1Amending Title 62 (Procurement) of the Pennsylvania Consolidated
2Statutes, providing for contingency fee contracts.

3The General Assembly of the Commonwealth of Pennsylvania
4hereby enacts as follows:

5Section 1.  Title 62 of the Pennsylvania Consolidated
6Statutes is amended by adding a section to read:

7§ 544.  Contingency fee contracts.

8(a)  Scope.--Nothing in this section shall be construed to
9expand the authority of the Commonwealth to enter into contracts
10if the authority never previously existed.

11(b) Procurement determination.--When the head of the
12purchasing agency determines in writing that it is in the best
13interests of the Commonwealth for the agency to pay for legal
14services on a contingent fee basis, the determination shall be
15part of the contract file and a solicitation shall disclose that
16a contingent fee basis is the method of compensation for the

1procurement.

2(c)  Prohibition.--

3(1)  The Commonwealth shall not enter into a contingency
4fee contract that provides for a legal entity to receive an
5aggregate contingency fee, exclusive of reasonable costs and
6expenses, in excess of $50,000,000.

7(2)  Except as provided for in paragraph (4), the
8Commonwealth shall not enter into a contingency fee contract
9that provides for a legal entity to receive an aggregate
10contingency fee, exclusive of reasonable costs and expenses,
11in excess of any of the following:

12(i) twenty-five percent of any recovery up to
13$10,000,000; plus

14(ii) twenty percent of any portion of such recovery
15between $10,000,000 and $15,000,000; plus

16(iii) fifteen percent of any portion of such
17recovery between $15,000,000 and $20,000,000; plus

18(iv)  ten percent of any portion of such recovery
19between $20,000,000 and $25,000,000; plus

20(v)  five percent of any portion of such recovery
21exceeding $25,000,000.

22(3)  A contingency fee shall not be based on a penalty or
23civil fine awarded or an amount attributable to a penalty or
24civil fine.

25(4)  The Commonwealth shall not enter a contingency fee
26contract covering a securities class action that provides for
27a legal entity to receive an aggregate contingency fee,
28exclusive of reasonable costs and expenses, in excess of 20%
29of a portion of the recovery if any of the following:

30(i)  The Commonwealth is appointed as lead plaintiff

1pursuant to section 21D(a)(3)(B)(i) of the Securities Act
2of 1933 (48 Stat. 74, 15 U.S.C. § 78u-4(a)(3)(B)(i)) or
3section 27 of the Securities Exchange Act of 1934 (48
4Stat. 881, 15 U.S.C. § 78aa).

5(ii)  The Commonwealth is a class representative.

6(5)  This subsection shall apply only to the
7Commonwealth's share of any judgment, settlement amount or
8common fund and shall not apply to the amount of attorney
9fees that may be awarded to a legal entity for representing
10other members of a class certified pursuant to the Rules of
11Civil Procedure or state class action procedures.

12(d)  Applicability.--This section shall not apply to
13contingency fee contracts where the gross amount of the award or
14settlement is less than $100,000.

15(e)  Control.--

16(1)  A contingency fee contract for legal services
17entered into shall include all of the following provisions:

18(i)  A Commonwealth attorney shall retain control
19over the course and conduct of the case.

20(ii)  A Commonwealth attorney shall retain veto power
21over a decision made by outside counsel.

22(iii)  A Commonwealth attorney shall attend all
23settlement conferences.

24(iv)  Decisions regarding settlement of the case
25shall be reserved exclusively to the discretion of a
26Commonwealth attorney and the Commonwealth.

27(v)  A Commonwealth attorney shall be subject to the
28Rules of Professional Conduct.

29(2)  The head of the purchasing agency shall develop a 
30standard addendum to the contingency fee contract that shall 

1be used in all cases, which shall include all of the 
2following:

3(i)  A detailed description of the expectations for
4both the contracted legal entity and the Commonwealth.

5(ii)  The provisions listed in paragraph (1).

6(f)  Oversight.--

7(1)  A copy of an executed contingency fee contract for
8legal services and the head of the purchasing agency's
9written determination under subsection (b) to enter into the
10contract shall be posted on the purchasing agency's website
11for public inspection no less than five business days after
12the date the contract is executed and shall remain posted on
13the website for the duration of the contract, including an
14extension or amendment to the contract.

15(2)  The cost of a contingency fee shall be posted on the
16purchasing agency's website no less than 15 days after the
17payment of the contingency fee and shall remain posted on the
18website for no less than 365 days.

19(3)  A contingency fee contract for legal services 
20executed under this section shall be in writing and posted in
21accordance with Chapter 17 of the act of February 14, 2008
22(P.L.6, No.3), known as the Right-to-Know Law.

23(4)  A legal entity under contract to provide legal 
24services on a contingency fee basis shall, from the inception 
25of the contract until no less than four years after the 
26contract expires or is terminated, maintain detailed current 
27records, including documentation of all expenses, 
28disbursements, charges, credits, underlying receipts and 
29invoices and other financial transactions concerning the 
30legal services. The legal entity shall make all the records 

1available to the head of the purchasing agency, where they 
2will be available for inspection and copying upon request in 
3accordance with the Right-to-Know Law. The Commonwealth may 
4take reasonable steps to protect the evidentiary privileges 
5of the Commonwealth when producing the records under the 
6Right-to-Know Law. The legal entity shall maintain detailed 
7contemporaneous time records for the legal services in 
8increments of no greater than one-tenth of an hour and shall 
9promptly provide the records upon request to the head of the 
10purchasing agency.

11(5)  By February 1 of each year, the head of the
12purchasing agency shall submit a report to the President of
13the Senate and the Speaker of the House of Representatives
14describing the use of contingency fee contracts with legal 
15entities in the preceding calendar year. The Commonwealth may 
16take reasonable steps to protect the evidentiary privileges 
17of the Commonwealth when producing the report. The report 
18shall include, but not be limited to, the following:

19(i)  The contingency fee contracts entered into 
20during the year and all previously executed contingency 
21fee contracts that remain current and for each contract 
22describe all of the following:

23(A)  The name of the legal entity with whom the
24purchasing agency has contracted, including the name
25of the attorney representing the Commonwealth.

26(B)  The nature and status of the legal matter.

27(C)  The name of the parties to the legal matter.

28(D)  The amount of the recovery.

29(E)  The amount of the contingency fee paid.

30(ii) The copies of written determinations made under

1subsection (b).

2(g)  Definitions.--As used in this section, the following
3words and phrases shall have the meanings given to them in this
4subsection unless the context clearly indicates otherwise:

5"Commonwealth attorney."  An attorney at law employed by the
6purchasing agency who is eligible to participate in the
7retirement system established under 71 Pa.C.S. Pt. XXV (relating
8to retirement for State employees and officers).

9"Legal entity."  A private attorney at law, law firm,
10partnership, association or professional corporation.

11"Securities class action"  An action brought as a class
12action that includes a claim for a violation of the Securities
13Act of 1933 (48 Stat. 74, 15 U.S.C. § 77a et seq.) or the
14Securities Exchange Act of 1934 (48 Stat. 881, 15 U.S.C. § 78a
15et seq.).

16Section 2.  This act shall take effect in 60 days.