CHAPTER 2254. PROFESSIONAL AND CONSULTING SERVICES
GOVERNMENT CODE
TITLE 10. GENERAL GOVERNMENT
SUBTITLE F. STATE AND LOCAL CONTRACTS AND FUND MANAGEMENT
CHAPTER 2254. PROFESSIONAL AND CONSULTING SERVICES
SUBCHAPTER A. PROFESSIONAL SERVICES
Sec. 2254.001. SHORT TITLE. This subchapter may be cited as the
Professional Services Procurement Act.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2254.002. DEFINITIONS. In this subchapter:
(1) "Governmental entity" means:
(A) a state agency or department;
(B) a district, authority, county, municipality, or other
political subdivision of the state;
(C) a local government corporation or another entity created by
or acting on behalf of a political subdivision in the planning
and design of a construction project; or
(D) a publicly owned utility.
(2) "Professional services" means services:
(A) within the scope of the practice, as defined by state law,
of:
(i) accounting;
(ii) architecture;
(iii) landscape architecture;
(iv) land surveying;
(v) medicine;
(vi) optometry;
(vii) professional engineering;
(viii) real estate appraising; or
(ix) professional nursing; or
(B) provided in connection with the professional employment or
practice of a person who is licensed or registered as:
(i) a certified public accountant;
(ii) an architect;
(iii) a landscape architect;
(iv) a land surveyor;
(v) a physician, including a surgeon;
(vi) an optometrist;
(vii) a professional engineer;
(viii) a state certified or state licensed real estate
appraiser; or
(ix) a registered nurse.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1997, 75th Leg., ch. 244, Sec. 1, eff.
Sept. 1, 1997; Acts 1999, 76th Leg., ch. 1542, Sec. 1, eff. Sept.
1, 1999; Acts 2001, 77th Leg., ch. 1409, Sec. 8, eff. Sept. 1,
2001.
Sec. 2254.003. SELECTION OF PROVIDER; FEES. (a) A governmental
entity may not select a provider of professional services or a
group or association of providers or award a contract for the
services on the basis of competitive bids submitted for the
contract or for the services, but shall make the selection and
award:
(1) on the basis of demonstrated competence and qualifications
to perform the services; and
(2) for a fair and reasonable price.
(b) The professional fees under the contract may not exceed any
maximum provided by law.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
1213, Sec. 14, eff. September 1, 2007.
Sec. 2254.0031. INDEMNIFICATION. A state governmental entity
may require a contractor selected under this subchapter to
indemnify or hold harmless the state from claims and liabilities
resulting from the negligent acts or omissions of the contractor
or persons employed by the contractor. A state governmental
entity may not require a contractor to indemnify or hold harmless
the state for claims or liabilities resulting from the negligent
acts or omissions of the state governmental entity or its
employees.
Added by Acts 1999, 76th Leg., ch. 1499, Sec. 1.37, eff. Sept. 1,
1999.
Sec. 2254.004. CONTRACT FOR PROFESSIONAL SERVICES OF ARCHITECT,
ENGINEER, OR SURVEYOR. (a) In procuring architectural,
engineering, or land surveying services, a governmental entity
shall:
(1) first select the most highly qualified provider of those
services on the basis of demonstrated competence and
qualifications; and
(2) then attempt to negotiate with that provider a contract at a
fair and reasonable price.
(b) If a satisfactory contract cannot be negotiated with the
most highly qualified provider of architectural, engineering, or
land surveying services, the entity shall:
(1) formally end negotiations with that provider;
(2) select the next most highly qualified provider; and
(3) attempt to negotiate a contract with that provider at a fair
and reasonable price.
(c) The entity shall continue the process described in
Subsection (b) to select and negotiate with providers until a
contract is entered into.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1997, 75th Leg., ch. 119, Sec. 1, eff.
Sept. 1, 1997.
Sec. 2254.005. VOID CONTRACT. A contract entered into or an
arrangement made in violation of this subchapter is void as
against public policy.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2254.006. CONTRACT NOTIFICATION. A state agency, including
an institution of higher education as defined by Section 61.003,
Education Code, shall provide written notice to the Legislative
Budget Board of a contract for professional services, other than
a contract for physician or optometric services, if the amount of
the contract, including an amendment, modification, renewal, or
extension of the contract, exceeds $14,000. The notice must be on
a form prescribed by the Legislative Budget Board and filed not
later than the 10th day after the date the agency enters into the
contract.
Added by Acts 1999, 76th Leg., ch. 281, Sec. 13, eff. Sept. 1,
1999.
Sec. 2254.007. DECLARATORY OR INJUNCTIVE RELIEF. (a) This
subchapter may be enforced through an action for declaratory or
injunctive relief filed not later than the 10th day after the
date a contract is awarded.
