Ariz. passes reform for contingency contracts with AG's office

Jessica M. Karmasek Apr. 15, 2011, 1:51pm

Arizona Attorney General Tom Horne

PHOENIX (Legal Newsline) - Arizona Gov. Jan Brewer has signed into law a bill that limits contingency fees for private attorneys who are hired to represent the state.

Brewer signed House Bill 2423 on Thursday, according to the Arizona Legislature's website.

The bill doesn't allow the State to enter into a contingency fee contract with a private attorney unless the attorney general makes a written determination that contingency fee representation is both "cost effective" and "in the public interest."

If the attorney general makes such a determination, he or she then requests proposals from private attorneys to represent the department.

Also under the bill, the State may not enter into a contingency fee contract that provides for the private attorney to receive an aggregate contingency fee in excess of:

- Twenty-five percent of any recovery of less than $10 million;

- Twenty percent of any recovery of $10 million or more but less than $15 million;

- Fifteen percent of any recovery of $15 million or more but less than $20 million;

- Ten percent of any recovery of $20 million or more but less than $25 million; and

- Five percent of any recovery of $25 million or more.

According to the bill, the aggregate contingency fee also shall not exceed $50 million, except for reasonable costs and expenses and "regardless of the number of lawsuits filed or the number of private attorneys retained to achieve the recovery."

HB 2423 also says the State shall not enter into a contract for contingency fee attorney services unless the following requirements are met throughout the contract period and any extensions of the contract:

- A government attorney retains complete control over the course and conduct of the case;

- A government attorney with supervisory authority is personally involved in overseeing the litigation;

- A government attorney retains veto power over any decisions made by the private attorney;

- Any defendant that is the subject of the litigation may contact the lead government attorney directly without having to confer with the private attorney;

- A government attorney with supervisory authority for the case attends all settlement conferences; and

- Decisions regarding settlement of the case are reserved exclusively to the discretion of the government attorney and the State.

The bill also requires the attorney general to post copies of any contingency fee contract and his or her written determination on the office's website for public viewing within five business days after the contract is executed. Both are to remain on the website for the duration of the contract, and including any extensions.

The attorney general also must post any payment of contingency fees on the office's website within 15 days after the private attorney has been paid. This record must remain on the website for at least 365 days, the bill says.

Any private attorney under contract with the State also will be required to keep "detailed current records," including the documentation of all expenses, disbursements, charges, credits, etc.

Also under the bill, on Feb. 1 of each year the attorney general is required to submit a report to the Senate president and House speaker and forward a copy to the secretary of state describing the use of contingency fee contracts for the preceeding year.

The American Tort Reform Association on Friday praised Arizona lawmakers for enacting the reform, saying it establishes "transparency" and "reasonable limits" on contingency fees.

"State Rep. Kimberly Yee deserves a great deal of credit for championing this commonsense, good-government measure," ATRA president Tiger Joyce said in a statement. "Rep. Yee's statehouse colleagues and Gov. Jan Brewer also are to be praised for acting in the public interest and on behalf of all Arizona taxpayers."

Yee, R-District 10, was the lead sponsor of the legislation.

"HB 2423 reflects many of the principles ATRA laid out a few years ago in its 'transparency code for state attorneys general,' designed to check a troubling and potentially corrupting trend wherein politically ambitious attorneys general court campaign support from private lawyers by offering those lawyers lucrative, no-bid contingency contracts," Joyce said.

From Legal Newsline: Reach Jessica Karmasek by e-mail at

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