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Wednesday, September 18, 2019

Ala. AG applauds measure to regulate, limit use of contingency fees in state litigation

By Jessica M. Karmasek | May 21, 2013

MONTGOMERY, Ala. (Legal Newsline) -- Alabama Attorney General Luther Strange on Tuesday praised the passage of legislation designed to provide transparency and limitations on state contracts with private attorneys.

House Bill 227, sponsored by state Rep. Paul DeMarco, R-Jefferson, and companion Senate Bill 134, sponsored by state Sen. Cam Ward, also a Republican, regulates how contingency fee contracts are awarded, the amount that can be paid, and establishes transparency and accountability measures for contingency fee attorneys representing the state.

HB 227 was listed as "enrolled" Monday. Enrollment is the final processing of a bill or resolution, incorporating all amendments, after passing both houses. This is the document that is signed by both presiding officers and the governor.

"When I became attorney general, I took action to preserve the taxpayer's money by utilizing the experience, knowledge and skill of our professional staff of state attorneys to handle cases of complex litigation that might have otherwise been hired out to private attorneys," Strange said in a statement.

"While we hope to always have leaders we can depend upon to keep the best public interest foremost in their decisions, it is also important to provide safeguards that will be in place for future times to come. The Transparency in Private Attorneys Contract Act does just that."

Strange said contingency fee contracts should not be utilized unless "truly necessary" and, if so, is done with "every due consideration to protect the taxpayers' money and to provide the public with information about how the people's business is being conducted."

Among the legislation's provisions:

- Any state entity seeking to enter into a contingency fee contract must make a written determination that such representation is both cost-effective and in the public interest. This must include details about whether the state has sufficient legal and financial resources to handle the matter on its own without a contingency fee contract; the expected time and labor required, as well as the complexity and skill necessary to handle the issues; and the amount of experience desired for the particular attorney services and the nature of private attorney's experience with similar matters;

- To ensure that the public interest is kept as the foremost consideration when cases are handled by private attorneys on contingency fee basis, the bill mandates that a government attorney retains complete control over the litigation. The government attorney has supervisory authority, retains veto power over any decisions by private attorneys, may be contacted directly by defendants, must attend all settlement conferences, and has exclusive discretion over settlement decisions;

- Contingency fees will be limited to 22 percent of the first $10 million; plus 20 percent of the next $15 million; plus 16 percent of the next $25 million; plus 12 percent of the next $25 million; plus 8 percent of the next $25 million; plus 7.1 percent of any recovery exceeding $100 million. Total fees are capped at $75 million per action; and

- For transparency and accountability of public funds, contingency fee attorneys must keep detailed records of expenses and time spent on a case, which would be available to the state for inspection. The contingency fee contract and all payments made are to be posted on the state's Open Alabama website.

"With the Transparency in Private Attorneys Contract Act as the law of Alabama, public officials and agencies will be required to make careful decisions, to act responsibly and be held accountable. This provides valuable and lasting protection for the taxpayers of Alabama," Strange said.

The measure is the first of its kind in Alabama.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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