(b) This section does not apply to the enforcement of a contract
entered into by a state agency as that term is defined by
Section 2151.002. In this subsection, "state agency" includes
the Texas Building and Procurement Commission.
Added by Acts 2007, 80th Leg., R.S., Ch.
1213, Sec. 13, eff. September 1, 2007.
SUBCHAPTER B. CONSULTING SERVICES
Sec. 2254.021. DEFINITIONS. In this subchapter:
(1) "Consulting service" means the service of studying or
advising a state agency under a contract that does not involve
the traditional relationship of employer and employee.
(2) "Major consulting services contract" means a consulting
services contract for which it is reasonably foreseeable that the
value of the contract will exceed $15,000, or $25,000 for an
institution of higher education other than a public junior
college.
(3) "Consultant" means a person that provides or proposes to
provide a consulting service. The term includes a political
subdivision but does not include the federal government, a state
agency, or a state governmental entity.
(4) "Political subdivision" means:
(A) a county;
(B) an incorporated or unincorporated municipality;
(C) a public junior college;
(D) a public school district or other educational or
rehabilitative district;
(E) a metropolitan or regional transit authority;
(F) an airport authority;
(G) a river authority or compact;
(H) a regional planning commission, a council of governments, or
a similar regional planning agency created under Chapter 391,
Local Government Code;
(I) the Edwards Aquifer Authority or a district governed by
Title 4, Water Code;
(J) a soil and water conservation district;
(K) a county or municipal improvement district;
(L) a county road or road utility district;
(M) a county housing authority;
(N) an emergency services or communications district;
(O) a fire prevention district;
(P) a public health or hospital authority or district;
(Q) a mosquito control district;
(R) a special waste district;
(S) a rural rail transportation district; or
(T) any other local government or special district of this
state.
(5) "State agency" has the meaning assigned by Section 2151.002.
(6) "State governmental entity" means a state department,
commission, board, office, institution, facility, or other agency
the jurisdiction of which is not limited to a geographical
portion of the state. The term includes a university system and
an institution of higher education, other than a public junior
college, as defined by Section 61.003, Education Code. The term
does not include a political subdivision.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1995, 74th Leg., ch. 76, Sec. 5.44(a), eff.
Sept. 1, 1995; Acts 1997, 75th Leg., ch. 165, Sec. 17.19(11),
eff. Sept. 1, 1997; Acts 1997, 75th Leg., ch. 1035, Sec. 3, eff.
June 19, 1997; Acts 2003, 78th Leg., ch. 1266, Sec. 1.02, eff.
June 20, 2003.
Sec. 2254.022. INTERPRETATION OF SUBCHAPTER. (a) This
subchapter shall be interpreted to ensure:
(1) the greatest and fairest competition in the selection by
state agencies of consultants; and
(2) the giving of notice to all potential consultants of the
need for and opportunity to provide consulting services.
(b) This subchapter does not:
(1) discourage state agencies from using consultants if the
agencies reasonably foresee that the use of consultants will
produce a more efficient and less costly operation or project;
(2) prohibit the making of a sole-source contract for consulting
services if a proposal is not received from a competent,
knowledgeable, and qualified consultant at a reasonable fee,
after compliance with this subchapter; or
(3) require or prohibit the use of competitive bidding
procedures to purchase consulting services.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1997, 75th Leg., ch. 1035, Sec. 4, eff.
June 19, 1997.
Sec. 2254.023. APPLICABILITY OF SUBCHAPTER. This subchapter
applies to consulting services that a state agency acquires with
money:
(1) appropriated by the legislature;
(2) derived from the exercise of the statutory duties of a state
agency; or
(3) received from the federal government, unless a federal law
or regulation conflicts with the application of this subchapter.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2254.024. EXEMPTIONS. (a) This subchapter does not apply
to or discourage the use of consulting services provided by:
(1) practitioners of professional services described in
Subchapter A;
(2) private legal counsel;
(3) investment counselors;
(4) actuaries;
(5) medical or dental services providers; or
(6) other consultants whose services are determined by the
governing board of a retirement system trust fund to be necessary
for the governing board to perform its constitutional fiduciary
duties, except that the governing board shall comply with Section
2254.030.
(b) If the governor and comptroller consider it more
advantageous to the state to procure a particular consulting
service under the procedures of Chapters 2155-2158, instead of
under this subchapter, they may make a memorandum of
understanding to that effect and each adopt the memorandum by
rule. Procurement of a consulting service described in a
memorandum of understanding under this subsection is subject only
to Chapters 2155-2158.
