter that has been referred to the attorney general under law
16-23 by another state governmental entity only if the other state
16-24 governmental entity approves and signs the contract in accordance
16-25 with Subsection (a).
16-26 (c) A state governmental entity, including the state, may
17-1 enter into a contingent fee contract for legal services that is not
17-2 described by Subsection (a) or (b) only if the governor approves
17-3 and signs the contract.
17-4 (d) Before approving the contract, the governing body,
17-5 elected or appointed officer, or governor, as appropriate, must
17-6 find that:
17-7 (1) there is a substantial need for the legal
17-8 services;
17-9 (2) the legal services cannot be adequately performed
17-10 by the attorneys and supporting personnel of the state governmental
17-11 entity or by the attorneys and supporting personnel of another
17-12 state governmental entity; and
17-13 (3) the legal services cannot reasonably be obtained
17-14 from attorneys in private practice under a contract providing only
17-15 for the payment of hourly fees, without regard to the outcome of
17-16 the matter, because of the nature of the matter for which the
17-17 services will be obtained or because the state governmental entity
17-18 does not have appropriated funds available to pay the estimated
17-19 amounts required under a contract providing only for the payment of
17-20 hourly fees.
17-21 (e) Before entering into a contingent fee contract for legal
17-22 services in which the estimated amount that may be recovered
17-23 exceeds $100,000, a state governmental entity that proposes to
17-24 enter into the contract in its own name or in the name of the state
17-25 must also notify the Legislative Budget Board that the entity
17-26 proposes to enter into the contract, send the board copies of the
18-1 proposed contract, and send the board information demonstrating
18-2 that the conditions required by Subsection (d)(3) exist. If the
18-3 state governmental entity finds under Subsection (d)(3) that the
18-4 state governmental entity does not have appropriated funds
18-5 available to pay the estimated amounts required under a contract
18-6 for the legal services providing only for the payment of hourly
18-7 fees, the state governmental entity may not enter into the proposed
18-8 contract in its own name or in the name of the state unless the
18-9 Legislative Budget Board finds that the state governmental entity's
18-10 finding with regard to available appropriated funds is correct.
18-11 (f) A contingent fee contract for legal services that is
18-12 subject to Subsection (e) and requires a finding by the Legislative
18-13 Budget Board is void unless the board has made the finding required
18-14 by Subsection (e).
18-15 Sec. 2254.104. TIME AND EXPENSE RECORDS REQUIRED; FINAL
18-16 STATEMENT. (a) The contract must require that the contracting
18-17 attorney or law firm keep current and complete written time and
18-18 expense records that describe in detail the time and money spent
18-19 each day in performing the contract.
18-20 (b) The contracting attorney or law firm shall permit the
18-21 governing body or governing officer of the state governmental
18-22 entity, the attorney general, and the state auditor each to inspect
18-23 or obtain copies of the time and expense records at any time on
18-24 request.
18-25 (c) On conclusion of the matter for which legal services
18-26 were obtained, the contracting attorney or law firm shall provide
19-1 the contracting state governmental entity with a complete written
19-2 statement that describes the outcome of the matter, states the
19-3 amount of any recovery, shows the contracting attorney's or law
19-4 firm's computation of the amount of the contingent fee, and
19-5 contains the final complete time and expense records required by
19-6 Subsection (a). The complete written statement required by this
19-7 subsection is public information under Chapter 552 and may not be
19-8 withheld from a requestor under that chapter under Section 552.103
19-9 or any other exception from required disclosure.
19-10 (d) This subsection does not apply to the complete written
19-11 statement required by Subsection (c). All time and expense records
19-12 required under this section are public information subject to
19-13 required public disclosure under Chapter 552. Information in the
19-14 records may be withheld from a member of the public under Section
19-15 552.103 only if, in addition to meeting the requirements of Section
19-16 552.103, the chief legal officer or employee of the state
19-17 governmental entity determines that withholding the information is
19-18 necessary to protect the entity's strategy or position in pending
19-19 or reasonably anticipated litigation. Information withheld from
19-20 public disclosure under this subsection shall be segregated from
19-21 information that is subject to required public disclosure.
19-22 Sec. 2254.105. CERTAIN GENERAL CONTRACT REQUIREMENTS. The
19-23 contract must:
19-24 (1) provide for the method by which the contingent fee
19-25 is computed;
19-26 (2) state the differences, if any, in the method by
20-1 which the contingent fee is computed if the matter is settled,
20-2 tried, or tried and appealed;
20-3 (3) state how litigation and other expenses will be
20-4 paid and, if reimbursement of any expense is contingent on the
20-5 outcome of the matter or reimbursable from the amount recovered in
20-6 the matter, state whether the amount recovered for purposes of the
20-7 contingent fee computation is considered to be the amount obtained
20-8 before or after expenses are deducted;
20-9 (4) state that any subcontracted legal or support
20-10 services performed by a person who is not a contracting attorney or
20-11 a partner, shareholder, or employee of a contracting attorney or
20-12 law firm is an expense subject to reimbursement only in accordance
20-13 with this subchapter; and
20-14 (5) state that the amount of the contingent fee and
20-15 reimbursement of expenses under the contract will be paid and
20-16 limited in accordance with this subchapter.
