From the Office of State Senator Troy Fraser

For Immediate Release
April 27, 1999
Contact: William A. Scott - (512) 463-0124

Senate Approves Fraser Bill on Contingency Fee Contracts

AUSTIN -- The Texas Senate today approved legislation authored by Senator Troy Fraser, R-Horseshoe Bay, that requires state government agencies and elected officials to provide full public disclosure when considering whether to hire private attorneys to represent the state on a contingency fee contract.

Fraser, R-Horseshoe Bay, said the measure is intended to prevent abuses similar to those that occurred in Texas' lawsuit against the tobacco industry.

"Not only did the former Attorney General make questionable contracts with the five outside lawyers, but he also hired former law partner Mark Murr through a backroom deal that resulted in a $260 million claim against the state," Fraser said.

"This bill is about open government and providing accountability to the taxpayers when state agencies are deciding whether to seek outside counsel to represent the state in a lawsuit," Fraser said. "Decisions involving hundreds of millions of dollars of taxpayers' money must be made in public, and with the consent of the Legislature."

"No elected or appointed official should have the authority to reward political cronies with lucrative contracts," Fraser said. "We need to ensure full public disclosure of the hiring process and have a clear audit trail to follow the money after the contract is awarded."

The legislation, Senate Bill 113, is co-authored by Senator Bill Ratliff, R-Mount Pleasant. The measure was approved by the Senate on a voice vote and now goes to the Texas House for consideration..

Under the bill, state agencies, boards and commissions would first have to demonstrate the need to retain outside counsel on a contingency fee basis. The agreement must also be approved by the agency's governing body and signed by the presiding officer.

Fraser amended the bill on the Senate floor to add a provision that requires the Legislative Budget Board (LBB) to approve the contracts when the Legislature is not in session. The LBB comprises 10 legislators -- five Senators and five House members -- including the Lieutenant Governor and Speaker of the House

The bill also requires the outside attorneys to furnish their time and expenses records to the State Auditor's Office, and to make those records available under the Texas Public Information Act.

In the tobacco lawsuit, the former Attorney General waived the reporting requirements for the outside lawyers and they claimed nearly $40 million in unverified expenses.

"This bill ensures complete and accurate record-keeping and prevents outside lawyers from being paid huge sums for expenses without providing written documentation that is available for public inspection," Fraser said.

Fraser also pointed out that the bill does not prohibit state agencies, boards or commissions from entering into contingency fee contracts with outside lawyers, but instead simply provides a system of checks and balances.

The bill provides a formula by which contingency fees must be computed and places a cap on the amount of money to be paid by the state, and specifies that all funds recovered by the state are to be deposited into the state treasury for subsequent appropriation by the Legislature.