(c) The comptroller by rule may define circumstances in which a
state agency may procure, without complying with this subchapter,
certain consulting services that will cost less than a minimum
amount established by the comptroller. The comptroller must
determine that noncompliance in those circumstances is more
cost-effective for the state.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1997, 75th Leg., ch. 165, Sec. 17.19(1),
eff. Sept. 1, 1997.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
937, Sec. 3.14, eff. September 1, 2007.
Sec. 2254.025. EMERGENCY WAIVER. (a) The governor, after
receipt of a request complying with this section, may grant a
limited waiver of the provisions of this subchapter for a state
agency that requires consulting services before compliance with
this subchapter can be completed because of an unforeseen
emergency.
(b) A state agency's request for a waiver must include
information required by the governor, including:
(1) information about the nature of the emergency;
(2) the reason that the state agency did not foresee the
emergency;
(3) the name of the consultant with whom the agency intends to
contract; and
(4) the amount of the intended contract.
(c) As soon as possible after the governor grants a limited
waiver, a state agency shall comply with this subchapter to the
extent that the requirements of this subchapter are not
superfluous or ineffective because of the waiver. The agency
shall include with information filed with the secretary of state
for publication in the Texas Register a detailed description of
the emergency on which the request for waiver was predicated.
(d) The governor shall adopt rules to administer this section.
(e) In this section, "unforeseen emergency" means a situation
that suddenly and unexpectedly causes a state agency to need the
services of a consultant. The term includes the issuance of a
court order, an actual or imminent natural disaster, and new
state or federal legislation. An emergency is not unforeseen if a
state agency was negligent in foreseeing the occurrence of the
emergency.
(f) This section applies to all consulting services contracts
and renewals, amendments, and extensions of consulting services
contracts.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1997, 75th Leg., ch. 1035, Sec. 5, eff.
June 19, 1997.
Sec. 2254.026. CONTRACT WITH CONSULTANT. A state agency may
contract with a consultant only if:
(1) there is a substantial need for the consulting services; and
(2) the agency cannot adequately perform the services with its
own personnel or obtain the consulting services through a
contract with a state governmental entity.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1997, 75th Leg., ch. 1035, Sec. 6, eff.
June 19, 1997.
Sec. 2254.027. SELECTION OF CONSULTANT. In selecting a
consultant, a state agency shall:
(1) base its choice on demonstrated competence, knowledge, and
qualifications and on the reasonableness of the proposed fee for
the services; and
(2) if other considerations are equal, give preference to a
consultant whose principal place of business is in the state or
who will manage the consulting contract wholly from an office in
the state.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1997, 75th Leg., ch. 1035, Sec. 7, eff.
June 19, 1997.
Sec. 2254.028. NOTICE OF INTENT: MAJOR CONSULTING SERVICES
CONTRACT. (a) Before entering into a major consulting services
contract, a state agency shall:
(1) notify the Legislative Budget Board and the governor's
Budget and Planning Office that the agency intends to contract
with a consultant;
(2) give information to the Legislative Budget Board and the
governor's Budget and Planning Office to demonstrate that the
agency has complied or will comply with Sections 2254.026 and
2254.027; and
(3) obtain a finding of fact from the governor's Budget and
Planning Office that the consulting services are necessary.
(b) A major consulting services contract that a state agency
enters into without first obtaining the finding required by
Subsection (a)(3) is void.
(c) Subsection (a)(3) does not apply to a major consulting
services contract to be entered into by an institution of higher
education other than a public junior college if the institution
includes in the invitation published under Section 2254.029 a
finding by the chief executive officer of the institution that
the consulting services are necessary and an explanation of that
finding.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1997, 75th Leg., ch. 1035, Sec. 8, eff.
June 19, 1997; Acts 2003, 78th Leg., ch. 1266, Sec. 1.03, eff.
June 20, 2003.
Sec. 2254.029. PUBLICATION IN TEXAS REGISTER BEFORE ENTERING
INTO MAJOR CONSULTING SERVICES CONTRACT. (a) Not later than the
30th day before the date it enters into a major consulting
services contract, a state agency shall file with the secretary
of state for publication in the Texas Register:
(1) an invitation for consultants to provide offers of
consulting services;
(2) the name of the individual who should be contacted by a
consultant that intends to make an offer;
(3) the closing date for the receipt of offers; and
(4) the procedure by which the state agency will award the
contract.
(b) If the consulting services sought by a state agency relate
to services previously provided by a consultant, the agency shall
disclose that fact in the invitation required by Subsection (a).
If the state agency intends to award the contract for the
consulting services to a consultant that previously provided the
services, unless a better offer is received, the agency shall
disclose its intention in the invitation required by Subsection
(a).
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1997, 75th Leg., ch. 1035, Sec. 9, eff.
June 19, 1997.
