CHAPTER 2254. PROFESSIONAL AND CONSULTING SERVICES

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GOVERNMENT CODE

TITLE 10. GENERAL GOVERNMENT

SUBTITLE F. STATE AND LOCAL CONTRACTS AND FUND MANAGEMENT

CHAPTER 2254. PROFESSIONAL AND CONSULTING SERVICES

SUBCHAPTER A. PROFESSIONAL SERVICES

Sec. 2254.001. SHORT TITLE. This subchapter may be cited as the

Professional Services Procurement Act.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2254.002. DEFINITIONS. In this subchapter:

(1) "Governmental entity" means:

(A) a state agency or department;

(B) a district, authority, county, municipality, or other

political subdivision of the state;

or acting on behalf of a political subdivision in the planning

and design of a construction project; or

(D) a publicly owned utility.

(2) "Professional services" means services:

(A) within the scope of the practice, as defined by state law,

of:

(i) accounting;

(ii) architecture;

(iii) landscape architecture;

(iv) land surveying;

(v) medicine;

(vi) optometry;

(vii) professional engineering;

(viii) real estate appraising; or

(ix) professional nursing; or

(B) provided in connection with the professional employment or

practice of a person who is licensed or registered as:

(i) a certified public accountant;

(ii) an architect;

(iii) a landscape architect;

(iv) a land surveyor;

(v) a physician, including a surgeon;

(vi) an optometrist;

(vii) a professional engineer;

(viii) a state certified or state licensed real estate

appraiser; or

(ix) a registered nurse.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1997, 75th Leg., ch. 244, Sec. 1, eff.

Sept. 1, 1997; Acts 1999, 76th Leg., ch. 1542, Sec. 1, eff. Sept.

1, 1999; Acts 2001, 77th Leg., ch. 1409, Sec. 8, eff. Sept. 1,

2001.

Sec. 2254.003. SELECTION OF PROVIDER; FEES. (a) A governmental

entity may not select a provider of professional services or a

group or association of providers or award a contract for the

services on the basis of competitive bids submitted for the

contract or for the services, but shall make the selection and

award:

(1) on the basis of demonstrated competence and qualifications

to perform the services; and

(2) for a fair and reasonable price.

(b) The professional fees under the contract may not exceed any

maximum provided by law.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

1213, Sec. 14, eff. September 1, 2007.

Sec. 2254.0031. INDEMNIFICATION. A state governmental entity

may require a contractor selected under this subchapter to

indemnify or hold harmless the state from claims and liabilities

resulting from the negligent acts or omissions of the contractor

or persons employed by the contractor. A state governmental

entity may not require a contractor to indemnify or hold harmless

the state for claims or liabilities resulting from the negligent

acts or omissions of the state governmental entity or its

employees.

Added by Acts 1999, 76th Leg., ch. 1499, Sec. 1.37, eff. Sept. 1,

1999.

Sec. 2254.004. CONTRACT FOR PROFESSIONAL SERVICES OF ARCHITECT,

ENGINEER, OR SURVEYOR. (a) In procuring architectural,

engineering, or land surveying services, a governmental entity

shall:

(1) first select the most highly qualified provider of those

services on the basis of demonstrated competence and

qualifications; and

(2) then attempt to negotiate with that provider a contract at a

fair and reasonable price.

(b) If a satisfactory contract cannot be negotiated with the

most highly qualified provider of architectural, engineering, or

land surveying services, the entity shall:

(1) formally end negotiations with that provider;

(2) select the next most highly qualified provider; and

(3) attempt to negotiate a contract with that provider at a fair

and reasonable price.

Subsection (b) to select and negotiate with providers until a

contract is entered into.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1997, 75th Leg., ch. 119, Sec. 1, eff.

Sept. 1, 1997.

Sec. 2254.005. VOID CONTRACT. A contract entered into or an

arrangement made in violation of this subchapter is void as

against public policy.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2254.006. CONTRACT NOTIFICATION. A state agency, including

an institution of higher education as defined by Section 61.003,

Education Code, shall provide written notice to the Legislative

Budget Board of a contract for professional services, other than

a contract for physician or optometric services, if the amount of

the contract, including an amendment, modification, renewal, or

extension of the contract, exceeds $14,000. The notice must be on

a form prescribed by the Legislative Budget Board and filed not

later than the 10th day after the date the agency enters into the

contract.

Added by Acts 1999, 76th Leg., ch. 281, Sec. 13, eff. Sept. 1,

1999.

