Abbott signs bill to scale back local governments hiring contingency fee attorneys for construction defects

Gov. Greg Abbott on Monday signed into law a bill to reign in the practice of contingency fee attorneys recruiting local governments to file lawsuits, including claims for construction defects.

House Bill 2826 Effective 9/1/19, sponsored by Rep. Greg Bonnen (R-Friendswood), cleared the House in early May on a 103-39 vote and passed the Senate by a 27-4 vote late in the session. Now that the bill has become law, it will take effect on Sept. 1, 2019.

Primarily, the law will require local governments, such as cities and counties, to approve contingency fee agreements in meetings open to the public. In the meeting, the local entities must discuss the need for obtaining the legal service, the terms of the contract, the qualifications of the attorney or firm, and the reasons the contract is in the best interests of the residents of the community. The law will also apply to public utilities and local government corporations created to design and plan construction projects.

The legislation, advanced by Texans for Lawsuit Reform, predominantly grew from concerns that contingency fee attorneys have been increasingly overcharging local governments for their services, especially on claims involving construction defects. AGC Texas Building Branch and other groups have called for changes to current law that would add transparency and place local practices more in line with the state contracting process.

"House Bill 2826 gives Texas taxpayers transparency, consistency and accountability when local governments hire private attorneys on a contingency fee basis to handle government litigation," TLR General Counsel Lee Parsley said. "The [bill] ensures local governments will get quality legal services at a reasonable rate that allows them to keep more of their potential awards."

The bill also subjects a political subdivision's written findings in approving the contract and the contract itself to public disclosure laws, and the bill requires that the contract be submitted to the Attorney General's Office for approval. If the political subdivision fails to comply with the bill's public notice and hearing requirements, the Attorney General may refuse to approve the contract.

Click here to read the full text of the law as approved by Gov. Abbott.

Abbott issues order to revive state plumbing board until 2021

Gov. Greg Abbott issued an executive order Thursday to extend the life of the Texas State Board of Plumbing Examiners until 2021, a move the governor says is necessary to continue providing relief from Hurricane Harvey.

"A qualified workforce of licensed plumbers throughout the state, including from areas not directly affected by Hurricane Harvey, will be essential as those funds are being invested in crucial infrastructure, medical facilities, living facilities, and other construction projects," Abbott said.

The board was one of several state agencies under "sunset" review this year, a process by which legislators assess an agency and decide whether it is still needed. Legislation to continue the board's existence was filed this session but failed to pass. Without action from the Legislature, the board was on track to cease operations in 2020, spurring plumbers across the state to call on Abbott to declare a special session to save the regulatory agency.

Instead of calling lawmakers back to Austin, Abbott issued an order that suspends the board's termination until either the Legislature takes action in the 87th legislative session ending May 31, 2021 or until "disaster needs subside," according to the executive order. Abbott pointed to more than $10 billion in federal funding still available to the state to aid regions impacted by Harvey.

"To fulfill the demands for rebuilding after Hurricane Harvey and keeping Texas prepared and able to recover from future disasters, it is necessary to continue the Board to perform its indispensable role in protecting Texans," Abbott's office said.

Alicia Dover, executive director of the Plumbing Heating Cooling Contractors Association of Texas, said the group was grateful for the executive order and looked forward to working with the Legislature in the sunset review process.

"Appropriate licensing and oversight of Texas plumbers is valued by the responsible individuals who comprise our industry and is relied upon by the Texans that utilize their services," Dover's statement said. "From providing peace of mind to families in their homes to ensuring safety in our schools, hospitals and businesses, the role of the plumber is central to the core of our daily lives."

APPROVED: Abbott signs right to repair and school construction defects bills into law

Gov. Greg Abbott on Friday signed two major AGC Texas Building Branch bills into law that address construction defects in schools and the right to repair defects in public buildings.

School Construction Defects

The bill addressing school construction defects - House Bill 1734 Effective 9/1/19, sponsored by Rep. Justin Holland (R-Rockwall) - will require school districts to spend funds to actually repair construction defects when those funds are awarded from a verdict or settlement resulting from the defects.

The bill advanced from the House in April on a 111-30 vote and unanimously passed the Senate with an amendment late in the session. The bill was ultimately worked out in conference committee and finally approved on the day before the end of session.

The legislation in HB 1734 came about as some trial attorneys in Texas had begun pursuing lawsuits on behalf of school districts against contractors over alleged construction defects before actually notifying the parties of the defects or giving them a chance to inspect or fix them. In many cases, settlement funds awarded to the districts were not actually being used to repair the defects.

The bill also requires school districts to notify the Texas Education Agency (TEA) of defects lawsuits once they have been filed or face dismissal, and it requires the districts to itemize any repairs made and report them to the agency. The Attorney General's Office will have enforcement powers. Click here to read the full text of the signed bill.

Right to Repair

The "right to repair" bill has been one of AGC-TBB's top priorities for the last several years. House Bill 1999 Effective Immediately, sponsored by Rep. Jeff Leach (R-Plano), will allow those involved in designing or constructing a public building or public work a chance to inspect and repair alleged defects before being sued.

The bill originally passed the House in April by a 99-34 vote and passed the Senate late in session on a 29-2 vote with a minor amendment. The House ultimately approved the bill 108-34 without going to conference committee.

The legislation is based on a 2017 bill that passed committee but hit a deadline in the final days of session. Like HB 1734, this bill arose out of concerns that some attorneys in Texas have developed a cottage industry around getting local governments (mostly school districts) to sue contractors, architects, and engineers for alleged construction defects before actually notifying the parties of the defects or giving them a chance to inspect or fix them. Like the school construction defect lawsuits, there are many cases where the funds obtained are not actually used toward making repairs.

The bill covers alleged defects in the original construction along with improvements, additions, and repairs or alterations. The measure will also require that the governmental entity provide contractors with a written report describing the defect. Contractors will have 30 days to inspect defects and another 120 days after the inspection to repair or enter an agreement to repair defects.

The bill applies to government projects including those commissioned by the state, cities, counties, school districts, and local government bodies. The bill does not apply to transportation and highway projects. Click here to read the full text of the signed bill.