BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Ellen M. Corbett, Chair
2009-2010 Regular Session
AB 471 (Nava)
As Amended June 16, 2010
Hearing Date: June 29, 2010
Fiscal: Yes
Urgency: No
TW:jd
SUBJECT
Legal Services: State Agencies and the Attorney General
DESCRIPTION
This bill would clarify the rules relating to the employment of
in-house counsel and outside counsel by state agencies,
commissioners, or officers for the provision of legal services
or representation in a judicial or other proceeding. It would
clarify the role of the Attorney General as the statutorily
designated legal services provider for all state agencies,
commissioners, or officers, and provide guidance to the AG when
considering whether to consent to employment of an in-house
counsel or outside counsel. The bill would define "in-house
counsel," "outside counsel," and "judicial or other proceeding"
for which the Attorney General may provide services to state
agencies, commissioners, or officers.
BACKGROUND
The Office of the California Attorney General employs more than
1,000 attorneys who are charged with representing the State and
its many agencies, boards, commissions, and officers in a wide
range of issues, often of great statewide significance. These
attorneys appear regularly before all levels of federal and
state courts, including administrative courts. According to the
Attorney General (AG), the Office has vast experience in
litigation, and a deep understanding of the impacts litigation
may have on statewide public policy. The Office also has an
army of experienced support staff to organize, monitor, and
maintain control over literally thousands of active litigation
matters. In short, "the depth and breadth of this litigation
(more)
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and subject matter expertise is not replicated in any other
state agency legal office."
Despite the statutory mandate to use the services of the
Attorney General and the ability and expertise of the AG's
office to deliver the services, many state agencies hire
in-house counsel for non-litigation legal services, without
clear statutory authority and often without the consent of the
Attorney General. As to the hiring of outside counsel, the law
requires the written consent of the Attorney General prior to
employment of counsel for the representation of a state agency
or employee, unless this requirement is waived by statute or the
state agency or employee is specifically authorized to employ
outside counsel without the AG's consent.
This bill was approved by this committee on June 23, 2009, and
was subsequently gutted and amended to include provisions
relating to water management. The most recent amendments gut
the bill and reinsert the prior version of AB 471 with several
additional clarifications.
This bill is intended to clarify the need for the Attorney
General's written consent when employing in-house or outside
counsel and the factors the AG may consider in determining
whether to provide that written consent.
CHANGES TO EXISTING LAW
Existing law establishes standards for the use of personal
service contracts outside the civil service system, if
contracting would achieve cost savings, as defined, or if
certain conditions are met. (Gov. Code Sec. 19130.)
Existing law requires, with certain exceptions, the consent of
the Attorney General prior to the employment of outside counsel
for representation of any state agency or employee in a judicial
proceeding. (Gov. Code. Sec. 11040.)
Existing law exempts specified agencies and officers from the
requirement that the Attorney General consent to the employment
of outside counsel. (Gov. Code Sec. 11041.)
Existing law prohibits a state agency, commissioner, or officer
from employing any legal counsel other than the Attorney General
or one of his assistants or deputies, in any matter in which the
agency, commissioner, or officer is interested or is a party as
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a result of office or official duties. (Gov. Code Sec. 11042.)
Existing law permits the Attorney General to employ outside
counsel in cases involving the escheat of property, whenever a
special prosecutor is necessary to substitute for a district
attorney disqualified to prosecute, or whenever the employment
of outside counsel for state agencies is justified. (Gov. Code.
Sec. 12520.)
Existing law exempts the Director of the Department of Managed
Health Care from these restrictions on employing legal counsel.
(Health & Saf. Code Sec. 1341.6(b).)
