SF 2101 (LSB 5235XS (4) 83)

SENATE FILE 2101

BY  McKINLEY

A BILL FOR

An Act creating the private attorney retention sunshine Act.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 13.7, Code 2009, is amended to read as follows:
   13.7  Special counsel.
   1.  Compensation shall not be allowed to any person for services as an attorney or counselor to an executive department of the state government, or the head thereof, or to a state board or commission. However, the executive council may employ legal assistance, at a reasonable compensation, in a pending action or proceeding to protect the interests of the state, but only upon a sufficient showing, in writing, made by the attorney general, that the department of justice cannot for reasons stated by the attorney general perform the service, which reasons and action of the council shall be entered upon its records. When the attorney general determines that the department of justice cannot perform legal service in an action or proceeding, the executive council shall request the department involved in the action or proceeding to recommend legal counsel to represent the department. If the attorney general concurs with the department that the person recommended is qualified and suitable to represent the department, the person recommended shall be employed. If the attorney general does not concur in the recommendation, the department shall submit a new recommendation. This section subsection does not affect the general counsel for the utilities board of the department of commerce, the legal counsel of the department of workforce development, or the general counsel for the property assessment appeal board.
   2.  The executive branch and the attorney general shall also comply with chapter 23B when retaining legal counsel under this section, as appropriate.
    Sec. 2.  NEW SECTION.  23B.1  Citation.

   This chapter shall be known and may be cited as the “Private Attorney Retention Sunshine Act”.
    Sec. 3.  NEW SECTION.  23B.2  Definitions.

   For purposes of this chapter:

