House measure limiting fees paid to outside law firms moves forward

OKLAHOMA CITY – A bill that would limit the amount paid to private law firms working for state government cleared the House Rules Committee this month and is expected to be heard by the full House soon.

Senate Bill 984 caps the contingency fees paid to private law firms hired by the state. The measure, written by state Sen. Kim David, R-Porter and Rep. Terry O’Donnell, R-Catoosa, sets a cap on fees based on the size of the settlement.

Under the bill, settlements of $10 million or less would have a 25 percent cap, while settlements of $25 million or more would be limited to a 5 percent fee. In addition, the bill caps the total fee that any one law firm can collect at $50 million. The measure also requires the attorney general’s office to post all contingency-fee contracts on the state website within five days and requires all contingency fee payments to be posted.

The bill cleared the House Rules Committee by a single vote, 5 to 4.

Senate Bill 984 is the latest attempt by state lawmakers to push back against the fees paid by the state to outside counsel. One measure, passed in 1995, required the attorney general’s office to approve the hiring of outside law firms and required state agencies to report what they spent on outside legal counsel.

At that time, then-state Senator Scott Pruitt complained that the state had spent too much money on the outside law firms that sued large tobacco companies. Pruitt continued his campaign against contingency fees paid by the state as attorney general.

Then, in 2017, after stories surfaced that reported Pruitt failed to follow the 1995 law, Pruitt told the Frontier, an on-line media outlet, that there was a change in the process “merely a reporting mechanism by state agencies to one that required agencies to seek approval for hiring attorneys.”

Because of that change, he said, “the 20i is the process by which the Attorney General’s Office now approves other agency’s hiring of outside counsel, the AG’s office no longer tracks outside counsel costs internally through the 20i.”

Pruitt also told the Frontier that during his tenure as AG he reduced the use of private law firms, lowering the cost from $11.78 in 2011 to $6.8 in 2015.

The fee issue surfaced again during the tenure of Attorney General Mike Hunter. While Hunter’s lawsuit against Purdue Pharma generated a $270 million settlement for the state, critics complained about the fees paid to the private law firms involved in the lawsuit. Records show that three firms, Nix Patterson, Whitten Burrage and Glenn Coffee and Associates were paid a total of $55.5 million in contingency fees.

The media outlet NonDoc reported that Hunter quietly lobbied House leaders to shelve the bill during the 2021 legislative session. Hunter resigned last May.

With about a month remaining in the session, supporters of the measure say there are hopeful the bill would be heard by the House. During debate in the Rules Committee, O’Donnell – who was forced to step down as a member of the House’s leadership team after complaints were raised about a conflict of interest – urged lawmakers to pass the bill. The measure he, said, would “put some guardrails” on the contracts between the attorney general and outside counsel.

State lawmakers have until the end of May of finish their work.