Sec. 2254.007. DECLARATORY OR INJUNCTIVE RELIEF. (a) This

subchapter may be enforced through an action for declaratory or

injunctive relief filed not later than the 10th day after the

date a contract is awarded.

(b) This section does not apply to the enforcement of a contract

entered into by a state agency as that term is defined by

Section 2151.002. In this subsection, "state agency" includes

the Texas Building and Procurement Commission.

Added by Acts 2007, 80th Leg., R.S., Ch.

1213, Sec. 13, eff. September 1, 2007.

SUBCHAPTER B. CONSULTING SERVICES

Sec. 2254.021. DEFINITIONS. In this subchapter:

(1) "Consulting service" means the service of studying or

advising a state agency under a contract that does not involve

the traditional relationship of employer and employee.

(2) "Major consulting services contract" means a consulting

services contract for which it is reasonably foreseeable that the

value of the contract will exceed $15,000, or $25,000 for an

institution of higher education other than a public junior

college.

(3) "Consultant" means a person that provides or proposes to

provide a consulting service. The term includes a political

subdivision but does not include the federal government, a state

agency, or a state governmental entity.

(4) "Political subdivision" means:

(A) a county;

(B) an incorporated or unincorporated municipality;

(D) a public school district or other educational or

rehabilitative district;

(E) a metropolitan or regional transit authority;

(F) an airport authority;

(G) a river authority or compact;

(H) a regional planning commission, a council of governments, or

a similar regional planning agency created under Chapter 391,

Local Government Code;

(I) the Edwards Aquifer Authority or a district governed by

Title 4, Water Code;

(J) a soil and water conservation district;

(K) a county or municipal improvement district;

(L) a county road or road utility district;

(M) a county housing authority;

(N) an emergency services or communications district;

(O) a fire prevention district;

(P) a public health or hospital authority or district;

(Q) a mosquito control district;

(R) a special waste district;

(S) a rural rail transportation district; or

(T) any other local government or special district of this

state.

(5) "State agency" has the meaning assigned by Section 2151.002.

(6) "State governmental entity" means a state department,

commission, board, office, institution, facility, or other agency

the jurisdiction of which is not limited to a geographical

portion of the state. The term includes a university system and

an institution of higher education, other than a public junior

college, as defined by Section 61.003, Education Code. The term

does not include a political subdivision.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1995, 74th Leg., ch. 76, Sec. 5.44(a), eff.

Sept. 1, 1995; Acts 1997, 75th Leg., ch. 165, Sec. 17.19(11),

eff. Sept. 1, 1997; Acts 1997, 75th Leg., ch. 1035, Sec. 3, eff.

June 19, 1997; Acts 2003, 78th Leg., ch. 1266, Sec. 1.02, eff.

June 20, 2003.

Sec. 2254.022. INTERPRETATION OF SUBCHAPTER. (a) This

subchapter shall be interpreted to ensure:

(1) the greatest and fairest competition in the selection by

state agencies of consultants; and

(2) the giving of notice to all potential consultants of the

need for and opportunity to provide consulting services.

(b) This subchapter does not:

(1) discourage state agencies from using consultants if the

agencies reasonably foresee that the use of consultants will

produce a more efficient and less costly operation or project;

(2) prohibit the making of a sole-source contract for consulting

services if a proposal is not received from a competent,

knowledgeable, and qualified consultant at a reasonable fee,

after compliance with this subchapter; or

(3) require or prohibit the use of competitive bidding

procedures to purchase consulting services.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1997, 75th Leg., ch. 1035, Sec. 4, eff.

June 19, 1997.

Sec. 2254.023. APPLICABILITY OF SUBCHAPTER. This subchapter

applies to consulting services that a state agency acquires with

money:

(1) appropriated by the legislature;

(2) derived from the exercise of the statutory duties of a state

agency; or

(3) received from the federal government, unless a federal law

or regulation conflicts with the application of this subchapter.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2254.024. EXEMPTIONS. (a) This subchapter does not apply

to or discourage the use of consulting services provided by:

(1) practitioners of professional services described in

Subchapter A;

(2) private legal counsel;

(3) investment counselors;

(4) actuaries;

(5) medical or dental services providers; or

(6) other consultants whose services are determined by the

governing board of a retirement system trust fund to be necessary

for the governing board to perform its constitutional fiduciary

duties, except that the governing board shall comply with Section

2254.030.

