SANTA FE, N.M. (AP) — New Mexico’s ethics commission has issued a stricter interpretation of rules governing state contracts in the wake of a report suggesting the attorney general paid outside lawyers excessive fees to negotiate opioid settlements with major pharmacy chains.
The panel's 11-page advisory opinion issued earlier this week deals specifically with contracts entered into on a contingency basis, the Santa Fe New Mexican reported Thursday.
It concluded the state procurement code’s limits on expenditures apply to contingency contracts for legal services, a departure from the way some state agencies traditionally have contracted for such services.
The opinion doesn’t mention any particular contract. But it comes after Legal Newsline reported in June that the New Mexico Attorney General’s Office was paying three law firms about $148 million out of a $453 million opioid settlement with Walgreens — three times as much as other states paid their lawyers to settle similar lawsuits.
Legal Newsline, which covers high-profile civil litigation lawsuits around the country, also reported at the time that New Mexico “for unexplained reasons pulled out of a $4.7 billion national settlement with other states under which the contingency fee rate is 12%” — significantly lower than the roughly 33% rate the state paid the three law firms.
Lauren Rodriguez, a spokesperson for the New Mexico Attorney General’s Office, said the contingency fee allocated as a part of the recent settlement with Walgreens was paid under an existing contract that contained no limit on fees.
She said it was done before Attorney General Raúl Torrez took office in January. His predecessor was Hector Balderas.
A contingent-fee agreement occurs when a law firm does not bill or expect payment until and unless the contingency is achieved, according to the advisory opinion.
Rodriguez said Torrez’s office didn’t receive the commission’s advisory opinion until Tuesday and still is reviewing it.
She said Torrez already has instituted a new policy that sets strict limits on contingency fee cases. She said his office will follow the practice of other state attorneys general in relying on in-house attorneys as local counsel whenever possible.
“However we recognize that the conclusion reached by the Commission represents a substantial change in how state agencies have historically contracted for legal services and may hinder the state’s ability to secure specialized legal representation when a case involves proprietary information or information that would jeopardize impending litigation if publicly revealed through the procurement process,” she added.
The New Mexico State Ethics Commission doesn't disclose who requested the opinion.
Jeremy Farris, the commission's executive director, told the New Mexican that the commission was not asked to opine on any particular contract. He said the board was not taking a closer look at the lucrative contracts involving the settlement with Walgreens.