Time for Transparency

When we elect individuals to serve in public office, they pledge to uphold the law, do what’s best for their constituents, and spend tax dollars wisely, honestly and transparently. After all, they’re doing the work of the people.

Those obligations don’t necessarily apply to contingency fee plaintiff lawyers who solicit local governments as clients.

We’ve written extensively about the rise of law firms soliciting local governments to file lawsuits. At the national level, we’ve seen this in climate change and opioid litigation, but it has also become a regular occurrence in Texas. From opioids to construction defects, lawyers are propositioning local governments to file contingency-fee lawsuits—that is, the lawyer doesn’t get paid unless the case is successful. The local government takes home the leftovers after the legal and court fees have been paid. While local governments must be able to hire private lawyers, the way the contracting process currently works leaves plenty of room for abuse and over-charging by lawyers.

A recent article from Legal Newsline highlights the problem. Records show that legal bills for two of the firms involved in county-level opioid litigation ranged from $160 to draft and file complaints to $3,000 or more to review the same complaints. The law firms involved fought the public release of their contracts, begging the question of exactly what is in those contracts that they want to hide from the public? And why did the contracts vary so wildly for what amounted to similar work?

Currently, nothing is stopping plaintiff lawyers from brokering a sweetheart deal behind closed doors to take home 30 percent or more in fees. Nothing stops those attorneys from inflating their rates to drive up their award if a case is resolved. That’s because contracts with local governments don’t have to follow the same statutes and procedures as contracts with state government.

For example, while the state can enter into contingency fee agreements with law firms, it cannot enter into percentage contingency fee agreements. Any contingency fee agreement with the state is based on the attorneys receiving a reasonable hourly rate. This lets the state keep more of the money from any potential award rather than simply getting the leftovers once the attorneys have taken a massive cut. At the same time, the hourly rate is sufficient to engage outstanding lawyers to litigate meritorious cases for the government.

It’s time to make contingency-fee contracting consistent and transparent. The statutes and regulations in place for state contracts have successfully allowed the state of Texas to hire private attorneys when necessary, to keep more of the money from these legal awards and to bring more transparency to the process. What has worked for the state will work for its political subdivisions.

Rep. Greg Bonnen has file a bill to create more transparency and consistency in the process, giving taxpayers a better idea of why contingency fee contracts are required and whether there were any preexisting relationships between the law firm and the government entity. We expect a Senate bill to be filed soon. The legislation requires local governments to publicly post that they are hiring a private attorney, to hire the most qualified attorneys to handle their specific litigation (rather than simply one who has solicited them) and require contracts for legal services to be based on a reasonable hourly rate rather than a percentage rate. Finally, the bills give the Texas attorney general the authority to review and reject contracts that don’t comply with the statutes, or that interfere with the state’s interest in similar litigation.

TLR supports this legislation and will keep you updated on its progress during session.