(b) If the governor and comptroller consider it more

advantageous to the state to procure a particular consulting

service under the procedures of Chapters 2155-2158, instead of

under this subchapter, they may make a memorandum of

understanding to that effect and each adopt the memorandum by

rule. Procurement of a consulting service described in a

memorandum of understanding under this subsection is subject only

to Chapters 2155-2158.

state agency may procure, without complying with this subchapter,

certain consulting services that will cost less than a minimum

amount established by the comptroller. The comptroller must

determine that noncompliance in those circumstances is more

cost-effective for the state.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1997, 75th Leg., ch. 165, Sec. 17.19(1),

eff. Sept. 1, 1997.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

937, Sec. 3.14, eff. September 1, 2007.

Sec. 2254.025. EMERGENCY WAIVER. (a) The governor, after

receipt of a request complying with this section, may grant a

limited waiver of the provisions of this subchapter for a state

agency that requires consulting services before compliance with

this subchapter can be completed because of an unforeseen

emergency.

(b) A state agency's request for a waiver must include

information required by the governor, including:

(1) information about the nature of the emergency;

(2) the reason that the state agency did not foresee the

emergency;

(3) the name of the consultant with whom the agency intends to

contract; and

(4) the amount of the intended contract.

waiver, a state agency shall comply with this subchapter to the

extent that the requirements of this subchapter are not

superfluous or ineffective because of the waiver. The agency

shall include with information filed with the secretary of state

for publication in the Texas Register a detailed description of

the emergency on which the request for waiver was predicated.

(d) The governor shall adopt rules to administer this section.

(e) In this section, "unforeseen emergency" means a situation

that suddenly and unexpectedly causes a state agency to need the

services of a consultant. The term includes the issuance of a

court order, an actual or imminent natural disaster, and new

state or federal legislation. An emergency is not unforeseen if a

state agency was negligent in foreseeing the occurrence of the

emergency.

(f) This section applies to all consulting services contracts

and renewals, amendments, and extensions of consulting services

contracts.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1997, 75th Leg., ch. 1035, Sec. 5, eff.

June 19, 1997.

Sec. 2254.026. CONTRACT WITH CONSULTANT. A state agency may

contract with a consultant only if:

(1) there is a substantial need for the consulting services; and

(2) the agency cannot adequately perform the services with its

own personnel or obtain the consulting services through a

contract with a state governmental entity.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1997, 75th Leg., ch. 1035, Sec. 6, eff.

June 19, 1997.

Sec. 2254.027. SELECTION OF CONSULTANT. In selecting a

consultant, a state agency shall:

(1) base its choice on demonstrated competence, knowledge, and

qualifications and on the reasonableness of the proposed fee for

the services; and

(2) if other considerations are equal, give preference to a

consultant whose principal place of business is in the state or

who will manage the consulting contract wholly from an office in

the state.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1997, 75th Leg., ch. 1035, Sec. 7, eff.

June 19, 1997.

Sec. 2254.028. NOTICE OF INTENT: MAJOR CONSULTING SERVICES

CONTRACT. (a) Before entering into a major consulting services

contract, a state agency shall:

(1) notify the Legislative Budget Board and the governor's

Budget and Planning Office that the agency intends to contract

with a consultant;

(2) give information to the Legislative Budget Board and the

governor's Budget and Planning Office to demonstrate that the

agency has complied or will comply with Sections 2254.026 and

2254.027; and

(3) obtain a finding of fact from the governor's Budget and

Planning Office that the consulting services are necessary.

(b) A major consulting services contract that a state agency

enters into without first obtaining the finding required by

Subsection (a)(3) is void.

services contract to be entered into by an institution of higher

education other than a public junior college if the institution

includes in the invitation published under Section 2254.029 a

finding by the chief executive officer of the institution that

the consulting services are necessary and an explanation of that

finding.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1997, 75th Leg., ch. 1035, Sec. 8, eff.

June 19, 1997; Acts 2003, 78th Leg., ch. 1266, Sec. 1.03, eff.

June 20, 2003.

Sec. 2254.029. PUBLICATION IN TEXAS REGISTER BEFORE ENTERING

INTO MAJOR CONSULTING SERVICES CONTRACT. (a) Not later than the

30th day before the date it enters into a major consulting

services contract, a state agency shall file with the secretary

of state for publication in the Texas Register:

(1) an invitation for consultants to provide offers of

consulting services;

(2) the name of the individual who should be contacted by a

consultant that intends to make an offer;

(3) the closing date for the receipt of offers; and

(4) the procedure by which the state agency will award the

contract.

(b) If the consulting services sought by a state agency relate

to services previously provided by a consultant, the agency shall

disclose that fact in the invitation required by Subsection (a).

