H.F. 563 Section 1. Section 13.7, Code 2011, 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 28 also comply with chapter 23B when retaining legal counsel on a 29 contingency fee basis under this section, as appropriate. 30 Sec. 2. NEW SECTION . 23B.1 Citation. 31 This chapter may be known and cited as the “Transparency in 32 Private Attorney Contracts Act” . 33 Sec. 3. NEW SECTION . 23B.2 Definitions. 34 For the purposes of this chapter: 35 -1- LSB 2089HV (3) 84 rh/nh 1/ 7

H.F. 563 1. “Government attorney” means an attorney employed by the 1 state as a staff attorney in the attorney general’s office. 2 2. “Private attorney” means any private attorney or law 3 firm. 4 3. “State” means the state of Iowa and includes state 5 officers, departments, boards, commissions, divisions, bureaus, 6 councils, and units of organization, however designated, of the 7 executive branch of state government, and any of its agents. 8 Sec. 4. NEW SECTION . 23B.3 Contracts for legal services. 9 1. The state shall not enter into a contingency fee contract 10 with a private attorney unless the attorney general makes a 11 written determination prior to entering into such a contract 12 that contingency fee representation is both cost-effective 13 and in the public interest. Any written determination shall 14 include specific findings for each of the following factors: 15 a. Whether sufficient and appropriate legal and financial 16 resources exist within the attorney general’s office to handle 17 the matter. 18 b. The time and labor required, the novelty, complexity, and 19 difficulty of the questions involved, and the skill required to 20 perform the attorney services properly. 21 c. The geographic area where the attorney services are to 22 be provided. 23 d. The amount of experience desired for the particular 24 kind of attorney services to be provided and the nature of the 25 private attorney’s experience with similar issues or cases. 26 2. If the attorney general makes the determination 27 described in subsection 1, the attorney general shall 28 follow the procurement process used by the department of 29 administrative services in seeking private attorneys to 30 represent the department of justice on a contingency fee 31 basis, unless the attorney general determines that requesting 32 proposals is not feasible under the circumstances and sets 33 forth the basis for this determination in writing. 34 3. a. The state shall not enter into a contingency fee 35 -2- LSB 2089HV (3) 84 rh/nh 2/ 7

H.F. 563 contract that provides for a private attorney to receive 1 an aggregate contingency fee in excess of the sum of the 2 following: 3 (1) Twenty-five percent of any recovery up to and including 4 ten million dollars. 5 (2) Twenty percent of any portion of any recovery that 6 exceeds ten million dollars up to and including fifteen million 7 dollars. 8 (3) Fifteen percent of any portion of any recovery that 9 exceeds fifteen million dollars up to and including twenty 10 million dollars. 11 (4) Ten percent of any portion of any recovery that exceeds 12 twenty million dollars up to and including twenty-five million 13 dollars. 14 (5) Five percent of any portion of any recovery that exceeds 15 twenty-five million dollars. 16 b. Except as provided in paragraph “c” , the aggregate 17 contingency fee of any recovery shall not exceed fifty million 18 dollars, exclusive of reasonable costs and expenses, and 19 regardless of the number of lawsuits filed or the number of 20 private attorneys retained to achieve the recovery. 21 c. The attorney general may request a waiver from the 22 executive council of the aggregate contingency fee limit in 23 paragraph “b” if the attorney general provides a thirty-day 24 notice of the attorney general’s intent to request a waiver. 25 The executive council, upon unanimous consent, may grant such a 26 waiver. 27 4. The attorney general shall develop a standard addendum to 28 every contract for contingent fee attorney services that shall 29 be used in all cases, describing in detail what is expected of 30 both the contracted private attorney and the state, including, 31 without limitation, all of the following requirements: 32 a. A government attorney shall retain complete control over 33 the course and conduct of the case. 34 b. A government attorney with supervisory authority shall be 35 -3- LSB 2089HV (3) 84 rh/nh 3/ 7

H.F. 563 personally involved in overseeing the litigation. 1 c. A government attorney shall retain veto power over any 2 decisions made by the contracted private attorney. 3 d. A defendant that is the subject of such litigation may 4 contact the lead government attorney directly, without having 5 to confer with the contracted private attorney. 6 e. Decisions regarding settlement of the case shall be 7 reserved exclusively to the discretion of the government 8 attorney and the state. 9 f. A government attorney with supervisory authority for the 10 case shall attend all settlement conferences. 11 5. Copies of any executed contingency fee contract as 12 well as the attorney general’s written determination to 13 enter into a contingency fee contract with a private attorney 14 shall be posted on the attorney general’s website for public 15 inspection within five business days after the date the 16 contract is executed and shall remain posted on the website for 17 the duration of the contingency fee contract, including any 18 extensions or amendments thereto. Any payment of contingency 19 fees shall be posted on the attorney general’s website within 20 fifteen days after the payment of such contingency fees to the 21 private attorney and shall remain posted on the website for at 22 least one year thereafter. 23 6. Any private attorney under contract to provide services 24 to the state on a contingency fee basis shall, from the 25 inception of the contract until at least four years after 26 the contract expires or is terminated, maintain detailed 27 current records, including documentation of all expenses, 28 disbursements, charges, credits, underlying receipts and 29 invoices, and other financial transactions that concern the 30 provision of such attorney services. The private attorney 31 shall make all such records available for inspection and 32 copying upon request in accordance with chapter 22. In 33 addition, the private attorney shall maintain detailed 34 contemporaneous time records for the attorneys and paralegals 35 -4- LSB 2089HV (3) 84 rh/nh 4/ 7

