Iowa lawmakers pass bill on outside counsel hiring
DES MOINES, Iowa (Legal Newsline) - The Iowa Legislature has unanimously passed a measure designed to improve the state's process of hiring outside lawyers.
The House passed House File 563 on Monday, 96-0.
The Senate passed the bill the same day, 49-0.
Gov. Terry Branstad is expected to sign the legislation in the coming days.
The measure puts in place new standards for the state's top lawyer -- in this case, Attorney General Tom Miller -- to follow when he or she hires outside attorneys to litigate on behalf of state residents.
In particular, HF 563 mandates that the State not enter into a contingency fee contract with a private attorney unless the attorney general makes a written determination prior to entering into such a contract that contingency fee representation is both "cost-effective" and "in the public interest."
If the attorney general makes such a determination, he or she will be required to follow the procurement process used by the state Department of Administrative Services in seeking outside counsel. If the process is deemed "not feasible" by the attorney general, he or she must explain why in writing.
Also under the bill, the State cannot enter into a fee contract that provides for a private attorney to receive an aggregate contingency fee in excess of the sum of the following:
- Twenty-five percent of any recovery up to and including $10 million, exclusive of reasonable costs and expenses;
- Twenty percent of any portion of any recovery that exceeds $10 million up to and including $15 million, exclusive of reasonable costs and expenses;
- Fifteen percent of any portion of any recovery that exceeds $15 million up to and including $20 million, exclusive of reasonable costs and expenses;
- Ten percent of any portion of any recovery that exceeds $20 million up to and including $25 million, exclusive of reasonable costs and expenses; and
- Five percent of any portion of any recovery that exceeds $25 million, exclusive of reasonable costs and expenses.
Also under the bill, the aggregate contingency fee of any recovery must not exceed $50 million, exclusive of reasonable costs and expenses, and regardless of the number of lawsuits filed or the number of private attorneys retained to achieve the recovery.
In addition, copies of any executed fee contract -- as well as the attorney general's written determination to enter into such a contract with a private attorney -- must be posted on the attorney general's website within five business days after the date the contract is executed. It must remain posted for the duration of the contract.
As required by HF 563, any payment of contingency fees also must be posted on the attorney general's website within 15 days after the payment of such fees to the outside counsel, and must remain posted for at least one year.
Also under the measure, the attorney general must submit a report to the secretary of the senate and the chief clerk of the House of Representatives describing the use of contingency fee contracts with private attorneys in the preceding calendar year by Feb. 1 of each year.
The American Tort Reform Association called the bill a win for Iowans Thursday.
ATRA -- a national organization dedicated to tort and liability reform -- said it believes the law will bring "needed transparency" to the state's hiring process.
The organization proposed its so-called "Transparency Code" for all state attorneys general to follow back in 2007.
"With increasing regularity, state attorneys general are hiring personal injury lawyers from the private sector to perform legal work for the state, and hundreds of millions of dollars in contingency fees are sometimes at stake," ATRA President Sherman "Tiger" Joyce said at the time.
"Yet often enough, some state AGs award such lucrative contracts to their political supporters without competitive bidding and with little or no oversight from the public or state legislatures."
Iowa now joins several other states in passing such a reform. Arizona, for example, passed a similar transparency bill in 2011.
From Legal Newsline: Reach Jessica Karmasek by email at firstname.lastname@example.org.