If the state agency intends to award the contract for the

consulting services to a consultant that previously provided the

services, unless a better offer is received, the agency shall

disclose its intention in the invitation required by Subsection

(a).

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1997, 75th Leg., ch. 1035, Sec. 9, eff.

June 19, 1997.

Sec. 2254.030. PUBLICATION IN TEXAS REGISTER AFTER ENTERING INTO

MAJOR CONSULTING SERVICES CONTRACT. Not later than the 20th day

after the date of entering into a major consulting services

contract, the contracting state agency shall file with the

secretary of state for publication in the Texas Register:

(1) a description of the activities that the consultant will

conduct;

(2) the name and business address of the consultant;

(3) the total value and the beginning and ending dates of the

contract; and

(4) the dates on which documents, films, recordings, or reports

that the consultant is required to present to the agency are due.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1997, 75th Leg., ch. 1035, Sec. 10, eff.

June 19, 1997; Acts 1999, 76th Leg., ch. 1467, Sec. 1.30, eff.

Sept. 1, 1999.

Sec. 2254.0301. CONTRACT NOTIFICATION. A state agency shall

provide written notice to the Legislative Budget Board of a

contract for consulting services if the amount of the contract,

including an amendment, modification, renewal, or extension of

the contract, exceeds $14,000. The notice must be on a form

prescribed by the Legislative Budget Board and filed not later

than the 10th day after the date the entity enters into the

contract.

Added by Acts 1999, 76th Leg., ch. 281, Sec. 14, eff. Sept. 1,

1999.

Sec. 2254.031. RENEWAL; AMENDMENT; EXTENSION. (a) A state

agency that intends to renew a major consulting services contract

shall:

(1) file with the secretary of state for publication in the

Texas Register the information required by Section 2254.030 not

later than the 20th day after the date the contract is renewed if

the renewal contract is not a major consulting services contract;

(2) comply with Sections 2254.028 and 2254.029 if the renewal

contract is a major consulting services contract.

(b) A state agency that intends to renew a contract that is not

a major consulting services contract shall comply with Sections

2254.028 and 2254.029 if the original contract and the renewal

contract have a reasonably foreseeable value totaling more than

$15,000, or $25,000 for an institution of higher education other

than a public junior college.

consulting services contract shall:

(1) not later than the 20th day after the date the contract is

amended or extended, file the information required by Section

2254.030 with the secretary of state for publication in the Texas

a major consulting services contract; or

(2) comply with Sections 2254.028 and 2254.029 if the contract

after the amendment or extension is a major consulting services

contract.

(d) A state agency that intends to amend or extend a contract

that is not a major consulting services contract shall comply

with Sections 2254.028 and 2254.029 if the original contract and

the amendment or extension have a reasonably foreseeable value

totaling more than $15,000, or $25,000 for an institution of

higher education other than a public junior college.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1997, 75th Leg., ch. 1035, Sec. 11, eff.

June 19, 1997; Acts 1999, 76th Leg., ch. 1467, Sec. 1.31, eff.

Sept. 1, 1999; Acts 2003, 78th Leg., ch. 1266, Sec. 1.04, eff.

June 20, 2003.

Sec. 2254.032. CONFLICTS OF INTEREST. (a) An officer or

employee of a state agency shall report to the chief executive of

the agency, not later than the 10th day after the date on which a

private consultant submits an offer to provide consulting

services to the agency, any financial interest that:

(1) the officer or employee has in the private consultant who

submitted the offer; or

(2) an individual who is related to the officer or employee

within the second degree by consanguinity or affinity, as

determined under Chapter 573, has in the private consultant who

submitted the offer.

(b) This section applies to all consulting services contracts

and renewals, amendments, and extensions of consulting services

contracts.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2254.033. RESTRICTION ON FORMER EMPLOYEES OF A STATE

AGENCY. (a) An individual who offers to provide consulting

services to a state agency and who has been employed by that

agency or by another agency at any time during the two years

preceding the making of the offer shall disclose in the offer:

(1) the nature of the previous employment with the agency or the

other agency;

(2) the date the employment was terminated; and

(3) the annual rate of compensation for the employment at the

time of its termination.

(b) A state agency that accepts an offer from an individual

described in Subsection (a) shall include in the information

filed under Section 2254.030 a statement about the individual's

previous employment and the nature of the employment.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2254.034. CONTRACT VOID. (a) A contract entered into in

violation of Sections 2254.029 through 2254.031 is void.

(b) A contract entered into with a private consultant who did

not comply with Section 2254.033 is void.

