S.F. 2101 Section 1. Section 13.7, Code 2009, is amended to read as 1 follows: 2 13.7 Special counsel. 3 1. Compensation shall not be allowed to any person for 4 services as an attorney or counselor to an executive department 5 of the state government, or the head thereof, or to a state 6 board or commission. However, the executive council may employ 7 legal assistance, at a reasonable compensation, in a pending 8 action or proceeding to protect the interests of the state, 9 but only upon a sufficient showing, in writing, made by the 10 attorney general, that the department of justice cannot for 11 reasons stated by the attorney general perform the service, 12 which reasons and action of the council shall be entered 13 upon its records. When the attorney general determines that 14 the department of justice cannot perform legal service in an 15 action or proceeding, the executive council shall request the 16 department involved in the action or proceeding to recommend 17 legal counsel to represent the department. If the attorney 18 general concurs with the department that the person recommended 19 is qualified and suitable to represent the department, the 20 person recommended shall be employed. If the attorney general 21 does not concur in the recommendation, the department shall 22 submit a new recommendation. This section subsection does 23 not affect the general counsel for the utilities board of the 24 department of commerce, the legal counsel of the department of 25 workforce development, or the general counsel for the property 26 assessment appeal board. 27 2. The executive branch and the attorney general shall also 28 comply with chapter 23B when retaining legal counsel under this 29 section, as appropriate. 30 Sec. 2. NEW SECTION . 23B.1 Citation. 31 This chapter shall be known and may be cited as the “Private 32 Attorney Retention Sunshine Act” . 33 Sec. 3. NEW SECTION . 23B.2 Definitions. 34 For purposes of this chapter: 35 -1- LSB 5235XS (4) 83 rh/rj 1/ 8

S.F. 2101 1. “Contract for legal services in excess of one million 1 dollars” means an agreement under which the fee paid to one or 2 more attorneys or law firms legally authorized to practice law 3 in the relevant jurisdiction, for services to be rendered in 4 connection with a single civil case, civil transaction or other 5 legal matter, or series of connected cases, transactions, or 6 other legal matters, exceeds or can be reasonably expected to 7 exceed one million dollars. This definition applies whether 8 the agreement provides for the fee to be calculated in the form 9 of a flat, hourly, or contingent fee, and the fee includes 10 expenses associated with the handling of the legal matter. 11 2. “State agency” includes any agency, executive board, 12 commission, bureau, division, office, department, or authorized 13 agent of the state of Iowa. 14 Sec. 4. NEW SECTION . 23B.3 Contracts for legal services. 15 1. A state agency shall not contract for legal services in 16 excess of one million dollars unless the procedures outlined in 17 this chapter have been complied with. 18 2. At the conclusion of any legal proceeding for which the 19 contract for legal services in excess of one million dollars 20 provides for recovery of a contingent fee, the contractor shall 21 provide the state agency with a statement of the hours worked 22 on the case, expenses incurred, the aggregate fee amount, and a 23 breakdown of the hourly fee rate based on hours worked divided 24 into the contingent fee less expenses. 25 3. A state agency shall not pay any hourly fee pursuant to 26 a contingent fee contract subject to this chapter that would 27 result in a fee payment in excess of one thousand dollars per 28 hour. The fee amount for such a contract shall be reduced to an 29 amount equivalent to one thousand dollars per hour worked. 30 Sec. 5. NEW SECTION . 23B.4 Legislative oversight —— public 31 hearing. 32 1. Except as otherwise provided in subsections 3 and 4, 33 if the general assembly is in session, a state agency which 34 seeks to enter into a contract for legal services in excess of 35 -2- LSB 5235XS (4) 83 rh/rj 2/ 8

S.F. 2101 one million dollars shall file the proposed contract with the 1 secretary of the senate and the chief clerk of the house of 2 representatives and shall include a written statement with the 3 proposed contract that identifies all of the following: 4 a. The reasons the state should retain private counsel and 5 the consideration of alternatives. 6 b. The open and competitive bidding process that has been 7 undertaken with respect to the proposed legal services. 8 c. The reasons for the selection of the attorney or law firm 9 that is the proposed contracting party. 10 d. The past or present relationship, if any, between such 11 attorney or law firm, and the state agency proposing to enter 12 into the contract. 13 e. If the contract contemplates that all or part of the 14 fee is contingent on the outcome of the legal proceeding, 15 the reasons the contingent fee arrangement is in the state’s 16 interest and any efforts undertaken to obtain private counsel 17 on a noncontingent fee basis. 18 2. a. The secretary of the senate and the chief clerk 19 of the house of representatives, with the approval of the 20 president of the senate and the speaker of the house of 21 representatives, shall promptly refer such proposed contract 22 and written statement to the appropriate committee for review. 23 b. Within forty-five days after the filing of the proposed 24 contract and written statement with the secretary of the senate 25 and the chief clerk of the house of representatives, the 26 reviewing committee may hold a public hearing on the proposed 27 contract and, whether or not a public hearing is held, shall 28 issue a report to the referring state agency. The report 29 shall include any recommended changes to the proposed contract 30 approved by the committee. If the reviewing committee fails 31 to recommend any changes to the proposed contract within 32 forty-five days of the initial filing of the proposed contract, 33 the referring state agency may enter into the proposed 34 contract. If the reviewing committee recommends changes to the 35 -3- LSB 5235XS (4) 83 rh/rj 3/ 8