Sec. 2254.030. PUBLICATION IN TEXAS REGISTER AFTER ENTERING INTO
MAJOR CONSULTING SERVICES CONTRACT. Not later than the 20th day
after the date of entering into a major consulting services
contract, the contracting state agency shall file with the
secretary of state for publication in the Texas Register:
(1) a description of the activities that the consultant will
conduct;
(2) the name and business address of the consultant;
(3) the total value and the beginning and ending dates of the
contract; and
(4) the dates on which documents, films, recordings, or reports
that the consultant is required to present to the agency are due.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1997, 75th Leg., ch. 1035, Sec. 10, eff.
June 19, 1997; Acts 1999, 76th Leg., ch. 1467, Sec. 1.30, eff.
Sept. 1, 1999.
Sec. 2254.0301. CONTRACT NOTIFICATION. A state agency shall
provide written notice to the Legislative Budget Board of a
contract for consulting services if the amount of the contract,
including an amendment, modification, renewal, or extension of
the contract, exceeds $14,000. The notice must be on a form
prescribed by the Legislative Budget Board and filed not later
than the 10th day after the date the entity enters into the
contract.
Added by Acts 1999, 76th Leg., ch. 281, Sec. 14, eff. Sept. 1,
1999.
Sec. 2254.031. RENEWAL; AMENDMENT; EXTENSION. (a) A state
agency that intends to renew a major consulting services contract
shall:
(1) file with the secretary of state for publication in the
Texas Register the information required by Section 2254.030 not
later than the 20th day after the date the contract is renewed if
the renewal contract is not a major consulting services contract;
or
(2) comply with Sections 2254.028 and 2254.029 if the renewal
contract is a major consulting services contract.
(b) A state agency that intends to renew a contract that is not
a major consulting services contract shall comply with Sections
2254.028 and 2254.029 if the original contract and the renewal
contract have a reasonably foreseeable value totaling more than
$15,000, or $25,000 for an institution of higher education other
than a public junior college.
(c) A state agency that intends to amend or extend a major
consulting services contract shall:
(1) not later than the 20th day after the date the contract is
amended or extended, file the information required by Section
2254.030 with the secretary of state for publication in the Texas
Register if the contract after the amendment or extension is not
a major consulting services contract; or
(2) comply with Sections 2254.028 and 2254.029 if the contract
after the amendment or extension is a major consulting services
contract.
(d) A state agency that intends to amend or extend a contract
that is not a major consulting services contract shall comply
with Sections 2254.028 and 2254.029 if the original contract and
the amendment or extension have a reasonably foreseeable value
totaling more than $15,000, or $25,000 for an institution of
higher education other than a public junior college.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1997, 75th Leg., ch. 1035, Sec. 11, eff.
June 19, 1997; Acts 1999, 76th Leg., ch. 1467, Sec. 1.31, eff.
Sept. 1, 1999; Acts 2003, 78th Leg., ch. 1266, Sec. 1.04, eff.
June 20, 2003.
Sec. 2254.032. CONFLICTS OF INTEREST. (a) An officer or
employee of a state agency shall report to the chief executive of
the agency, not later than the 10th day after the date on which a
private consultant submits an offer to provide consulting
services to the agency, any financial interest that:
(1) the officer or employee has in the private consultant who
submitted the offer; or
(2) an individual who is related to the officer or employee
within the second degree by consanguinity or affinity, as
determined under Chapter 573, has in the private consultant who
submitted the offer.
(b) This section applies to all consulting services contracts
and renewals, amendments, and extensions of consulting services
contracts.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2254.033. RESTRICTION ON FORMER EMPLOYEES OF A STATE
AGENCY. (a) An individual who offers to provide consulting
services to a state agency and who has been employed by that
agency or by another agency at any time during the two years
preceding the making of the offer shall disclose in the offer:
(1) the nature of the previous employment with the agency or the
other agency;
(2) the date the employment was terminated; and
(3) the annual rate of compensation for the employment at the
time of its termination.
(b) A state agency that accepts an offer from an individual
described in Subsection (a) shall include in the information
filed under Section 2254.030 a statement about the individual's
previous employment and the nature of the employment.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2254.034. CONTRACT VOID. (a) A contract entered into in
violation of Sections 2254.029 through 2254.031 is void.
(b) A contract entered into with a private consultant who did
not comply with Section 2254.033 is void.
(c) If a contract is void under this section:
(1) the comptroller may not draw a warrant or transmit money to
satisfy an obligation under the contract; and
(2) a state agency may not make any payment under the contract
with state or federal money or money held in or outside the state
treasury.
(d) This section applies to all consulting services contracts,
including renewals, amendments, and extensions of consulting
services contracts.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1999, 76th Leg., ch. 1467, Sec. 1.32, eff.