(1) the comptroller may not draw a warrant or transmit money to

satisfy an obligation under the contract; and

(2) a state agency may not make any payment under the contract

with state or federal money or money held in or outside the state

treasury.

(d) This section applies to all consulting services contracts,

including renewals, amendments, and extensions of consulting

services contracts.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1999, 76th Leg., ch. 1467, Sec. 1.32, eff.

June 19, 1999.

Sec. 2254.035. DIVIDING CONTRACTS. (a) A state agency may not

divide a consulting services contract into more than one contract

to avoid the requirements of this subchapter.

(b) This section applies to all consulting services contracts,

including renewals, amendments, and extensions of consulting

services contracts.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2254.036. ARCHIVES. (a) On request, a state agency shall,

after the agency's contract with a consultant has ended, supply

the Legislative Budget Board and the governor's Budget and

Planning Office with copies of all documents, films, recordings,

or reports compiled by the consultant under the contract.

(b) Copies of all documents, films, recordings, or reports

compiled by the consultant shall be filed with the Texas State

Library and shall be retained by the library for at least five

years.

recording, and report given to it under Subsection (b) and shall

file the list at the end of each calendar quarter with the

secretary of state for publication in the Texas Register.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1997, 75th Leg., ch. 1035, Sec. 12, eff.

June 19, 1997.

Sec. 2254.037. REPORTS. As part of the biennial budgetary

hearing process conducted by the Legislative Budget Board and the

governor's Budget and Planning Office, a state agency shall

report to the Legislative Budget Board and the governor's Budget

and Planning Office on any actions taken in response to the

recommendations of any consultant with whom the state agency

contracts during the previous biennium.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1997, 75th Leg., ch. 1035, Sec. 13, eff.

June 19, 1997.

Sec. 2254.038. MIXED CONTRACTS. This subchapter applies to a

contract that involves both consulting and other services if the

primary objective of the contract is the acquisition of

consulting services.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Sec. 2254.039. COMPTROLLER'S RULES. (a) The comptroller shall

adopt rules to implement and administer this subchapter. The

comptroller's rules may not conflict with or cover a matter on

which this subchapter authorizes the governor to adopt rules.

(b) The comptroller shall give proposed rules to the governor

for review and comment before adopting the rules.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

937, Sec. 3.15, eff. September 1, 2007.

Sec. 2254.040. PROCUREMENT BY COMPTROLLER. (a) The comptroller

may, on request of a state agency, procure for the agency

consulting services that are covered by this subchapter.

(b) The comptroller may require reimbursement for the costs it

incurs in procuring the services.

Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,

1993. Amended by Acts 1999, 76th Leg., ch. 426, Sec. 16, eff.

June 18, 1999.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

937, Sec. 1.75, eff. September 1, 2007.

SUBCHAPTER C. CONTINGENT FEE CONTRACT FOR LEGAL SERVICES

Sec. 2254.101. DEFINITIONS. In this subchapter:

(1) "Contingent fee" means that part of a fee for legal

services, under a contingent fee contract, the amount or payment

of which is contingent on the outcome of the matter for which the

services were obtained.

(2) "Contingent fee contract" means a contract for legal

services under which the amount or the payment of the fee for the

services is contingent in whole or in part on the outcome of the

matter for which the services were obtained.

(3) "State governmental entity":

(A) means the state or a board, commission, department, office,

or other agency in the executive branch of state government

created under the constitution or a statute of the state,

including an institution of higher education as defined by

Section 61.003, Education Code;

(B) includes the state when a state officer is bringing a parens

patriae proceeding in the name of the state; and

receiver, special deputy receiver, liquidator, or liquidating

agent in connection with the administration of the assets of an

insolvent entity under Article 21.28, Insurance Code, or Chapter

36, 66, 96, or 126, Finance Code.

Added by Acts 1999, 76th Leg., ch. 1499, Sec. 3.03, eff. Sept. 1,

1999.

Sec. 2254.102. APPLICABILITY. (a) This subchapter applies only

to a contingent fee contract for legal services entered into by a

state governmental entity.

(b) The legislature by this subchapter is providing, in

accordance with Section 44, Article III, Texas Constitution, for

the manner in which and the situations under which a state

governmental entity may compensate a public contractor under a

contingent fee contract for legal services.

(1) with a state agency to collect an obligation under Section

2107.003(b), (c), or (c-1); or

(2) for legal services entered into by an institution of higher

education under Section 153.006, Education Code.

(d) This subchapter does not apply to a contract for legal

services entered into by the Teacher Retirement System of Texas

if the services are paid for from money that is not appropriated

from the general revenue fund, including funds of a trust

administered by the retirement system.

