While the recently completed legislative session earned headlines for the passage of a sweeping economic competitiveness package, another new law that will help Arizona’s taxpayers and employers went largely unnoticed.
Attorney General Tom Horne worked with the Legislature and Gov. Jan Brewer to create a more business- and taxpayer-friendly legal environment in Arizona by advocating for passage of much-needed legislation that shines a light on a process that is too often muddied. House Bill 2423 reforms the practice of the state hiring private attorneys on a contingency fee basis, whereby the outside attorneys receive a percentage of any cash settlement that may come from a lawsuit.
As the workloads of state attorneys general have grown much larger over the past decade, there are specific cases when an AG’s office might need to hire outside counsel on a contingency fee basis in order to best serve the state. However, the alignment of private attorneys who are motivated by maximizing their fees with the seal of approval from the state creates an inherent conflict of interest if not properly regulated.
While the practice of using contingency fee attorneys by the state has increased over the years, the proper safeguards and oversight have not kept pace. This new law helps alleviate these inherent conflicts of interest by making the contracting process more transparent for the benefit of all involved. While Horne’s office has already instituted internal policies that mirror this legislation, he strongly advocated for legislation to codify these policies beyond his tenure in the office.
The new law bars the state from entering into a contingency fee contract with a private sector lawyer or law firm unless the Attorney General’s Office first makes a written determination that the contingency fee representation is both cost effective and in the public interest. If the office makes such a determination, it will then request proposals from private attorneys to best represent the department, allowing for an equal opportunity across the board — rather than awarding contracts to political allies.
The final contract must then be posted on the attorney general’s official website for at least 365 days. Additionally, this legislation puts reasonable checks on the financial incentives of private lawyers by limiting to $50 million the amount of aggregate contingency fees that private lawyers may receive on each contract, regardless of the number of lawsuits filed or the number of private attorneys retained to achieve the recovery.
These moves are the type of good-government reforms that are necessary to strengthen the confidence in our elected officials and deliver maximum benefit to the state’s taxpayers. The Legislature and Brewer should be applauded for siding with Horne and the bill’s sponsor, Rep. Kimberly Yee, a Phoenix Republican.
I encourage all state attorneys general to give careful consideration to the principles embodied in these reforms promoted by Horne to help protect those very people who elected them to office by ensuring honesty and transparency in an often-clouded process.
— Glenn Hamer is president and CEO of the Arizona Chamber of Commerce and Industry.