   1.  “Contract for legal services in excess of one million dollars” means an agreement under which the fee paid to one or more attorneys or law firms legally authorized to practice law in the relevant jurisdiction, for services to be rendered in connection with a single civil case, civil transaction or other legal matter, or series of connected cases, transactions, or other legal matters, exceeds or can be reasonably expected to exceed one million dollars. This definition applies whether the agreement provides for the fee to be calculated in the form of a flat, hourly, or contingent fee, and the fee includes expenses associated with the handling of the legal matter.
   2.  “State agency” includes any agency, executive board, commission, bureau, division, office, department, or authorized agent of the state of Iowa.
    Sec. 4.  NEW SECTION.  23B.3  Contracts for legal services.
   1.  A state agency shall not contract for legal services in excess of one million dollars unless the procedures outlined in this chapter have been complied with.
   2.  At the conclusion of any legal proceeding for which the contract for legal services in excess of one million dollars provides for recovery of a contingent fee, the contractor shall provide the state agency with a statement of the hours worked on the case, expenses incurred, the aggregate fee amount, and a breakdown of the hourly fee rate based on hours worked divided into the contingent fee less expenses.
   3.  A state agency shall not pay any hourly fee pursuant to a contingent fee contract subject to this chapter that would result in a fee payment in excess of one thousand dollars per hour. The fee amount for such a contract shall be reduced to an amount equivalent to one thousand dollars per hour worked.
    Sec. 5.  NEW SECTION.  23B.4  Legislative oversight —— public hearing.
   1.  Except as otherwise provided in subsections 3 and 4, if the general assembly is in session, a state agency which seeks to enter into a contract for legal services in excess of one million dollars shall file the proposed contract with the secretary of the senate and the chief clerk of the house of representatives and shall include a written statement with the proposed contract that identifies all of the following:
   a.  The reasons the state should retain private counsel and the consideration of alternatives.
   b.  The open and competitive bidding process that has been undertaken with respect to the proposed legal services. 
   c.  The reasons for the selection of the attorney or law firm that is the proposed contracting party.
   d.  The past or present relationship, if any, between such attorney or law firm, and the state agency proposing to enter into the contract.
   e.  If the contract contemplates that all or part of the fee is contingent on the outcome of the legal proceeding, the reasons the contingent fee arrangement is in the state’s interest and any efforts undertaken to obtain private counsel on a noncontingent fee basis.
   2.  a.  The secretary of the senate and the chief clerk of the house of representatives, with the approval of the president of the senate and the speaker of the house of representatives, shall promptly refer such proposed contract and written statement to the appropriate committee for review.
   b.  Within forty-five days after the filing of the proposed contract and written statement with the secretary of the senate and the chief clerk of the house of representatives, the reviewing committee may hold a public hearing on the proposed contract and, whether or not a public hearing is held, shall issue a report to the referring state agency. The report shall include any recommended changes to the proposed contract approved by the committee. If the reviewing committee fails to recommend any changes to the proposed contract within forty-five days of the initial filing of the proposed contract, the referring state agency may enter into the proposed contract. If the reviewing committee recommends changes to the proposed contract within forty-five days of the initial filing of the proposed contract, the state agency shall review the committee’s report recommending the changes, prepare a revised contract, and file a copy of the revised contract with the secretary of the senate and the chief clerk of the house of representatives.
   c.  If the revised contract does not contain all of the changes recommended by the reviewing committee, the referring state agency shall send a letter to the secretary of the senate and the chief clerk of the house of representatives accompanying the proposed contract stating the reasons why the recommended changes were not adopted. The secretary of the senate and the chief clerk of the house of representatives shall promptly transmit the letter and revised contract to the appropriate committee, which may hold additional hearings and issue additional reports in its discretion. Not earlier than forty-five days after the filing of such letter and revised contract with the secretary and the clerk, the referring state agency may enter into the revised contract. Notwithstanding any provision of this subsection to the contrary, a revised contract containing terms not previously reviewed or recommended by the appropriate reviewing committee that can reasonably be expected to increase the fees and expenses to be paid shall be treated as a new proposed contract and shall be filed and reviewed in accordance with this subsection.
   3.  If the general assembly is not in session and a state agency desires to enter into a contract for legal services in excess of one million dollars, the proposed contract and written statement described in subsection 1 shall be filed with the office of the governor, the secretary of the senate, and the chief clerk of the house of representatives. Except as otherwise provided in subsection 4, the governor shall establish a five-member interim committee consisting of five members of the general assembly, with one committee member to be appointed by the governor, the majority leader of the senate, the minority leader of the senate, the speaker of the house of representatives, and the minority leader of the house of representatives to execute the oversight duties relating to review and recommendations set forth in subsection 2. The same deadlines and reporting responsibilities shall apply to the interim committee that apply to a standing committee of the general assembly executing its powers and obligations under this section.
   4.  If the state agency files a statement with the office of the governor that time exigencies require that the state retain counsel before the expiration of the time periods provided in subsection 2 and provides the reasons therefor, the governor shall establish a five-member committee, with members appointed as provided in subsection 3, to which the proposed contract and written statement described in subsection 1 shall be referred. Such committee shall consult with the state agency to establish an expedited schedule for review and recommendations on the proposed contract.
    Sec. 6.  NEW SECTION.  23B.5  Other existing law.

   If the state agency is the department of justice headed by the attorney general, the state agency shall also comply with the provisions of section 13.7 in the retention of legal services. However, the provisions of this chapter shall prevail, to the extent that there are any conflicts between the requirements of this chapter and other law.
    Sec. 7.  NEW SECTION.  23B.6  No expansion of authority to contract.

   This chapter shall not be construed to expand the authority of a state agency to enter into contracts where no other authority exists.
    Sec. 8.  NEW SECTION.  23B.7  Chapter inapplicable.

