2005S0191-1 02/07/05
By: Fraser S.B. No. 458
A BILL TO BE ENTITLED
AN ACT
relating to governmental contingent fee contracts for legal
services entered into by a local governmental entity.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 271, Local Government Code, is amended
by adding Subchapter I to read as follows:
SUBCHAPTER I. CONTINGENT FEE CONTRACT FOR LEGAL SERVICES
Sec. 271.131. DEFINITIONS. In this subchapter:
(1) "Contingent fee" has the meaning assigned by
Section 2254.101, Government Code.
(2) "Contingent fee contract" has the meaning assigned
by Section 2254.101, Government Code.
(3) "Local governmental entity" means:
(A) a municipality;
(B) a county;
(C) a school district, including a junior college
district;
(D) a levee improvement district;
(E) a drainage district;
(F) an irrigation district;
(G) a water improvement district;
(H) a water control and improvement district;
(I) a water control and preservation district;
(J) a freshwater supply district;
(K) a navigation district;
(L) a conservation and reclamation district;
(M) a soil conservation district;
(N) an emergency services or communication
district;
(O) a public health or hospital authority
district;
(P) a river authority;
(Q) an emergency service organization; or
(R) any other political subdivision of this
state.
Sec. 271.132. TIME AND EXPENSE RECORDS REQUIRED; FINAL
STATEMENT. (a) A contingent fee contract entered into by a local
governmental entity must require that the contracting attorney or
law firm keep current and complete written time and expense records
that describe in detail the time and money spent each day in
performing the contract.
(b) The contracting attorney or law firm shall permit the
governing body or governing officer of the local governmental
entity or a person designated by that entity to inspect or obtain
copies of the time and expense records at any time on request.
(c) On conclusion of the matter for which legal services
were obtained, the contracting attorney or law firm shall provide
the contracting local governmental entity with a complete written
statement that describes the outcome of the matter, states the
amount of any recovery, shows the contracting attorney's or law
firm's computation of the amount of the contingent fee, and
contains the final complete time and expense records required by
Subsection (a). The complete written statement required by this
subsection is public information under Chapter 552, Government
Code, and may not be withheld from a requestor under Section
552.103, Government Code, or any other exception from required
disclosure.
(d) All time and expense records required under this section
are public information subject to required public disclosure under
Chapter 552, Government Code. Information in the records may be
withheld from a member of the public under Section 552.103,
Government Code, only if, in addition to meeting the requirements
of Section 552.103, Government Code, the chief legal officer or
employee of the local governmental entity determines that
withholding the information is necessary to protect the entity's
strategy or position in pending or reasonably anticipated
litigation. Information withheld from public disclosure under this
subsection shall be segregated from information that is subject to
required public disclosure.
Sec. 271.133. CERTAIN GENERAL CONTRACT REQUIREMENTS. A
contingent fee contract entered into by a local governmental entity
must:
(1) provide for the method by which the contingent fee
is computed;
(2) state the differences, if any, in the method by
which the contingent fee is computed if the matter is settled,
tried, or tried and appealed;
(3) state how litigation and other expenses will be
paid and, if reimbursement of any expense is contingent on the
outcome of the matter or reimbursable from the amount recovered in
the matter, state whether the amount recovered for purposes of the
contingent fee computation is considered to be the amount obtained
before or after expenses are deducted;
(4) state that any subcontracted legal or support
services performed by a person who is not a contracting attorney or
a partner, shareholder, or employee of a contracting attorney or
law firm is an expense subject to reimbursement only in accordance
with this subchapter; and
(5) state that the amount of the contingent fee and
reimbursement of expenses under the contract will be limited in
accordance with this subchapter.
Sec 271.134. CONTRACT REQUIREMENTS: COMPUTATION OF
CONTINGENT FEE; REIMBURSEMENT OF EXPENSES. (a) A contingent fee
contract entered into by a local governmental entity must establish
the reasonable hourly rate for work performed by an attorney, law
clerk, or paralegal who will perform legal or support services
under the contract based on the reasonable and customary rate in the
relevant locality for the type of work performed and on the relevant
experience, demonstrated ability, and standard hourly billing
rate, if any, of the person performing the work. The contract may
establish the reasonable hourly rate for one or more persons by name
and may establish a rate schedule for work performed by unnamed
persons. The highest hourly rate for a named person or under a rate
schedule may not exceed $1,000 an hour. This subsection applies to
subcontracted work performed by an attorney, law clerk, or
paralegal who is not a contracting attorney or a partner,
shareholder, or employee of a contracting attorney or law firm as
well as to work performed by a contracting attorney or by a partner,
shareholder, or employee of a contracting attorney or law firm.
(b) The contract must establish a base fee to be computed as
provided by this subsection. For each attorney, law clerk, or
paralegal who is a contracting attorney or a partner, shareholder,
or employee of a contracting attorney or law firm, multiply the
number of hours the attorney, law clerk, or paralegal works in
providing legal or support services under the contract times the
reasonable hourly rate for the work performed by that attorney, law
clerk, or paralegal and add the resulting amounts to obtain the base
fee. The computation of the base fee may not include hours or costs
attributable to work performed by a person who is not a contracting
attorney or a partner, shareholder, or employee of a contracting
attorney or law firm.
(c) The contract must provide that the contingent fee is
computed by multiplying the base fee by a multiplier. The contract
must establish a reasonable multiplier based on any expected
difficulties in performing the contract, the amount of expenses
expected to be risked by the contractor, the expected risk of no
recovery, and any expected long delay in recovery. The multiplier
may not exceed four.
(d) In addition to establishing the method of computing the
fee under Subsections (a), (b), and (c), the contract must limit the
amount of the contingent fee to a stated percentage of the amount
recovered. The contract may state different percentage limitations
for different ranges of possible recoveries and different
percentage limitations in the event the matter is settled, tried,
or tried and appealed. The contract must state that the amount of
the contingent fee will not exceed the lesser of the stated
percentage of the amount recovered or the amount computed under
Subsections (a), (b), and (c).
(e) The contract may also:
(1) limit the amount of expenses that may be
reimbursed; and
(2) provide that the amount or payment of only part of
the fee is contingent on the outcome of the matter for which the
services were obtained, with the amount and payment of the
remainder of the fee payable on a regular hourly rate basis without
regard to the outcome of the matter.
SECTION 2. This Act takes effect September 1, 2005, and
applies only to a contingent fee contract entered into by a local
governmental entity on or after that date.