H.F. 563 working on the matter in increments of no greater than 1 one-tenth of an hour and shall promptly provide these records 2 to the attorney general, upon request. 3 7. The attorney general shall submit a report to the 4 secretary of the senate and the chief clerk of the house of 5 representatives describing the use of contingency fee contracts 6 with private attorneys in the preceding calendar year by 7 February 1 of each year. At a minimum, the report shall 8 include all of the following information: 9 a. Identify all new contingency fee contracts entered into 10 during the year and all previously executed contingency fee 11 contracts that remain current during any part of the year, and 12 for each contract describe: 13 (1) The name of the private attorney with whom the state has 14 contracted, including the name of the attorney’s law firm. 15 (2) The nature and status of the legal matter. 16 (3) The name of the parties to the legal matter. 17 (4) The amount of any recovery. 18 (5) The amount of any contingency fee paid. 19 b. Copies of any written determinations made under 20 subsection 1 or 2 during the year. 21 Sec. 5. NEW SECTION . 23B.4 No expansion of authority to 22 contract. 23 This chapter shall not be construed to expand the authority 24 of a state agency or state agent to enter into contracts where 25 no such authority previously existed. 26 Sec. 6. NEW SECTION . 23B.5 Chapter inapplicable. 27 This chapter shall not apply to legal services contracts 28 under chapter 13B. 29 EXPLANATION 30 This bill creates the transparency in private attorney 31 contracts Act in new Code chapter 23B to address the procedure 32 for retention of a private attorney by this state defined to 33 include state officers, departments, boards, commissions, 34 divisions, bureaus, councils, and units of organization, 35 -5- LSB 2089HV (3) 84 rh/nh 5/ 7

H.F. 563 however designated, of the executive branch of state 1 government, and any of its agents. 2 The bill specifies a procedure for the state’s retention of a 3 private attorney on a contingency fee basis. The bill requires 4 the attorney general to analyze certain factors and make a 5 written determination that the contingency fee representation 6 will be both cost-effective and in the public interest. The 7 bill requires the attorney general to follow the procurement 8 process used by the department of administrative services in 9 seeking private attorneys under the bill unless the attorney 10 general makes a written determination that such a request is 11 not feasible under the circumstances. 12 All contingency fees in the bill are subject to tiered 13 limits and an aggregate cap of $50 million, exclusive of 14 reasonable costs and expenses (25 percent of any recovery up 15 to and including $10 million; plus 20 percent of the next $5 16 million in recoveries; plus 15 percent of the next $5 million 17 in recoveries; plus 10 percent of the next $5 million in 18 recoveries; plus 5 percent of any portion of the recovery that 19 exceeds $25 million); provided, however, that the attorney 20 general may request a waiver from the executive council of the 21 aggregate contingency fee limit under certain circumstances. 22 All contingency fee contracts must include certain standard 23 provisions to help assure that government attorneys retain 24 absolute control over the litigation. The bill requires the 25 contingency fee contract, payments made under the contract, and 26 the attorney general’s written determination about the need for 27 contingency fee representation to be posted on the attorney 28 general’s website. Other records relating to the contract are 29 subject to Code chapter 22 (Iowa’s open records law). The 30 contracted private attorneys and paralegals are required to 31 maintain detailed contemporaneous time records for presentation 32 to the attorney general upon request. The attorney general is 33 required to submit an annual report to the secretary of the 34 senate and the chief clerk of the house of representatives 35 -6- LSB 2089HV (3) 84 rh/nh 6/ 7

H.F. 563 that describes the state’s retention of private attorneys on a 1 contingency fee basis in the preceding calendar year. 2 The bill does not expand the state’s authority to enter into 3 contracts where no such authority previously existed. 4 The bill provides that this new Code chapter does not apply 5 to legal services contracts under Code chapter 13B relating to 6 public defenders. 7 The bill amends Code section 13.7, the current Code section 8 relating to the retention of private counsel by executive 9 branch departments and by the attorney general, to specify that 10 the executive branch and the attorney general shall comply with 11 this bill when retaining legal counsel on a contingency fee 12 basis. 13 -7- LSB 2089HV (3) 84 rh/nh 7/ 7