20-17 Sec. 2254.106. CONTRACT REQUIREMENTS: COMPUTATION OF
20-18 CONTINGENT FEE; REIMBURSEMENT OF EXPENSES. (a) The contract must
20-19 establish the reasonable hourly rate for work performed by an
20-20 attorney, law clerk, or paralegal who will perform legal or support
20-21 services under the contract based on the reasonable and customary
20-22 rate in the relevant locality for the type of work performed and on
20-23 the relevant experience, demonstrated ability, and standard hourly
20-24 billing rate, if any, of the person performing the work. The
20-25 contract may establish the reasonable hourly rate for one or more
20-26 persons by name and may establish a rate schedule for work
21-1 performed by unnamed persons. The highest hourly rate for a named
21-2 person or under a rate schedule may not exceed $1,000 an hour.
21-3 This subsection applies to subcontracted work performed by an
21-4 attorney, law clerk, or paralegal who is not a contracting attorney
21-5 or a partner, shareholder, or employee of a contracting attorney or
21-6 law firm as well as to work performed by a contracting attorney or
21-7 by a partner, shareholder, or employee of a contracting attorney or
21-8 law firm.
21-9 (b) The contract must establish a base fee to be computed as
21-10 follows. For each attorney, law clerk, or paralegal who is a
21-11 contracting attorney or a partner, shareholder, or employee of a
21-12 contracting attorney or law firm, multiply the number of hours the
21-13 attorney, law clerk, or paralegal works in providing legal or
21-14 support services under the contract times the reasonable hourly
21-15 rate for the work performed by that attorney, law clerk, or
21-16 paralegal. Add the resulting amounts to obtain the base fee. The
21-17 computation of the base fee may not include hours or costs
21-18 attributable to work performed by a person who is not a contracting
21-19 attorney or a partner, shareholder, or employee of a contracting
21-20 attorney or law firm.
21-21 (c) Subject to Subsection (d), the contingent fee is
21-22 computed by multiplying the base fee by a multiplier. The contract
21-23 must establish a reasonable multiplier based on any expected
21-24 difficulties in performing the contract, the amount of expenses
21-25 expected to be risked by the contractor, the expected risk of no
21-26 recovery, and any expected long delay in recovery. The multiplier
22-1 may not exceed four without prior approval by the legislature.
22-2 (d) In addition to establishing the method of computing the
22-3 fee under Subsections (a), (b), and (c), the contract must limit
22-4 the amount of the contingent fee to a stated percentage of the
22-5 amount recovered. The contract may state different percentage
22-6 limitations for different ranges of possible recoveries and
22-7 different percentage limitations in the event the matter is
22-8 settled, tried, or tried and appealed. The percentage limitation
22-9 may not exceed 35 percent without prior approval by the
22-10 legislature. The contract must state that the amount of the
22-11 contingent fee will not exceed the lesser of the stated percentage
22-12 of the amount recovered or the amount computed under Subsections
22-13 (a), (b), and (c).
22-14 (e) The contract also may:
22-15 (1) limit the amount of expenses that may be
22-16 reimbursed; and
22-17 (2) provide that the amount or payment of only part of
22-18 the fee is contingent on the outcome of the matter for which the
22-19 services were obtained, with the amount and payment of the
22-20 remainder of the fee payable on a regular hourly rate basis without
22-21 regard to the outcome of the matter.
22-22 (f) Except as provided by Section 2254.107, this section
22-23 does not apply to a contingent fee contract for legal services:
22-24 (1) in which the expected amount to be recovered and
22-25 the actual amount recovered do not exceed $100,000; or
22-26 (2) under which a series of recoveries is contemplated
23-1 and the amount of each individual recovery is not expected to and
23-2 does not exceed $100,000.
23-3 (g) This section applies to a contract described by
23-4 Subsection (f) for each individual recovery under the contract that
23-5 actually exceeds $100,000, and the contract must provide for
23-6 computing the fee in accordance with this section for each
23-7 individual recovery that actually exceeds $100,000.