This bill would:
(1) clarify that express written consent from the AG is
required prior to the employment of outside counsel unless
specifically waived, exempted, or excepted by statute;
(2) provide that, except as otherwise provided by statute, a
state agency, commissioner, or officer may employ in-house
legal counsel to provide legal services, but may not employ
in-house counsel for services relating to a judicial or other
proceeding in which the agency or officer is interested, or is
a party as a result of office or official duties, unless
express written consent is given by the AG to employ in-house
counsel;
(3) provide that nothing prohibits a state agency,
commissioner, or officer from obtaining legal services from
the AG that are unrelated to a judicial or other proceeding;
(4) provide that when the state agency, commissioner, or
officer employs in-house counsel or outside counsel in a
judicial or other proceeding, the AG may nevertheless
intervene in the proceeding, or appear as amicus curiae to the
extent permitted by the court or agency;
(5) where the Attorney General's consent is sought by a state
agency, commissioner, or officer to employ in-house or outside
counsel in a judicial or other proceeding, provide the AG with
several factors that the AG may consider, such as public
policy, potential conflicts of interest, the availability of
subject matter expertise and staffing within the Office of the
Attorney General, and the availability of subject matter
expertise and staffing among in-house counsel;
(6) define, for purposes of the provisions dealing with the
employment of "in-house counsel" and "outside counsel" by a
state agency, commissioner, or officer, the terms used,
including "judicial or other proceeding;" and
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(7)conform the proposed provisions of this bill with the
exemption provided for the Director of the Department of
Managed Health Care and clarify that the Department of Managed
Health Care itself is also exempted from the restrictions on
employing legal counsel.
COMMENT
1. Need for the bill
The Attorney General, sponsor of AB 471, contends that a state
agency is required to obtain the Attorney General's express,
written consent, prior to the agency's employment of in-house
counsel to perform any legal services. However, the AG states
that because this has never been expressly provided for in
statute, and the practice of hiring in-house counsel has become
prevalent in many state agencies, it is time to clarify the
statutes and implement the intent of the Legislature in enacting
the original statutes governing the use of the Attorney
General's services.
The Attorney General states that there is no objection to not
requiring written consent by the AG in cases where the legal
work for which in-house counsel is being hired does not involve
litigation. "It is appropriate that the widespread agency
practice of employing in-house counsel be acknowledged in the
law, and authority be given to state agencies to employ legal
counsel to provide advice in non-litigation matters, without the
necessity of obtaining the Attorney General's consent," the AG
states. However, where litigation is involved, the AG cites one
case handled by in-house counsel at the Department of Veterans'
Affairs that went up to the California Supreme Court without the
AG having been told about the case or having had the opportunity
to handle the case. Because the statewide significance of a
case that goes to the Supreme Court is a given, the AG believes
that the rule requiring the AG's consent in matters of
litigation should be enforced. "[W]here a state agency intends
to retain private counsel outside of state employment, it
remains an appropriate 'check and balance' in the contracting
process for the Attorney General's approval to be required, as
it currently is by Government Code Section 19130."
This bill would clarify when the AG's written consent will be
required. The AG mentions, in defining this need to clarify
existing law that clear authority over civil litigation has been
highlighted by recent events involving client agencies that have
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litigated matters without the Attorney General's consent, or
have "insisted on too prominent a role in litigation, creating
unnecessary conflict in the conduct of litigation on behalf of
the State."
2. Written consent to be required for representation in
judicial or other proceedings, litigation
While the law is already clear that the Attorney General's
written consent is required for the employment of outside
counsel, it is not clear for the hiring of in-house counsel to
perform work related to judicial proceedings and other
proceedings in which the agency, commissioner, or officer must
be represented in an adversarial setting. Thus, AB 471 would
clarify that while a state agency, commissioner, or officer may
hire in-house counsel to provide legal services, unless
otherwise provided in another statute or specifically authorized
by another statute, the hiring of in-house counsel in relation
to a judicial proceeding or other proceeding in which the
agency, commissioner, or officer is interested as a result of
official duties must be consented to in writing by the Attorney
General.
To be sure, there are state agencies that are authorized by
statute to employ outside counsel for any purpose, to be paid
for by the state agency. Following is the list of state
agencies not required to obtain the consent of the Attorney
General in order to employ outside counsel:
Regents of the University of California
Board of Trustees of the California State University
(who must pay costs of outside counsel within their
existing resources)
Legal Division of the Department of Transportation
Division of Labor Standards Enforcement of the
Department of
Industrial Relations
Workers' Compensation Appeals Board
Public Utilities Commission
State Compensation Insurance Fund
Legislative Counsel Bureau
Inheritance Tax Department
State Lands Commission
Secretary of State
Alcoholic Beverage Control Board (except when the
board affirms a decision of the Department of Alcoholic
Beverage Control)
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State Department of Education
Treasurer, with respect to bonds
Any other state agency authorized to employ outside
counsel after enactment of Chapter 213, Statutes of 1933
The Director of the Department of Managed Health Care is also
exempt from the consent provisions clarified by this bill. In
this regard, this bill would conform the proposed provisions of
this bill with the exemption provided for the Director of the
Department of Managed Health Care and clarify that the
Department of Managed Health Care itself is also exempted from
the restrictions on employing legal counsel.
