AUSTIN – Trying to use a previously hired lawyer to bring new litigation on behalf of a Texas local government still requires approval from the Texas Attorney General’s Office, AG Ken Paxton opined yesterday.
Until two years ago, Texas trial lawyers routinely solicited local governments for litigious purposes and then sent contingency fee contracts to the Comptroller’s Office for approval.
That changed on Sept. 1, 2019 – the date House Bill 2826 went into effect, a law designed to bring transparency to how local governments go about hiring law firms and place contract approval in the hands of the attorney general.
HB 2826 requires local governmental entities to provide notice and negotiate with well-qualified attorneys, instead of just hiring those who solicit them.
Prior to HB 2826, lawyers solicited dozens of Texas municipalities to file opioid litigation. Another boom for trial lawyers was soliciting local governments to file multi-million dollar construction defect lawsuits.
HB 2826 was supposed to end such solicitation and backroom deals but trial lawyers and local governments found a suspected loophole – amend an existing contingent contract that was approved prior to Sept. 1, 2019.
Back in February, Rep. Terry Canales, D-Edinburg, requested an AG opinion on whether an amendment to an existing contingent contract that changes of the scope of work require compliance with the amendments brought about by HB 2826.
“For example, if a political subdivision contracted with attorneys before September 1, 2019 to pursue a multimillion-dollar lawsuit for alleged defects in the construction of a specified elementary school, can the political subdivision amend that contract after September 1, 2019 to allow the attorneys to pursue other multimillion-dollar lawsuits for alleged defects in the construction of other school buildings?” the request asks. “Or, instead, is that amendment void and unenforceable?”
Paxton found that SB 1821, which went into effect on May 19, broadened the reach of HB 2826’s requirements and that an amended contingent contract failing to meet those requirements is void.
Opinion No. KP-0378