S.F. 2101 proposed contract within forty-five days of the initial filing 1 of the proposed contract, the state agency shall review the 2 committee’s report recommending the changes, prepare a revised 3 contract, and file a copy of the revised contract with the 4 secretary of the senate and the chief clerk of the house of 5 representatives. 6 c. If the revised contract does not contain all of the 7 changes recommended by the reviewing committee, the referring 8 state agency shall send a letter to the secretary of the 9 senate and the chief clerk of the house of representatives 10 accompanying the proposed contract stating the reasons why the 11 recommended changes were not adopted. The secretary of the 12 senate and the chief clerk of the house of representatives 13 shall promptly transmit the letter and revised contract to the 14 appropriate committee, which may hold additional hearings and 15 issue additional reports in its discretion. Not earlier than 16 forty-five days after the filing of such letter and revised 17 contract with the secretary and the clerk, the referring state 18 agency may enter into the revised contract. Notwithstanding 19 any provision of this subsection to the contrary, a revised 20 contract containing terms not previously reviewed or 21 recommended by the appropriate reviewing committee that can 22 reasonably be expected to increase the fees and expenses to be 23 paid shall be treated as a new proposed contract and shall be 24 filed and reviewed in accordance with this subsection. 25 3. If the general assembly is not in session and a state 26 agency desires to enter into a contract for legal services 27 in excess of one million dollars, the proposed contract and 28 written statement described in subsection 1 shall be filed 29 with the office of the governor, the secretary of the senate, 30 and the chief clerk of the house of representatives. Except 31 as otherwise provided in subsection 4, the governor shall 32 establish a five-member interim committee consisting of five 33 members of the general assembly, with one committee member 34 to be appointed by the governor, the majority leader of the 35 -4- LSB 5235XS (4) 83 rh/rj 4/ 8

S.F. 2101 senate, the minority leader of the senate, the speaker of the 1 house of representatives, and the minority leader of the house 2 of representatives to execute the oversight duties relating 3 to review and recommendations set forth in subsection 2. The 4 same deadlines and reporting responsibilities shall apply to 5 the interim committee that apply to a standing committee of the 6 general assembly executing its powers and obligations under 7 this section. 8 4. If the state agency files a statement with the office of 9 the governor that time exigencies require that the state retain 10 counsel before the expiration of the time periods provided in 11 subsection 2 and provides the reasons therefor, the governor 12 shall establish a five-member committee, with members appointed 13 as provided in subsection 3, to which the proposed contract and 14 written statement described in subsection 1 shall be referred. 15 Such committee shall consult with the state agency to establish 16 an expedited schedule for review and recommendations on the 17 proposed contract. 18 Sec. 6. NEW SECTION . 23B.5 Other existing law. 19 If the state agency is the department of justice headed 20 by the attorney general, the state agency shall also comply 21 with the provisions of section 13.7 in the retention of legal 22 services. However, the provisions of this chapter shall 23 prevail, to the extent that there are any conflicts between the 24 requirements of this chapter and other law. 25 Sec. 7. NEW SECTION . 23B.6 No expansion of authority to 26 contract. 27 This chapter shall not be construed to expand the authority 28 of a state agency to enter into contracts where no other 29 authority exists. 30 Sec. 8. NEW SECTION . 23B.7 Chapter inapplicable. 31 This chapter shall not apply to legal services contracts 32 under chapter 13B. 33 EXPLANATION 34 This bill creates new Code chapter 23B, to address the 35 -5- LSB 5235XS (4) 83 rh/rj 5/ 8