23-8 Sec. 2254.107. MIXED HOURLY AND CONTINGENT FEE CONTRACTS;
23-9 REIMBURSEMENT FOR SUBCONTRACTED WORK. (a) This section applies
23-10 only to a contingent fee contract:
23-11 (1) under which the amount or payment of only part of
23-12 the fee is contingent on the outcome of the matter for which the
23-13 services were obtained, with the amount and payment of the
23-14 remainder of the fee payable on a regular hourly rate basis without
23-15 regard to the outcome of the matter; or
23-16 (2) under which reimbursable expenses are incurred for
23-17 subcontracted legal or support services performed by a person who
23-18 is not a contracting attorney or a partner, shareholder, or
23-19 employee of a contracting attorney or law firm.
23-20 (b) Sections 2254.106(a) and (e) apply to the contract
23-21 without regard to the expected or actual amount of recovery under
23-22 the contract.
23-23 (c) The limitations prescribed by Section 2254.106 on the
23-24 amount of the contingent fee apply to the entire amount of the fee
23-25 under the contingent fee contract, including the part of the fee
23-26 the amount and payment of which is not contingent on the outcome of
24-1 the matter.
24-2 (d) The limitations prescribed by Section 2254.108 on
24-3 payment of the fee apply only to payment of the contingent portion
24-4 of the fee.
24-5 Sec. 2254.108. FEE PAYMENT AND EXPENSE REIMBURSEMENT.
24-6 (a) Except as provided by Subsection (b), a contingent fee and a
24-7 reimbursement of an expense under a contract with a state
24-8 governmental entity is payable only from funds the legislature
24-9 specifically appropriates to pay the fee or reimburse the expense.
24-10 An appropriation to pay the fee or reimburse the expense must
24-11 specifically describe the individual contract, or the class of
24-12 contracts classified by subject matter, on account of which the fee
24-13 is payable or expense is reimbursable. A general reference to
24-14 contingent fee contracts for legal services or to contracts subject
24-15 to this subchapter or a similar general description is not a
24-16 sufficient description for purposes of this subsection.
24-17 (b) If the legislature has not specifically appropriated
24-18 funds for paying the fee or reimbursing the expense, a state
24-19 governmental entity may pay the fee or reimburse the expense from
24-20 other available funds only if:
24-21 (1) the legislature is not in session; and
24-22 (2) the Legislative Budget Board gives its prior
24-23 approval for that payment or reimbursement under Section 69,
24-24 Article XVI, Texas Constitution, after examining the statement
24-25 required under Section 2254.104(c) and determining that the
24-26 requested payment and the contract under which payment is requested
25-1 meet all the requirements of this subchapter.
25-2 (c) A payment or reimbursement under the contract may not be
25-3 made until:
25-4 (1) final and unappealable arrangements have been made
25-5 for depositing all recovered funds to the credit of the appropriate
25-6 fund or account in the state treasury; and
25-7 (2) the state governmental entity and the state
25-8 auditor have received from the contracting attorney or law firm the
25-9 statement required under Section 2254.104(c).
25-10 (d) Litigation and other expenses payable under the
25-11 contract, including expenses attributable to attorney, paralegal,
25-12 accountant, expert, or other professional work performed by a
25-13 person who is not a contracting attorney or a partner, shareholder,
25-14 or employee of a contracting attorney or law firm, may be
25-15 reimbursed only if the state governmental entity and the state
25-16 auditor determine that the expenses were reasonable, proper,
25-17 necessary, actually incurred on behalf of the state governmental
25-18 entity, and paid for by the contracting attorney or law firm. The
25-19 contingent fee may not be paid until the state auditor has reviewed
25-20 the relevant time and expense records and verified that the hours
25-21 of work on which the fee computation is based were actually worked
25-22 in performing reasonable and necessary services for the state
25-23 governmental entity under the contract.
25-24 Sec. 2254.109. EFFECT ON OTHER LAW. (a) This subchapter
25-25 does not limit the right of a state governmental entity to recover
25-26 fees and expenses from opposing parties under other law.
26-1 (b) Compliance with this subchapter does not relieve a
26-2 contracting attorney or law firm of an obligation or responsibility
26-3 under other law, including under the Texas Disciplinary Rules of
26-4 Professional Conduct.
26-5 (c) A state officer, employee, or governing body, including
26-6 the attorney general, may not waive the requirements of this
26-7 subchapter or prejudice the interests of the state under this
26-8 subchapter. This subchapter does not waive the state's sovereign
26-9 immunity from suit or its immunity from suit in federal court under
26-10 the Eleventh Amendment to the federal constitution.
26-11 SECTION 3.04. The changes in law made by this article apply
26-12 only to a contract entered into on or after September 1, 1999.
26-13 Explanation: This addition is necessary to regulate matters
26-14 relating to contingent fee contracts for legal services entered
26-15 into by state agencies.
26-16 ______________________________________
26-17 President of the Senate
26-18 I hereby certify that the above
26-19 Resolution was adopted by the Senate
26-20 on May 30, 1999, by the following
26-21 vote: Yeas 30, Nays 0.
26-22 ______________________________________
26-23 Secretary of the Senate