FOR IMMEDIATE RELEASE
NEWS ADVISORY
May 21, 2013
For More Information, contact:
Luther Strange
Joy Patterson (334) 242-7491
Alabama Attorney General
Page 1 of 2
AG ANNOUNCES LAW TO REGULATE AND LIMIT
USE OF CONTINGENCY FEES IN STATE LITIGATION
(MONTGOMERY)–Attorney General Luther Strange lauded the passage of
legislation to provide transparency and limitations on state contracts with private
attorneys, with the final approval of a bill modeled upon national standards for greater
openness and better protection of the public interest. Particularly, the bill sets guidelines
and ceilings for the State’s use of private attorneys on a contingency fee basis.
“When I became Attorney General, I took action to preserve the taxpayer’s
money by utilizing the experience, knowledge and skill of our professional staff of state
attorneys to handle cases of complex litigation that might have otherwise been hired out
to private attorneys,” said Attorney General Strange. “While we hope to always have
leaders we can depend upon to keep the best public interest foremost in their decisions, it
is also important to provide safeguards that will be in place for future times to come. The
Transparency in Private Attorneys Contract Act does just that.”
Attorney General Strange added that, “we need to ensure that contingency fee
contracts are not utilized unless it is truly necessary, and is done with every due
consideration to protect the taxpayers’ money and to provide the public with information
about how the people’s business is being conducted.”
Previously, there has been no Alabama law governing contingency fee contracts
issued by the State. House Bill 227, sponsored by Representative Paul DeMarco and its
companion Senate Bill 134, sponsored by Senator Cam Ward, regulates how contingency
fee contracts are awarded, the amount that can be paid, and establishes transparency and
accountability measures for contingency fee attorneys representing the State.
Among its provisions are:
Any state entity seeking to enter into a contingency fee contract must make a
written determination that such representation is both cost-effective and in the
public interest. This must include details about whether the State has sufficient
legal and financial resources to handle the matter on its own without a
contingency fee contract; the expected time and labor required, as well as the
complexity and skill necessary to handle the issues; and the amount of experience
desired for the particular attorney services and the nature of private attorney’s
experience with similar matters.
–more –
501 Washington Avenue Montgomery, AL 36104 (334) 242-7300
www.ago.state.al.us Page 2 of 2
To ensure that the public interest is kept as the foremost consideration when cases
are handled by private attorneys on contingency fee basis, the law mandates that a
government attorney retains complete control over the litigation. The government
attorney has supervisory authority, retains veto power over any decisions by
private attorneys, may be contacted directly by defendants, must attend all
settlement conferences, and has exclusive discretion over settlement decisions.
Contingency fees will be limited to 22 percent of the first $10 million; plus 20
percent of the next $15 million; plus 16 percent of the next $25 million; plus 12
percent of the next $25 million; plus 8 percent of the next $25 million; plus 7.1
percent of any recovery exceeding $100 million. Total fees are capped at $75
million per action.
For transparency and accountability of public funds, contingency fee attorneys
must keep detailed records of expenses and time spent on a case, which would be
available to the State for inspection. The contingency fee contract and all payments
made are to be posted on the State’s Open Alabama website.
Attorney General Strange emphasized the value of these specific safeguards and
requirements. “With the Transparency in Private Attorneys Contract Act as the law of
Alabama, public officials and agencies will be required to make careful decisions, to act
responsibly, and be held accountable. This provides valuable and lasting protection for
the taxpayers of Alabama,” he said.
“I want to give special thanks to Senator Cam Ward, Representative Paul
DeMarco, the Business Council of Alabama and the U.S. Chamber of Commerce for their
invaluable assistance in achieving the bill’s successful passage,” Attorney General
Strange concluded.
–30–