Added by Acts 1999, 76th Leg., ch. 1499, Sec. 3.03, eff. Sept. 1,

1999. Amended by Acts 2003, 78th Leg., ch. 1266, Sec. 1.13, eff.

June 20, 2003.

Amended by:

Acts 2005, 79th Leg., Ch.

1359, Sec. 31, eff. September 1, 2005.

Acts 2007, 80th Leg., R.S., Ch.

1386, Sec. 3, eff. September 1, 2007.

Sec. 2254.103. CONTRACT APPROVAL; SIGNATURE. (a) A state

governmental entity that has authority to enter into a contract

for legal services in its own name may enter into a contingent

fee contract for legal services only if:

(1) the governing body of the state governmental entity approves

the contract and the approved contract is signed by the presiding

officer of the governing body; or

(2) 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.

(b) The attorney general may enter into a contingent fee

contract for legal services in the name of the state in relation

to a matter that has been referred to the attorney general under

law by another state governmental entity only if the other state

governmental entity approves and signs the contract in accordance

with Subsection (a).

into a contingent fee contract for legal services that is not

described by Subsection (a) or (b) only if the governor approves

and signs the contract.

(d) Before approving the contract, the governing body, elected

or appointed officer, or governor, as appropriate, must find

that:

(1) there is a substantial need for the legal services;

(2) the legal services cannot be adequately performed by the

attorneys and supporting personnel of the state governmental

entity or by the attorneys and supporting personnel of another

state governmental entity; and

(3) 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 for which the

services will be obtained 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.

(e) Before entering into a contingent fee contract for legal

services in which the estimated amount that may be recovered

exceeds $100,000, a state governmental entity that proposes to

enter into the contract in its own name or in the name of the

state must also notify the Legislative Budget Board that the

entity 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 Subsection (d)(3)

exist. If the state governmental entity finds under Subsection

(d)(3) that the state governmental entity does not have

appropriated funds available to pay the estimated amounts

required under a contract for the legal services providing only

for the payment of hourly fees, the state governmental entity may

not enter into the proposed contract in its own name or in the

name of the state unless the Legislative Budget Board finds that

the state governmental entity's finding with regard to available

appropriated funds is correct.

(f) A contingent fee contract for legal services that is subject

to Subsection (e) and requires a finding by the Legislative

Budget Board is void unless the board has made the finding

required by Subsection (e).

Added by Acts 1999, 76th Leg., ch. 1499, Sec. 3.03, eff. Sept. 1,

1999.

Sec. 2254.104. TIME AND EXPENSE RECORDS REQUIRED; FINAL

STATEMENT. (a) The contract must require that the contracting

attorney or law firm keep current and complete written time and

expense records that describe in detail the time and money spent

each day in performing the contract.

(b) The contracting attorney or law firm shall permit the

governing body or governing officer of the state governmental

entity, the attorney general, and the state auditor each to

inspect or obtain copies of the time and expense records at any

time on request.

obtained, the contracting attorney or law firm shall provide the

contracting state governmental entity with a complete written

statement that describes the outcome of the matter, states the

amount of any recovery, shows the contracting attorney's or law

firm's computation of the amount of the contingent fee, and

contains the final complete time and expense records required by

Subsection (a). The complete written statement required by this

subsection is public information under Chapter 552 and may not be

withheld from a requestor under that chapter under Section

552.103 or any other exception from required disclosure.

(d) This subsection does not apply to the complete written

statement required by Subsection (c). All time and expense

records required under this section are public information

subject to required public disclosure under Chapter 552.

Information in the records may be withheld from a member of the

public under Section 552.103 only if, in addition to meeting the

requirements of Section 552.103, the chief legal officer or

employee of the state governmental entity determines that

withholding the information is necessary to protect the entity's

strategy or position in pending or reasonably anticipated

litigation. Information withheld from public disclosure under

this subsection shall be segregated from information that is

subject to required public disclosure.

Added by Acts 1999, 76th Leg., ch. 1499, Sec. 3.03, eff. Sept. 1,

1999.

Sec. 2254.105. CERTAIN GENERAL CONTRACT REQUIREMENTS. The

contract must:

(1) provide for the method by which the contingent fee is

computed;

(2) state the differences, if any, in the method by which the

contingent fee is computed if the matter is settled, tried, or

tried and appealed;

(3) state how litigation and other expenses will be paid and, if

reimbursement of any expense is contingent on the outcome of the

matter or reimbursable from the amount recovered in the matter,

state whether the amount recovered for purposes of the contingent

fee computation is considered to be the amount obtained before or

after expenses are deducted;

(4) state that any subcontracted legal or support services

performed by a person who is not a contracting attorney or a

partner, shareholder, or employee of a contracting attorney or

law firm is an expense subject to reimbursement only in

accordance with this subchapter; and

(5) state that the amount of the contingent fee and

reimbursement of expenses under the contract will be paid and

limited in accordance with this subchapter.

