BILL ANALYSIS
AB 2391
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Date of Hearing: April 28, 2004
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Judy Chu, Chair
AB 2391 (Koretz) - As Introduced: February 19, 2004
Policy Committee: PERSSVote:8-1
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill prohibits state agencies from contracting for legal
services if the hourly rate of compensation for these services
exceeds by more than 200% the hourly rate billed to state
agencies by State Bargaining Unit 2 - California Attorneys,
Administrative Law Judges, Hearing Officers, and Deputy Labor
Commissioners in State Employment (CASE)
FISCAL EFFECT
1)Unknown savings to state agencies, probably in the range of $5
to $10 million annually, from reduced legal services
contracting costs. BU 2 attorneys presently bill state
agencies hourly rates varying from $38 to $165. This bill
would cap state legal services contracts at an hourly rate of
$360. A 2002 summary of state legal services contracting
prepared by CASE identified 46 contracts over varying periods
in recent years in which at least part of the hourly rate
billed exceeded $360. (It is not possible to total the cost
of hours billed in excess of the proposed cap because many of
the contracts bill at varying rates.)
2)Unknown, potentially significant, increase in state liability
from adverse court decisions, to the extent that the proposed
cap inhibits state agencies from retaining competent legal
counsel with specific expertise. Many of the hours billed to
state agencies in excess of the proposed cap are for the
defense of state agencies and officials sued for decisions
made in the performance of their official duties.
COMMENTS
AB 2391
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1)Background . Current law allows state agencies to enter into
personal services contracts only under certain limited
circumstances. One limitation is that such contracts may not
cause the displacement of civil service employees. Other
limitations include requirements that the services either be
unavailable within civil service, cannot be performed
satisfactorily by civil service employees, or require
knowledge, experience or abilities not available through the
civil service system. Furthermore, with respect to contracts
for legal services, most state agencies may not solicit such
contracts without the consent of the Attorney General.
2)Purpose . Despite existing restrictions on contracting-out for
legal services, CASE is concerned that millions of dollars are
expended each year on legal service contracts for which the
needed expertise already exists within the civil service
system. In recent years, the increased use of outside
counsel by state agencies has become an issue of great concern
for CASE and its members, particularly at a time when the
state is proposing laying off bargaining unit members. This
bill would address the problem by prohibiting a state agency
from contracting out if the hourly rate of compensation
exceeds by more than 200% the hourly rate billed to state
agencies by the State Bargaining Unit 2.
3)Clarification Needed . It is the intent of the author and
sponsor that the bill cap the hourly contracting rate for
legal services at 200% of the maximum rate billed by BU 2
attorneys. However, the bill states: "? a state agency may
not contract for legal services if the hourly rate of
compensation for these services exceeds by more than 200
percent the hourly rate
billed to state agencies by State Bargaining Unit 2." [italics
added]
This language literally means that the proposed cap would be
200 percent above the maximum hourly rate charged by BU 2
attorneys, or $525 per hour ($165 + $360). The Committee
should clarify this language if it chooses to pass this bill
off its suspense file.
Analysis Prepared by : Stephen Shea / APPR. / (916) 319-2081