S.F. 2101 procedure for retention of private counsel in high attorney fee 1 cases by any state agency, which according to the definition 2 section of the bill includes any agency, executive board, 3 commission, bureau, division, office, department, or authorized 4 agent of the state. 5 New Code section 23B.3 contains a special limitation on 6 contracts for legal services. The bill provides that at the 7 conclusion of any legal proceeding for which the contract 8 provides for recovery of a contingent fee, the state agency 9 shall receive from counsel a statement of the hours worked on 10 the case, expenses incurred, the aggregate fee amount, and a 11 breakdown as to the hourly rate, based on hours worked divided 12 into the contingent fee to be recovered, less expenses. The 13 bill further provides that the state shall not pay any hourly 14 fee under any contingent fee contract that would result in 15 payment in excess of $1,000 per hour. 16 The bill establishes in new Code section 23B.4 legislative 17 oversight of the contract award process when the contract for 18 legal services exceeds $1 million, depending on whether the 19 general assembly is in or out of session. 20 If the general assembly is in session, a state agency which 21 seeks to enter into a contract for legal services in excess 22 of $1 million is required to file the proposed contract with 23 the secretary of the senate and the chief clerk of the house 24 of representatives and shall include a written statement 25 with the proposed contract that identifies the reasons the 26 state should retain private counsel and the consideration of 27 alternatives, the open and competitive bidding process that has 28 been undertaken with respect to the proposed legal services, 29 the reasons for the selection of the attorney or law firm 30 that is the proposed contracting party, the past or present 31 relationship, if any, between such attorney, law firm, or any 32 partner or other principal in such law firm and the state 33 agency proposing to enter into the contract and, if applicable, 34 the reasons the contingent fee arrangement is in the state’s 35 -6- LSB 5235XS (4) 83 rh/rj 6/ 8

S.F. 2101 interest and any efforts undertaken to obtain private counsel 1 on a noncontingent fee basis. The procedure authorizes 2 transmittal of the filed contract to a legislative committee 3 for further action. 4 The bill provides that within 45 days after the filing of 5 the proposed contract and written statement, the reviewing 6 committee may hold a public hearing on the proposed contract 7 and, whether or not a public hearing is held, shall issue a 8 report to the referring state agency. The report shall include 9 any recommended changes to the proposed contract approved by 10 the committee. If the reviewing committee fails to recommend 11 any changes to the proposed contract, the referring agency may 12 enter into the proposed contract. If the reviewing committee 13 recommends changes to the proposed contract, the state agency 14 is required to review the committee’s report recommending the 15 changes, prepare a revised contract, and file a copy of the 16 revised contract with the secretary of the senate and the 17 chief clerk of the house of representatives. If the revised 18 contract does not contain all of the changes recommended by the 19 reviewing committee, the referring state agency is required 20 to send a letter to the secretary of the senate and the chief 21 clerk of the house of representatives accompanying the proposed 22 contract stating the reasons why the recommended changes were 23 not adopted. The secretary of the senate and the chief clerk 24 of the house of representatives shall promptly transmit the 25 letter and revised contract to the appropriate committee, which 26 may hold additional hearings and issue additional reports in 27 its discretion. Not earlier than 45 days after the filing of 28 such letter and revised contract, the referring state agency 29 may enter into the revised contract. A revised contract 30 containing terms not previously reviewed or recommended by the 31 appropriate reviewing committee that can reasonably be expected 32 to increase the fees and expenses to be paid shall be treated 33 as a new proposed contract and shall be filed and reviewed in 34 accordance with the oversight procedures established in the 35 -7- LSB 5235XS (4) 83 rh/rj 7/ 8

S.F. 2101 bill. 1 If the general assembly is not in session and the state 2 agency desires to enter into a contract for legal services 3 in excess of $1 million, the proposed contract and written 4 statement are required to be filed with the office of the 5 governor, the secretary of the senate, and the chief clerk of 6 the house of representatives. In such a case, the governor 7 shall establish a five-member interim committee consisting 8 of five legislators, to be appointed by the governor, the 9 majority leader of the senate, the speaker of the house of 10 representatives, and the minority leader in each house to 11 execute the oversight duties set forth in the bill. The 12 same deadlines and reporting responsibilities apply to the 13 interim committee that apply to a standing committee of the 14 general assembly executing its powers and obligations under 15 the bill. If time exigencies require that the state retain 16 counsel before the expiration of the time periods provided in 17 the bill, the governor shall establish a five-member committee, 18 with members appointed as provided in the bill, to which the 19 proposed contract and written statement shall be referred. 20 Such committee shall consult with the state agency to establish 21 an expedited schedule for review and recommendations on the 22 proposed contract. 23 The bill also provides that the new Code chapter does not 24 apply to legal services contracts under Code chapter 13B 25 relating to public defenders. 26 The bill also amends Code section 13.7, the current Code 27 section pertaining to the retention of private counsel by 28 executive branch departments and by the attorney general, to 29 specify that the procedures of new Code chapter 23B apply. 30 -8- LSB 5235XS (4) 83 rh/rj 8/ 8