Added by Acts 1999, 76th Leg., ch. 1499, Sec. 3.03, eff. Sept. 1,

1999.

Sec. 2254.106. CONTRACT REQUIREMENTS: COMPUTATION OF CONTINGENT

FEE; REIMBURSEMENT OF EXPENSES. (a) The contract must establish

the reasonable hourly rate for work performed by an attorney, law

clerk, or paralegal who will perform legal or support services

under the contract based on the reasonable and customary rate in

the relevant locality for the type of work performed and on the

relevant experience, demonstrated ability, and standard hourly

billing rate, if any, of the person performing the work. The

contract may establish the reasonable hourly rate for one or more

persons by name and may establish a rate schedule for work

performed by unnamed persons. The highest hourly rate for a named

person or under a rate schedule may not exceed $1,000 an hour.

This subsection applies to subcontracted work performed by an

attorney, law clerk, or paralegal who is not a contracting

attorney or a partner, shareholder, or employee of a contracting

attorney or law firm as well as to work performed by a

contracting attorney or by a partner, shareholder, or employee of

a contracting attorney or law firm.

(b) The contract must establish a base fee to be computed as

follows. For each attorney, law clerk, or paralegal who is a

contracting attorney or a partner, shareholder, or employee of a

contracting attorney or law firm, multiply the number of hours

the attorney, law clerk, or paralegal works in providing legal or

support services under the contract times the reasonable hourly

rate for the work performed by that attorney, law clerk, or

paralegal. Add the resulting amounts to obtain the base fee. The

computation of the base fee may not include hours or costs

attributable to work performed by a person who is not a

contracting attorney or a partner, shareholder, or employee of a

contracting attorney or law firm.

multiplying the base fee by a multiplier. The contract must

establish a reasonable multiplier based on any expected

difficulties in performing the contract, the amount of expenses

expected to be risked by the contractor, the expected risk of no

recovery, and any expected long delay in recovery. The multiplier

may not exceed four without prior approval by the legislature.

(d) In addition to establishing the method of computing the fee

under Subsections (a), (b), and (c), the contract must limit the

amount of the contingent fee to a stated percentage of the amount

recovered. The contract may state different percentage

limitations for different ranges of possible recoveries and

different percentage limitations in the event the matter is

settled, tried, or tried and appealed. The percentage limitation

may not exceed 35 percent without prior approval by the

legislature. The contract must state that the amount of the

contingent fee will not exceed the lesser of the stated

percentage of the amount recovered or the amount computed under

Subsections (a), (b), and (c).

(e) The contract also may:

(1) limit the amount of expenses that may be reimbursed; and

(2) provide that the amount or payment of only part of the fee

is contingent on the outcome of the matter for which the services

were obtained, with the amount and payment of the remainder of

the fee payable on a regular hourly rate basis without regard to

the outcome of the matter.

(f) Except as provided by Section 2254.107, this section does

not apply to a contingent fee contract for legal services:

(1) in which the expected amount to be recovered and the actual

amount recovered do not exceed $100,000; or

(2) under which a series of recoveries is contemplated and the

amount of each individual recovery is not expected to and does

not exceed $100,000.

(g) This section applies to a contract described by Subsection

(f) for each individual recovery under the contract that actually

exceeds $100,000, and the contract must provide for computing the

fee in accordance with this section for each individual recovery

that actually exceeds $100,000.

Added by Acts 1999, 76th Leg., ch. 1499, Sec. 3.03, eff. Sept. 1,

1999.

Sec. 2254.107. MIXED HOURLY AND CONTINGENT FEE CONTRACTS;

REIMBURSEMENT FOR SUBCONTRACTED WORK. (a) This section applies

only to a contingent fee contract:

(1) under which the amount or payment of only part of the fee is

contingent on the outcome of the matter for which the services

were obtained, with the amount and payment of the remainder of

the fee payable on a regular hourly rate basis without regard to

the outcome of the matter; or

(2) under which reimbursable expenses are incurred for

subcontracted legal or support services performed by a person who

is not a contracting attorney or a partner, shareholder, or

employee of a contracting attorney or law firm.