June 19, 1999.
Sec. 2254.035. DIVIDING CONTRACTS. (a) A state agency may not
divide a consulting services contract into more than one contract
to avoid the requirements of this subchapter.
(b) This section applies to all consulting services contracts,
including renewals, amendments, and extensions of consulting
services contracts.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2254.036. ARCHIVES. (a) On request, a state agency shall,
after the agency's contract with a consultant has ended, supply
the Legislative Budget Board and the governor's Budget and
Planning Office with copies of all documents, films, recordings,
or reports compiled by the consultant under the contract.
(b) Copies of all documents, films, recordings, or reports
compiled by the consultant shall be filed with the Texas State
Library and shall be retained by the library for at least five
years.
(c) The Texas State Library shall list each document, film,
recording, and report given to it under Subsection (b) and shall
file the list at the end of each calendar quarter with the
secretary of state for publication in the Texas Register.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1997, 75th Leg., ch. 1035, Sec. 12, eff.
June 19, 1997.
Sec. 2254.037. REPORTS. As part of the biennial budgetary
hearing process conducted by the Legislative Budget Board and the
governor's Budget and Planning Office, a state agency shall
report to the Legislative Budget Board and the governor's Budget
and Planning Office on any actions taken in response to the
recommendations of any consultant with whom the state agency
contracts during the previous biennium.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1997, 75th Leg., ch. 1035, Sec. 13, eff.
June 19, 1997.
Sec. 2254.038. MIXED CONTRACTS. This subchapter applies to a
contract that involves both consulting and other services if the
primary objective of the contract is the acquisition of
consulting services.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2254.039. COMPTROLLER'S RULES. (a) The comptroller shall
adopt rules to implement and administer this subchapter. The
comptroller's rules may not conflict with or cover a matter on
which this subchapter authorizes the governor to adopt rules.
(b) The comptroller shall give proposed rules to the governor
for review and comment before adopting the rules.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
937, Sec. 3.15, eff. September 1, 2007.
Sec. 2254.040. PROCUREMENT BY COMPTROLLER. (a) The comptroller
may, on request of a state agency, procure for the agency
consulting services that are covered by this subchapter.
(b) The comptroller may require reimbursement for the costs it
incurs in procuring the services.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1999, 76th Leg., ch. 426, Sec. 16, eff.
June 18, 1999.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
937, Sec. 1.75, eff. September 1, 2007.
SUBCHAPTER C. CONTINGENT FEE CONTRACT FOR LEGAL SERVICES
Sec. 2254.101. DEFINITIONS. In this subchapter:
(1) "Contingent fee" means that part of a fee for legal
services, under a contingent fee contract, the amount or payment
of which is contingent on the outcome of the matter for which the
services were obtained.
(2) "Contingent fee contract" means a contract for legal
services under which the amount or the payment of the fee for the
services is contingent in whole or in part on the outcome of the
matter for which the services were obtained.
(3) "State governmental entity":
(A) means the state or a board, commission, department, office,
or other agency in the executive branch of state government
created under the constitution or a statute of the state,
including an institution of higher education as defined by
Section 61.003, Education Code;
(B) includes the state when a state officer is bringing a parens
patriae proceeding in the name of the state; and
(C) does not include a state agency or state officer acting as a
receiver, special deputy receiver, liquidator, or liquidating
agent in connection with the administration of the assets of an
insolvent entity under Article 21.28, Insurance Code, or Chapter
36, 66, 96, or 126, Finance Code.
Added by Acts 1999, 76th Leg., ch. 1499, Sec. 3.03, eff. Sept. 1,
1999.
Sec. 2254.102. APPLICABILITY. (a) This subchapter applies only
to a contingent fee contract for legal services entered into by a
state governmental entity.
(b) The legislature by this subchapter is providing, in
accordance with Section 44, Article III, Texas Constitution, for
the manner in which and the situations under which a state
governmental entity may compensate a public contractor under a
contingent fee contract for legal services.
(c) This subchapter does not apply to a contract:
(1) with a state agency to collect an obligation under Section
2107.003(b), (c), or (c-1); or
(2) for legal services entered into by an institution of higher
education under Section 153.006, Education Code.
(d) This subchapter does not apply to a contract for legal
services entered into by the Teacher Retirement System of Texas
if the services are paid for from money that is not appropriated
from the general revenue fund, including funds of a trust
administered by the retirement system.
Added by Acts 1999, 76th Leg., ch. 1499, Sec. 3.03, eff. Sept. 1,
1999. Amended by Acts 2003, 78th Leg., ch. 1266, Sec. 1.13, eff.
June 20, 2003.
Amended by:
Acts 2005, 79th Leg., Ch.
