Retention or Employment of Attorneys
Contingent Fee Contracts for Legal Services

A contingent fee contract for legal services entered into by a state governmental entity is valid only if it meets certain requirements under Texas Government Code, Chapter 2254, Subchapter C:

• The governing body of the governmental entity approves the contract and the approved contract is signed by the presiding officer of the governing body; or, 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.
• Before approving the contract, the governing body, elected or appointed officer, or governor, as appropriate, must find that:
  • There is a substantial need for the legal services.
  • The legal services cannot be adequately performed by the attorneys and supporting personnel of the governmental entity or by the attorneys and supporting personnel of another state governmental entity.
    – and –
  • 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 the services are needed for 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.
• If the contingent fee contract for legal services is estimated to exceed $100,000, the state governmental entity that proposes to enter into the contract must notify the Legislative Budget Board (LBB) that it 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 Section 2254.103(d)(3) exist. If the state governmental entity finds under subsection (d)(3) that it does not have appropriated funds available to pay the estimated amounts required, the entity may not enter into the proposed contract unless the LBB certifies the entity’s finding about available appropriated funds.

Contingent Fee Contract Void

A contingent fee contract for legal services that is estimated to exceed $100,000 and requires a finding by the LBB is void unless the board has made the finding required by Section 2254.103(e).

Exceptions

The requirements for a contingent fee contract do not apply to a center for technology development and transfer. The requirements also do not apply to a state agency that is given authority by the attorney general to contract for the collection of delinquent taxes or other debts owed to the state.

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