(b) Sections 2254.106(a) and (e) apply to the contract without

regard to the expected or actual amount of recovery under the

contract.

of the contingent fee apply to the entire amount of the fee under

the contingent fee contract, including the part of the fee the

amount and payment of which is not contingent on the outcome of

the matter.

(d) The limitations prescribed by Section 2254.108 on payment of

the fee apply only to payment of the contingent portion of the

fee.

Added by Acts 1999, 76th Leg., ch. 1499, Sec. 3.03, eff. Sept. 1,

1999.

Sec. 2254.108. FEE PAYMENT AND EXPENSE REIMBURSEMENT. (a)

Except as provided by Subsection (b), a contingent fee and a

reimbursement of an expense under a contract with a state

governmental entity is payable only from funds the legislature

specifically appropriates to pay the fee or reimburse the

expense. An appropriation to pay the fee or reimburse the expense

must specifically describe the individual contract, or the class

of contracts classified by subject matter, on account of which

the fee is payable or expense is reimbursable. A general

reference to contingent fee contracts for legal services or to

contracts subject to this subchapter or a similar general

description is not a sufficient description for purposes of this

subsection.

(b) If the legislature has not specifically appropriated funds

for paying the fee or reimbursing the expense, a state

governmental entity may pay the fee or reimburse the expense from

other available funds only if:

(1) the legislature is not in session; and

(2) the Legislative Budget Board gives its prior approval for

that payment or reimbursement under Section 69, Article XVI,

Texas Constitution, after examining the statement required under

Section 2254.104(c) and determining that the requested payment

and the contract under which payment is requested meet all the

requirements of this subchapter.

made until:

(1) final and unappealable arrangements have been made for

depositing all recovered funds to the credit of the appropriate

fund or account in the state treasury; and

(2) the state governmental entity and the state auditor have

received from the contracting attorney or law firm the statement

required under Section 2254.104(c).

(d) Litigation and other expenses payable under the contract,

including expenses attributable to attorney, paralegal,

accountant, expert, or other professional work performed by a

person who is not a contracting attorney or a partner,

shareholder, or employee of a contracting attorney or law firm,

may be reimbursed only if the state governmental entity and the

state auditor determine that the expenses were reasonable,

proper, necessary, actually incurred on behalf of the state

governmental entity, and paid for by the contracting attorney or

law firm. The contingent fee may not be paid until the state

auditor has reviewed the relevant time and expense records and

verified that the hours of work on which the fee computation is

based were actually worked in performing reasonable and necessary

services for the state governmental entity under the contract.

Added by Acts 1999, 76th Leg., ch. 1499, Sec. 3.03, eff. Sept. 1,

1999.

Sec. 2254.109. EFFECT ON OTHER LAW. (a) This subchapter does

not limit the right of a state governmental entity to recover

fees and expenses from opposing parties under other law.

(b) Compliance with this subchapter does not relieve a

contracting attorney or law firm of an obligation or

responsibility under other law, including under the Texas

Disciplinary Rules of Professional Conduct.

attorney general, may not waive the requirements of this

subchapter or prejudice the interests of the state under this

subchapter. This subchapter does not waive the state's sovereign

immunity from suit or its immunity from suit in federal court

under the Eleventh Amendment to the federal constitution.

Added by Acts 1999, 76th Leg., ch. 1499, Sec. 3.03, eff. Sept. 1,

1999.

SUBCHAPTER D. OUTSIDE LEGAL SERVICES

Sec. 2254.151. DEFINITION. In this subchapter, "state agency"

means a department, commission, board, authority, office, or

other agency in the executive branch of state government created

by the state constitution or a state statute.

Added by Acts 2003, 78th Leg., ch. 309, Sec. 7.18, eff. June 18,

2003.

Sec. 2254.152. APPLICABILITY. This subchapter does not apply to

a contingent fee contract for legal services.

Added by Acts 2003, 78th Leg., ch. 309, Sec. 7.18, eff. June 18,

2003.

Sec. 2254.153. CONTRACTS FOR LEGAL SERVICES AUTHORIZED. Subject

to Section 402.0212, a state agency may contract for outside

legal services.

Added by Acts 2003, 78th Leg., ch. 309, Sec. 7.18, eff. June 18,

2003.

Sec. 2254.154. ATTORNEY GENERAL; COMPETITIVE PROCUREMENT. The

attorney general may require state agencies to obtain outside

legal services through a competitive procurement process, under

conditions prescribed by the attorney general.

Added by Acts 2003, 78th Leg., ch. 309, Sec. 7.18, eff. June 18,

2003.

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

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