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F I S C A L I M P A C T R E P O R T

SPONSOR Komadina

DATE TYPED 1/25/05

HB

SHORT TITLE Procurement of Lawyer Services

SB 153

ANALYST Wilson

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

See Narrative

Relates to SB 207

SOURCES OF INFORMATION

LFC Files

Responses Received From

Attorney General’s Office (AGO)

Administrative Office of the Courts (AOC)

Public Education Department (PED)

Corrections Department (CD)

Department of Transportation (DOT)

SUMMARY

Synopsis of Bill

Senate Bill 153 amends the Procurement Code and requires all contracts with lawyers or law

firms which exceed, or are “reasonably expected to exceed”, $1 million be procured only by

competitive sealed proposals. The bill also limits hourly fees for such contracts to $1 thousand

per hour. If the contract is on a flat or contingency fee basis, compensation is limited to the

amount of hours worked divided into the fee. The AGO must approve contracts covered by the

bill, and a copy of those contracts must be sent to the LFC.

Significant Issues

The AGO provided the following:

•

The bill does not limit its application to state agency contracts, so it presumably will re-

Senate Bill 153 -- Page 2

quire local governments to submit their contracts exceeding $1million with lawyers or

law firms to the AGO and LFC.

•

The bill will prevent the state and local governments from entering into emergency or

sole source contracts with lawyers or law firms if the amount of the attorney fees will ex-

ceed $1million. We assume that is the total cost of the contract, regardless of its term. It

requires the governmental entity to estimate the cost of the contract and then decide

whether to submit it to the AGO and LFC. The bill does not address situations where at-

torney fees are awarded by a court to an attorney or law firm representing the state or lo-

cal government. It will also require the governmental entity to calculate compensation

during the term of the contract so as not to exceed the $1thousand/ hour cap, which pre-

sumably would apply to all work performed by a law firm, regardless of the number of

attorneys and other staff assigned to the contract.

•

There are situations where certain law firms and attorneys are in fact “sole source” pro-

viders, specializing in obscure areas of the law. This bill will prevent the state and local

governments from entering into such contracts if the compensation is expected to exceed

$1 million. The calculations required by the bill to ensure that compensation does not ex-

ceed the cap may be onerous for contract administrators.

•

The bill does not specifically limit its application to contracts for legal services. It refers

to a contract “with a lawyer or law firm” which presumably includes persons licensed as

attorneys who are not providing legal services.

•

The bill targets only fees paid to law firms and lawyers, yet does not deal with hourly

rates paid to other professionals.

FISCAL IMPLICATIONS

It is unclear whether the bill will result in savings to the state and local public bodies.

ADMINISTRATIVE IMPLICATIONS

The bill will require state agencies and local public bodies to utilize competitive sealed proposals

for contracts subject to its provisions. This might require an additional administrative staff for

existing personnel.

RELATIONSHIP

Relates to SB 207, Attorney General Review of Certain Contracts.

TECHNICAL ISSUES

The PED provided the following:

The bill does not specify the time period for calculating the threshold amount of $1 thousand.

Complex litigation may require a number of years to reach completion; it may also be diffi-

cult to predict the duration and complexity of certain matters.

It appears that the limitation applies to the services governed by a single contract. A law firm

Senate Bill 153 -- Page 3

may have multiple contracts, which total in excess of $1 thousand.

The bill does not specify whether the hourly fee determination is calculated solely on the ba-

sis of lawyer time.

Subsection A includes expenses in the amount used to calculate the applicability of the provi-

sion; Subsection B, however, subtracts expenses from the fee prior to the calculation of the

hourly fee. These provisions may be inconsistent.

DW/rs