As to other state agencies, however, the employment of outside
counsel will always be required, whether for litigation or
judicial or other proceedings or not. And, under this bill,
these state agencies, commissioners, or officers would be
required to obtain the AG's written consent in order to hire
in-house counsel in relation to a judicial or other proceeding.
In determining whether to consent or to what extent consent
would be given, this bill would authorize the Attorney General
to consider factors such as public policy, potential conflicts
of interest, the availability of subject matter expertise and
staffing within the Office of the Attorney General, and the
availability of subject matter expertise and staffing among
in-house counsel.
3. Judicial or other proceedings defined
In addition to defining "in-house counsel" (a licensed attorney
employed in state service by a state agency, commissioner, or
officer) and "outside counsel" (a licensed attorney engaged in
the private practice of law), this bill would define "judicial
or other proceeding" that would trigger the need for the
Attorney General's written consent prior to hiring of counsel.
"Judicial or other proceeding" would be defined as litigation in
a civil court, an administrative adjudicatory proceeding, or any
related alternative dispute resolution proceeding in which an
agency is represented by an attorney. Advice or opinions
relating to bonds is included within this definition.
Proceedings before the State Personnel Board, the Department of
Personnel Administration, or the Unemployment Insurance Appeals
Board would be exempt from this definition and would therefore
not require the written consent of the Attorney General.
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4. Suggested amendment
This bill would clarify that express written consent from the AG
is required prior to the employment of any outside counsel for
representation of any state agency or employee. However, this
bill does not specify that this provision would pertain to all
legal services provided by the outside counsel and therefore is
unclear that prior written consent is required for all types of
outside counsel representation, not just judicial or
administrative actions. For this reason, the author has agreed
to the following amendment:
On page 3, line 19, after "representation" insert "for any
legal services"
5. Technical amendments requested by the sponsor
The following technical amendments were requested by the sponsor
after discussions with the Governor's office. The author has
agreed to the following amendments:
1. On page 3, line 8, strike "in judicial or other
proceedings"
2. On page 3, line 13, strike "in any judicial or other
proceeding"
3. On page 4, line 4, strike "or agency"
4. On page 4, lines 26-27, strike "'Judicial or other
proceeding' also includes advice or opinions relating to
bonds"
Support : None Known
Opposition : None Known
HISTORY
Source : Attorney General
Related Pending Legislation : None Known
Prior Legislation :
AB 862 (Firebaugh, Ch. 883, Stats. 2003) required state agencies
and the AG provide specified notices to designated
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representatives of State Employees Bargaining Unit 2 regarding
contracts with outside counsel and the consent given by the AG
for those contracts.
AB 1037 (Firebaugh, 2002) would have required that attorneys
subject to the collective bargaining process and employed by the
State of California, including the Attorney General, be
compensated, at a minimum, with wages and benefits that are
consistent with the specified salary parity. The bill died
without any hearing.
SB 1628 (Sher, Ch. 396, Stats. 2002) authorized the Attorney
General to represent specified state agencies jointly, with
agency consent.
SB 213 (Kopp, 1997) would have limited the prohibition against
the hiring of legal counsel without the AG's consent to only
insurance delinquency judicial proceedings, including ancillary
judicial proceedings. The bill was vetoed.
AB 3458 (Speier, Ch. 386, Stats. 1996) provided that the
Department of General Services, in approving a contract for
legal services, has required a state agency seeking to contract
with private legal counsel to demonstrate that the AG has
consented to the employment of outside counsel.
SB 1452 (Kopp, 1994) would have required the AG, upon request of
the Insurance Commissioner, to petition the court for a
determination in the event of a disagreement between the AG and
the Insurance Commissioner about the need to employ outside
counsel or about the compensation for that counsel. The bill
failed to pass the Assembly Insurance Committee.
Prior Vote :
Assembly Judiciary Committee (Ayes 10, Noes 0)
Assembly Appropriations Committee (Ayes 15, Noes 0)
Assembly Floor (Ayes 76, Noes 0)
Senate Judiciary Committee (Ayes 3, Noes 2)
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