Legislation sponsored by Senator Ronald L. Rice to increase transparency and State oversight of municipal legal contracts was approved recently by the Senate on a vote of 31-0, receiving final legislative approval. “New Jersey taxpayers are paying enough for local governments and authorities without over-the-top legal contracts to political cronies,” said Senator Rice, D-Essex. “This bill is about making sure that local officials publicly report any legal contract in which the municipality is expected to spend more than $50,000, so that State regulators, lawmakers and the Governor can step in if necessary on behalf of the local taxpayers. This bill is about ensuring oversight and transparency so that politically-connected lawyers can’t turn frivolous municipal lawsuits into a big payday at the taxpayers’ expense.”
The bill, S-1248, would require municipalities and governmental authorities to provide the State with information on any lawsuits in which they are a party, and in which they expect to spend more than $50,000 in legal fees or settlement costs, and in which they are not covered by a liability insurer. Under the bill, the local government or authority, prior to adopting their annual budget, would be required to provide information to the Director of Local Government Services, including: the number of lawsuits filed by or against the local unit or authority; the dollar amount awarded in those lawsuits; the number of lawsuits settled out of court; the number of pending lawsuits, with information about the attorney or law firm representing them, and the dollar amount paid to the attorney or law firm; an explanation of the billing manner used by attorneys or law firms representing the municipality or authority in each lawsuit; and a summary of the municipality or authority’s liability insurance plan, indicating whether they are selfinsured or contract their liability to an insurance provider. Copies of the reports filed with the Director of Local Government Services would be transmitted to the Department of Community Affairs, which would, in turn, transmit them to the Governor and the Legislature.
“Runaway legal contracts represent a major cost to the taxpayers of New Jersey, and it’s time that we expose these deals to public scrutiny,” said Senator Rice. “This bill builds checks and balances into large legal contracts, and gives the Legislature and the Governor the information they need to act, should it come down to that. As a former local official, I know that municipalities are party to a number of frivolous lawsuits each year, and rather than spend taxpayers’ hard-earned money to defend themselves from these suits, local officials ought to find more cost-effective ways to settle these cases, including using lawyers who are already on public payroll, rather than contracting out for legal services.” The bill now heads to the Governor to be signed into law.