   This chapter shall not apply to legal services contracts under chapter 13B.
EXPLANATION
   This bill creates new Code chapter 23B, to address the procedure for retention of private counsel in high attorney fee cases by any state agency, which according to the definition section of the bill includes any agency, executive board, commission, bureau, division, office, department, or authorized agent of the state.
   New Code section 23B.3 contains a special limitation on contracts for legal services. The bill provides that at the conclusion of any legal proceeding for which the contract provides for recovery of a contingent fee, the state agency shall receive from counsel a statement of the hours worked on the case, expenses incurred, the aggregate fee amount, and a breakdown as to the hourly rate, based on hours worked divided into the contingent fee to be recovered, less expenses. The bill further provides that the state shall not pay any hourly fee under any contingent fee contract that would result in payment in excess of $1,000 per hour.
   The bill establishes in new Code section 23B.4 legislative oversight of the contract award process when the contract for legal services exceeds $1 million, depending on whether the general assembly is in or out of session.
   If the general assembly is in session, a state agency which seeks to enter into a contract for legal services in excess of $1 million is required to file the proposed contract with the secretary of the senate and the chief clerk of the house of representatives and shall include a written statement with the proposed contract that identifies the reasons the state should retain private counsel and the consideration of alternatives, the open and competitive bidding process that has been undertaken with respect to the proposed legal services, the reasons for the selection of the attorney or law firm that is the proposed contracting party, the past or present relationship, if any, between such attorney, law firm, or any partner or other principal in such law firm and the state agency proposing to enter into the contract and, if applicable, the reasons the contingent fee arrangement is in the state’s interest and any efforts undertaken to obtain private counsel on a noncontingent fee basis. The procedure authorizes transmittal of the filed contract to a legislative committee for further action.
   The bill provides that within 45 days after the filing of the proposed contract and written statement, the reviewing committee may hold a public hearing on the proposed contract and, whether or not a public hearing is held, shall issue a report to the referring state agency. The report shall include any recommended changes to the proposed contract approved by the committee. If the reviewing committee fails to recommend any changes to the proposed contract, the referring agency may enter into the proposed contract. If the reviewing committee recommends changes to the proposed contract, the state agency is required to review the committee’s report recommending the changes, prepare a revised contract, and file a copy of the revised contract with the secretary of the senate and the chief clerk of the house of representatives. If the revised contract does not contain all of the changes recommended by the reviewing committee, the referring state agency is required to send a letter to the secretary of the senate and the chief clerk of the house of representatives accompanying the proposed contract stating the reasons why the recommended changes were not adopted. The secretary of the senate and the chief clerk of the house of representatives shall promptly transmit the letter and revised contract to the appropriate committee, which may hold additional hearings and issue additional reports in its discretion. Not earlier than 45 days after the filing of such letter and revised contract, the referring state agency may enter into the revised contract. A revised contract containing terms not previously reviewed or recommended by the appropriate reviewing committee that can reasonably be expected to increase the fees and expenses to be paid shall be treated as a new proposed contract and shall be filed and reviewed in accordance with the oversight procedures established in the bill.
   If the general assembly is not in session and the state agency desires to enter into a contract for legal services in excess of $1 million, the proposed contract and written statement are required to be filed with the office of the governor, the secretary of the senate, and the chief clerk of the house of representatives. In such a case, the governor shall establish a five-member interim committee consisting of five legislators, to be appointed by the governor, the majority leader of the senate, the speaker of the house of representatives, and the minority leader in each house to execute the oversight duties set forth in the bill. The same deadlines and reporting responsibilities apply to the interim committee that apply to a standing committee of the general assembly executing its powers and obligations under the bill. If time exigencies require that the state retain counsel before the expiration of the time periods provided in the bill, the governor shall establish a five-member committee, with members appointed as provided in the bill, to which the proposed contract and written statement shall be referred. Such committee shall consult with the state agency to establish an expedited schedule for review and recommendations on the proposed contract.
   The bill also provides that the new Code chapter does not apply to legal services contracts under Code chapter 13B relating to public defenders.
   The bill also amends Code section 13.7, the current Code section pertaining to the retention of private counsel by executive branch departments and by the attorney general, to specify that the procedures of new Code chapter 23B apply.