1359, Sec. 31, eff. September 1, 2005.
Acts 2007, 80th Leg., R.S., Ch.
1386, Sec. 3, eff. September 1, 2007.
Sec. 2254.103. CONTRACT APPROVAL; SIGNATURE. (a) A state
governmental entity that has authority to enter into a contract
for legal services in its own name may enter into a contingent
fee contract for legal services only if:
(1) the governing body of the state governmental entity approves
the contract and the approved contract is signed by the presiding
officer of the governing body; or
(2) for an entity that is not governed by a multimember
governing body, the elected or appointed officer who governs the
entity approves and signs the contract.
(b) The attorney general may enter into a contingent fee
contract for legal services in the name of the state in relation
to a matter that has been referred to the attorney general under
law by another state governmental entity only if the other state
governmental entity approves and signs the contract in accordance
with Subsection (a).
(c) A state governmental entity, including the state, may enter
into a contingent fee contract for legal services that is not
described by Subsection (a) or (b) only if the governor approves
and signs the contract.
(d) Before approving the contract, the governing body, elected
or appointed officer, or governor, as appropriate, must find
that:
(1) there is a substantial need for the legal services;
(2) the legal services cannot be adequately performed by the
attorneys and supporting personnel of the state governmental
entity or by the attorneys and supporting personnel of another
state governmental entity; and
(3) the legal services cannot reasonably be obtained from
attorneys in private practice under a contract providing only for
the payment of hourly fees, without regard to the outcome of the
matter, because of the nature of the matter for which the
services will be obtained or because the state governmental
entity does not have appropriated funds available to pay the
estimated amounts required under a contract providing only for
the payment of hourly fees.
(e) Before entering into a contingent fee contract for legal
services in which the estimated amount that may be recovered
exceeds $100,000, a state governmental entity that proposes to
enter into the contract in its own name or in the name of the
state must also notify the Legislative Budget Board that the
entity proposes to enter into the contract, send the board copies
of the proposed contract, and send the board information
demonstrating that the conditions required by Subsection (d)(3)
exist. If the state governmental entity finds under Subsection
(d)(3) that the state governmental entity does not have
appropriated funds available to pay the estimated amounts
required under a contract for the legal services providing only
for the payment of hourly fees, the state governmental entity may
not enter into the proposed contract in its own name or in the
name of the state unless the Legislative Budget Board finds that
the state governmental entity's finding with regard to available
appropriated funds is correct.
(f) A contingent fee contract for legal services that is subject
to Subsection (e) and requires a finding by the Legislative
Budget Board is void unless the board has made the finding
required by Subsection (e).
Added by Acts 1999, 76th Leg., ch. 1499, Sec. 3.03, eff. Sept. 1,
1999.
Sec. 2254.104. TIME AND EXPENSE RECORDS REQUIRED; FINAL
STATEMENT. (a) The contract must require that the contracting
attorney or law firm keep current and complete written time and
expense records that describe in detail the time and money spent
each day in performing the contract.
(b) The contracting attorney or law firm shall permit the
governing body or governing officer of the state governmental
entity, the attorney general, and the state auditor each to
inspect or obtain copies of the time and expense records at any
time on request.
(c) On conclusion of the matter for which legal services were
obtained, the contracting attorney or law firm shall provide the
contracting state governmental entity with a complete written
statement that describes the outcome of the matter, states the
amount of any recovery, shows the contracting attorney's or law
firm's computation of the amount of the contingent fee, and
contains the final complete time and expense records required by
Subsection (a). The complete written statement required by this
subsection is public information under Chapter 552 and may not be
withheld from a requestor under that chapter under Section
552.103 or any other exception from required disclosure.
(d) This subsection does not apply to the complete written
statement required by Subsection (c). All time and expense
records required under this section are public information
subject to required public disclosure under Chapter 552.
Information in the records may be withheld from a member of the
public under Section 552.103 only if, in addition to meeting the
requirements of Section 552.103, the chief legal officer or
employee of the state governmental entity determines that
withholding the information is necessary to protect the entity's
strategy or position in pending or reasonably anticipated
litigation. Information withheld from public disclosure under
this subsection shall be segregated from information that is
subject to required public disclosure.
Added by Acts 1999, 76th Leg., ch. 1499, Sec. 3.03, eff. Sept. 1,
1999.
