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ARIZONA STATE SENATE
Fifty-Fifth Legislature, First Regular Session
private attorney retention; municipalities; counties
Purpose
Establishes guidelines for private attorney retention on a contingency fee basis by cities, towns and counties, including a determination of the necessity to enter into a contingency fee contract, contingency fee limitations and reporting requirements.
Background
The state is prohibited to enter into a contingency fee contract with a private attorney unless the Attorney General (AG) first makes a written determination that the contingency fee representation is both cost effective and in the public interest. Statute outlines specific findings that the AG must make in order to approve the representation (A.R.S. § 41-4802).
Furthermore, private attorneys working for the state on a contingency fee basis have statutory limits on what they may receive as a portion of the state's recovery. The contingency fee received by a private attorney representing the state may 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 (A.R.S. § 41-4803). The AG is required to submit an annual report that describes the use of contingency fee contracts with private attorneys (A.R.S. § 41-4804).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
Approval of Contingency Fee Contracts
1. Prohibits a city, town or county from entering into a contingency fee contract with a private attorney unless the city or town attorney or manager or county board of supervisors (county BOS), in consultation with the county attorney, makes a written determination before entering into the contract that the contingency fee representation is cost effective and in the public interest.
2. Requires the determination of a city or town attorney or manager or county BOS to include specific findings for the following factors:
a) whether sufficient and appropriate legal and financial resources exist within the city, town or county attorney's office to handle the matter;
b) the time and labor required to perform the task, the novelty, complexity and difficulty of the questions involved and the skills necessary to properly perform the attorney services;
c) the geographic area where the attorney services are to be provided; and
d) the amount of experience desired for the particular kind of attorney services to be provided and the nature of the private attorney's experience with similar issues or cases.
3. Requires, if the city or town attorney or manager or county BOS determines it may contract with a private attorney, that the attorney's or manager's office or county BOS requests proposals or qualifications from private attorneys to represent the city, town or county on a contingency fee basis, unless the city or town council or county BOS determines that requesting proposals is not feasible under the circumstances and specifies the basis for the determination .
4. Exempts contracts for private attorneys to represent a city, town or county on a contingency fee basis from the Arizona Procurement Code, if the city or town council or county board of supervisors determines that requesting proposals is not feasible under the circumstances.
Private Attorney Recovery Limitations
5. Limits a city's, town's or county's portion of the recovery that may be awarded to a private attorney pursuant to a contingency fee contract to the following:
a) 25 percent of the initial recovery of under $10 million;
b) 20 percent of a portion of a recovery from $10 million to $15 million;
c) 15 percent of a portion of a recovery from $15 million to $20 million;
d) 10 percent of a portion of a recovery from $20 million to $25 million; and
e) 5 percent of any recovery of $25 million or more.
6. Prohibits the contingency fee received by the city's, town's or county's private attorney from exceeding $50 million, except for reasonable costs and expenses.
Government Attorney Oversight
7. Requires the following to occur throughout the contingency fee contract period, including any extensions of the contract:
a) a city or town council or county board of supervisors retains ultimate control over the course and conduct of the case;
b) a government attorney with supervisory authority is personally involved in overseeing the litigation;
c) a government attorney retains veto power over any decisions made by the private attorney;
d) any defendant's attorney that is the subject of the litigation may contact the lead government attorney directly without having to confer with the private attorney;
e) a government attorney with supervisory authority for the case attends all settlement conferences, including by telephone, teleconferencing or similar electronic devices; and
f) decisions regarding settlement of the case may not be delegated to a city's, town's or county's private attorney.
8. Requires the city or town attorney or manager or county attorney to develop a standard addendum to every contingency fee contract that must be used in all cases, that describes in detail what is expected of both the contracted private attorney and the city, town or county, including statutory requirements.
Notice of Contingency Fee Agreements with Private Attorneys
9. Requires the city, town or county to post copies of any executed contingency fee contract and its written determinations to enter into a contingency fee contract on the city or town website or county attorney's website, within 5 business days after the contract is executed.
10. Allows the contingency fee contract and determination to be posted on the county's website, if the county attorney does not have a website.
11. Requires the contingency fee contract and determination to remain posted online for the duration of the contract, including extensions or amendments to the contract, unless the city, town or county determines that the posting may cause damage to the reputation of any business or person.
12. Requires online posting of the contingency fee contract before a lawsuit is filed by the city, town or county.
13. Requires the city, town or county to post any payment of contingency fees online within 15 days after the payment to the private attorney and stipulates that the payment must remain posted on the website for at least 365 days.
Private Attorney Records
14. Requires a private attorney under a contingency fee contract with a city, town or county to maintain specified records for at least four years after the contract expires or is terminated.
15. Requires the private attorney to make all records available for inspection and copying on request pursuant to public records laws.
16. Requires the private attorney to maintain detailed contemporaneous time records for the attorneys and paralegals working on the matter in increments of one-tenth of one hour or less.
17. Requires the private attorney to promptly provide time records to the city town or county attorney when requested.
Miscellaneous
18. Requires the city or town attorney or manager or county attorney to submit an annual report that describes the use of contingency fee contracts with private attorneys by February 1 of each year and outlines reporting requirements and recipients.
19. Excludes contingency fee contracts for debt collection cases from statutory requirements and limitations.
20. Stipulates that the requirements and limitations imposed on the use of private attorney contingency fee usage does not expand the authority of a city, town or county or one of its employees to enter into contracts where no authority previously existed.
21. Asserts that the requirements and limitations imposed on the use of private attorney contingency fee usage does not create, abolish or modify existing cause of action or restrict a city, town or county from serving as a named plaintiff in a class action lawsuit or participating in a class action settlement.
22. Defines government attorney and private attorney.
23. Becomes effective on the general effective date.
Prepared by Senate Research
February 3, 2021
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