Former U.S. Representative and Florida Attorney General Testifies at Judiciary Committee Meeting

Former U.S. Representative and Florida Attorney General Bill McCollum visited Montgomery on Wednesday to testify at a public hearing before a joint House and Senate Judiciary Committee meeting on SB 134 and HB 227, which would limit the amount of contingency fees private attorneys could be paid when working on behalf of the state.

McCollum, along with BCA senior vice president for intergovernmental affairs Anita L. Archie, spoke on behalf of the U.S. Chamber Institute for Legal Reform (ILR) and the Business Council of Alabama and told committee members the legislation was introduced to promote the principles of transparency and accountability in Alabama’s private attorney contracting process.  It is based on model legislation known as Transparency in Private Attorney Contracting (TIPAC), which has already been introduced in over a dozen state legislatures and successfully implemented in states like Florida, Indiana, and Mississippi.

State attorneys general once held relatively low-profile roles in state government, serving as legal advisers for governors, state agencies and local governments.  Over the past decade, there has been a dramatic transformation in the manner in which state attorneys general enforce their traditional consumer protection and antitrust enforcement powers.  Nationwide, attorneys general are actively working to expand their subject matter jurisdiction into areas such as environmental policy and financial services regulation.  State attorneys general are stepping up their regulation of the business community and are well on their way to displacing federal authorities as the nation’s chief consumer protection watchdogs.

As state attorneys general become more engaged in major consumer protection issues, the ILR has noticed a willingness on the part of state attorneys general to hire private plaintiff’s firms to pursue litigation on behalf of the state.  As payment, these attorneys receive a contingency fee, which is a percentage of whatever amount is recovered on behalf of the taxpayer.  In the past, some private law firms received excessively high fees in relation to the amount of work they did on behalf of the state.  In addition to excessive fees, there is a substantial risk of “pay to play” schemes that may appear when political contributions from plaintiffs firms are traded for contingent fee contracts.  At the very least, use of such counsel without the proper safeguards can give the appearance of impropriety and undermine confidence in our legal system.

It should be noted that Alabama Attorney General Luther Strange has been a model of transparency and accountability during his time in office and has not engaged in the type of private attorney contracting as stated above.

HB 227 by Representative DeMarco and SB 134 by Senator Ward require the state contracting agency to make a written determination that contingency fee counsel is cost effective and in the public interest.  The legislation requires a contracting agency to request proposals from private counsel, with certain exceptions.  In order to rein in excessive attorneys fees, the bill sets tiers for contingency fees as a percent of recovered amounts ranging from 25 percent to 1 percent.  To ensure that the private plaintiff’s firm is acting in the best interests of the state, and not in the interest of their own profit, the legislation requires government attorneys to maintain control of case and any settlement decisions.  Transparency is achieved through the requirement that a copy of the executed fee contract be posted online.  In addition, the private attorney must maintain time records and keep detailed records of expenses, disbursements, etc. for 4 years after the contract terminates.

No official action was taken after the public hearing concluded. 

BCA supports this legislation.

– Nathan M. Lindsay