Sec. 2254.105. CERTAIN GENERAL CONTRACT REQUIREMENTS. The
contract must:
(1) provide for the method by which the contingent fee is
computed;
(2) state the differences, if any, in the method by which the
contingent fee is computed if the matter is settled, tried, or
tried and appealed;
(3) state how litigation and other expenses will be paid and, if
reimbursement of any expense is contingent on the outcome of the
matter or reimbursable from the amount recovered in the matter,
state whether the amount recovered for purposes of the contingent
fee computation is considered to be the amount obtained before or
after expenses are deducted;
(4) state that any subcontracted legal or support services
performed by a person who is not a contracting attorney or a
partner, shareholder, or employee of a contracting attorney or
law firm is an expense subject to reimbursement only in
accordance with this subchapter; and
(5) state that the amount of the contingent fee and
reimbursement of expenses under the contract will be paid and
limited in accordance with this subchapter.
Added by Acts 1999, 76th Leg., ch. 1499, Sec. 3.03, eff. Sept. 1,
1999.
Sec. 2254.106. CONTRACT REQUIREMENTS: COMPUTATION OF CONTINGENT
FEE; REIMBURSEMENT OF EXPENSES. (a) The contract must establish
the reasonable hourly rate for work performed by an attorney, law
clerk, or paralegal who will perform legal or support services
under the contract based on the reasonable and customary rate in
the relevant locality for the type of work performed and on the
relevant experience, demonstrated ability, and standard hourly
billing rate, if any, of the person performing the work. The
contract may establish the reasonable hourly rate for one or more
persons by name and may establish a rate schedule for work
performed by unnamed persons. The highest hourly rate for a named
person or under a rate schedule may not exceed $1,000 an hour.
This subsection applies to subcontracted work performed by an
attorney, law clerk, or paralegal who is not a contracting
attorney or a partner, shareholder, or employee of a contracting
attorney or law firm as well as to work performed by a
contracting attorney or by a partner, shareholder, or employee of
a contracting attorney or law firm.
(b) The contract must establish a base fee to be computed as
follows. For each attorney, law clerk, or paralegal who is a
contracting attorney or a partner, shareholder, or employee of a
contracting attorney or law firm, multiply the number of hours
the attorney, law clerk, or paralegal works in providing legal or
support services under the contract times the reasonable hourly
rate for the work performed by that attorney, law clerk, or
paralegal. Add the resulting amounts to obtain the base fee. The
computation of the base fee may not include hours or costs
attributable to work performed by a person who is not a
contracting attorney or a partner, shareholder, or employee of a
contracting attorney or law firm.
(c) Subject to Subsection (d), the contingent fee is computed by
multiplying the base fee by a multiplier. The contract must
establish a reasonable multiplier based on any expected
difficulties in performing the contract, the amount of expenses
expected to be risked by the contractor, the expected risk of no
recovery, and any expected long delay in recovery. The multiplier
may not exceed four without prior approval by the legislature.
(d) In addition to establishing the method of computing the fee
under Subsections (a), (b), and (c), the contract must limit the
amount of the contingent fee to a stated percentage of the amount
recovered. The contract may state different percentage
limitations for different ranges of possible recoveries and
different percentage limitations in the event the matter is
settled, tried, or tried and appealed. The percentage limitation
may not exceed 35 percent without prior approval by the
legislature. The contract must state that the amount of the
contingent fee will not exceed the lesser of the stated
percentage of the amount recovered or the amount computed under
Subsections (a), (b), and (c).
(e) The contract also may:
(1) limit the amount of expenses that may be reimbursed; and
(2) provide that the amount or payment of only part of the fee
is contingent on the outcome of the matter for which the services
were obtained, with the amount and payment of the remainder of
the fee payable on a regular hourly rate basis without regard to
the outcome of the matter.
(f) Except as provided by Section 2254.107, this section does
not apply to a contingent fee contract for legal services:
(1) in which the expected amount to be recovered and the actual
amount recovered do not exceed $100,000; or
(2) under which a series of recoveries is contemplated and the
amount of each individual recovery is not expected to and does
not exceed $100,000.
(g) This section applies to a contract described by Subsection
(f) for each individual recovery under the contract that actually
exceeds $100,000, and the contract must provide for computing the
fee in accordance with this section for each individual recovery
that actually exceeds $100,000.
Added by Acts 1999, 76th Leg., ch. 1499, Sec. 3.03, eff. Sept. 1,
1999.
Sec. 2254.107. MIXED HOURLY AND CONTINGENT FEE CONTRACTS;
REIMBURSEMENT FOR SUBCONTRACTED WORK. (a) This section applies
only to a contingent fee contract:
(1) under which the amount or payment of only part of the fee is
contingent on the outcome of the matter for which the services
were obtained, with the amount and payment of the remainder of
the fee payable on a regular hourly rate basis without regard to
the outcome of the matter; or
(2) under which reimbursable expenses are incurred for
subcontracted legal or support services performed by a person who
is not a contracting attorney or a partner, shareholder, or
employee of a contracting attorney or law firm.
(b) Sections 2254.106(a) and (e) apply to the contract without
regard to the expected or actual amount of recovery under the
contract.
(c) The limitations prescribed by Section 2254.106 on the amount
of the contingent fee apply to the entire amount of the fee under
the contingent fee contract, including the part of the fee the
amount and payment of which is not contingent on the outcome of
the matter.
(d) The limitations prescribed by Section 2254.108 on payment of
the fee apply only to payment of the contingent portion of the
fee.
Added by Acts 1999, 76th Leg., ch. 1499, Sec. 3.03, eff. Sept. 1,
1999.
Sec. 2254.108. FEE PAYMENT AND EXPENSE REIMBURSEMENT. (a)
Except as provided by Subsection (b), a contingent fee and a
reimbursement of an expense under a contract with a state
governmental entity is payable only from funds the legislature
specifically appropriates to pay the fee or reimburse the
expense. An appropriation to pay the fee or reimburse the expense
must specifically describe the individual contract, or the class
of contracts classified by subject matter, on account of which
the fee is payable or expense is reimbursable. A general
reference to contingent fee contracts for legal services or to
contracts subject to this subchapter or a similar general
description is not a sufficient description for purposes of this
subsection.
(b) If the legislature has not specifically appropriated funds
for paying the fee or reimbursing the expense, a state
governmental entity may pay the fee or reimburse the expense from
other available funds only if:
(1) the legislature is not in session; and
(2) the Legislative Budget Board gives its prior approval for
that payment or reimbursement under Section 69, Article XVI,
Texas Constitution, after examining the statement required under
Section 2254.104(c) and determining that the requested payment
and the contract under which payment is requested meet all the
requirements of this subchapter.
(c) A payment or reimbursement under the contract may not be
made until:
(1) final and unappealable arrangements have been made for
depositing all recovered funds to the credit of the appropriate
fund or account in the state treasury; and
(2) the state governmental entity and the state auditor have
received from the contracting attorney or law firm the statement
required under Section 2254.104(c).
(d) Litigation and other expenses payable under the contract,
including expenses attributable to attorney, paralegal,
accountant, expert, or other professional work performed by a
person who is not a contracting attorney or a partner,
shareholder, or employee of a contracting attorney or law firm,
may be reimbursed only if the state governmental entity and the
state auditor determine that the expenses were reasonable,
proper, necessary, actually incurred on behalf of the state
governmental entity, and paid for by the contracting attorney or
law firm. The contingent fee may not be paid until the state
auditor has reviewed the relevant time and expense records and
verified that the hours of work on which the fee computation is
based were actually worked in performing reasonable and necessary
services for the state governmental entity under the contract.
Added by Acts 1999, 76th Leg., ch. 1499, Sec. 3.03, eff. Sept. 1,
1999.
Sec. 2254.109. EFFECT ON OTHER LAW. (a) This subchapter does
not limit the right of a state governmental entity to recover
fees and expenses from opposing parties under other law.
(b) Compliance with this subchapter does not relieve a
contracting attorney or law firm of an obligation or
responsibility under other law, including under the Texas
Disciplinary Rules of Professional Conduct.
(c) A state officer, employee, or governing body, including the
attorney general, may not waive the requirements of this
subchapter or prejudice the interests of the state under this
subchapter. This subchapter does not waive the state's sovereign
immunity from suit or its immunity from suit in federal court
under the Eleventh Amendment to the federal constitution.
Added by Acts 1999, 76th Leg., ch. 1499, Sec. 3.03, eff. Sept. 1,
1999.
SUBCHAPTER D. OUTSIDE LEGAL SERVICES
Sec. 2254.151. DEFINITION. In this subchapter, "state agency"
means a department, commission, board, authority, office, or
other agency in the executive branch of state government created
by the state constitution or a state statute.
Added by Acts 2003, 78th Leg., ch. 309, Sec. 7.18, eff. June 18,
2003.
Sec. 2254.152. APPLICABILITY. This subchapter does not apply to
a contingent fee contract for legal services.
Added by Acts 2003, 78th Leg., ch. 309, Sec. 7.18, eff. June 18,
2003.
Sec. 2254.153. CONTRACTS FOR LEGAL SERVICES AUTHORIZED. Subject
to Section 402.0212, a state agency may contract for outside
legal services.
Added by Acts 2003, 78th Leg., ch. 309, Sec. 7.18, eff. June 18,
2003.
Sec. 2254.154. ATTORNEY GENERAL; COMPETITIVE PROCUREMENT. The
attorney general may require state agencies to obtain outside
legal services through a competitive procurement process, under
conditions prescribed by the attorney general.
Added by Acts 2003, 78th Leg., ch. 309, Sec. 7.18, eff. June 18,
2003.