FISCAL NOTE

Date Requested: January 31, 2019
Time Requested: 01:14 PM
Agency: Public Defender Services
CBD Number: Version: Bill Number: Resolution Number:
1058 Introduced SB103
CBD Subject: Boards and Commissions, Courts


FUND(S):

0226

Sources of Revenue:

General Fund

Legislation creates:

Increases Existing Expenses



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


Summarize in a clear and concise manner what impact this measure will have on costs and revenues of state government. The legislation increases the rates of compensation for court-appointed counsel by $15 an hour. The current rates are the original rates enacted in 1989. Based on the reported hours of service in Fiscal Year 2017, Public Defender Services, Annual Report, Fiscal Year 2017 (“AR”) p. 244, the increase would result in additional payments during a fiscal year in the amount of $7,361,265. The legislation changes the process for approving payments to court-appointed counsel. The initial “approval” function would be transferred from the circuit courts to PDS who would review vouchers and confer with attorneys before court action would be required. Particularly, PDS would review vouchers in relation to other submissions by the counsel, which judges cannot do. The agency estimates, conservatively, that the transfer would result in a reduction of expenditures from general revenue in an annual amount of $639,720.95 in the specific instances of known overbilling and an additional annual amount of $560,000.00 from the review of all vouchers. With a raise in the rates of compensation, the agency intends to curtail billing for certain administrative tasks that have been historically permitted even though the statute provides only for compensation of legal services and reimbursement of expenses. The agency estimates that the reduction in payments to counsel for these services would be $815,711.94. While a raise in the rate of compensation would benefit all attorneys, the decrease in payment of these expenses would affect, in PDS’ estimate, only one-third of the attorneys submitting vouchers.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2019
Increase/Decrease
(use"-")
2020
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 5,427,862 0 5,427,862
Personal Services 82,028 0 82,028
Current Expenses 5,345,834 0 5,345,834
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


Please explain increases and decreases in personal services, current expenses, repairs and alterations, assets, other costs and revenues, including assumptions and data sources and delineation between start-up and ongoing costs. Please also include a long-range schedule of costs and revenues if fiscal impact is expected to vary in future years. A year of 2400 billable hours on court-appointed matters means that the attorney is fully engaged in court-appointed work and is working extended hours on a daily basis, including weekends. The attorney could not be conceivably engaged in a private practice or could not be performing other services as a mental hygiene commissioner or a family law court guardian ad litem. Any billing in excess of 2400 hours a year is simply unrealistic and unsustainable. The agency has identified 24 individual attorneys who billed more than 2400 billable hours in Fiscal Year 2017. AR, pp. 224-227. The agency believes that its “approval” of vouchers would limit the 24 attorneys who exceeded 2,400 hours to the more realistic level of 2,400 hours, if not less. With the addition of one attorney and with the authority to approve the vouchers rather than being restrained by the circuit court’s order approving the vouchers, the agency has the means to determine an attorneys’ historical level of billings, has the means to review an attorneys’ vouchers collectively, has the means to examine closely the vouchers submitted by the attorneys on an entry-by-entry basis, and has the authority to investigate overbilling and to require answers from the subject attorneys. The agency’s estimate is that the total reduction in compensation upon the elimination of this excessive billing would be $639,720.95. PDS will also scrutinize carefully all billings received from counsel that constantly exceed levels of 2,000 billable hours per year. And, of course, PDS will continue to review all vouchers for compliance with the statutory provisions. PDS estimates that this will provide an additional $560,000 in reduced compensation. The additional attorney required by the agency would result in increased administrative costs to the agency in the amount of $82,028, assuming a salary of $60,000 for the attorney. Again, the $15 an hour increase in the rates of compensation would result in an additional expense of $7,361,265 based on the reported hours of 490,751 in Fiscal Year 2017. And, again, the elimination of a present policy permitting billing of certain administrative tasks would further result in a reduction in expenses in the amount of $815,711.94. The overall fiscal impact of the legislation would be, therefore, $5,427,862 (i.e., $7,361,265 - $639,720 - $560,000 + $82,028 - $815,711). Finally, the legislation addresses the issue of compensation for paralegals. Presently, the use of paralegals is considered an expense to the attorney. The attorney can be reimbursed for the hourly wage paid to the paralegal, up to $20 an hour. This discourages the use of paralegals, however, because the attorney recognizes no economic advantage. Indeed, the attorney is limited to the wage expense and, therefore, if a paralegal is hired, the attorney loses money if benefits are paid and if additional office space is leased. The legislation would make the compensation for paralegals $20 an hour without regard to the actual expense of the paralegal to the attorney. The agency believes that this will encourage the use of paralegals and will provide the attorney an economic incentive for their use. The further belief is that this will reduce the attorney time that is billed for basic legal services and will provide a decrease in the expenditures for fees. However, the agency cannot quantify this savings.



Memorandum


Please identify any areas of vagueness, technical defects, reasons a bill would not have a fiscal impact, and/or any special issues not captured elsewhere on this form. An additional benefit from the legislation which cannot be quantified is that vouchers should be processed for payment more quickly with the elimination of the requirement that vouchers be submitted, first, to the courts for review, and then transmitted by mail to PDS. Now, vouchers will simply be electronically submitted to PDS, reducing also the expense of requiring hard copies of the vouchers and an accompanying court order. The result is that attorneys may not be as compelled to discount their vouchers to third party financial entities by ten or twenty percent if the period to await payment is reduced. For many attorneys, this represents an increase in the net proceeds of payment for their services. The legislation also provides for the potential execution of contracts for legal services in certain situations that would pay an established amount for the handling of matters rather than the payment of an hourly rate. The contracts would be executed only as the need arises. Accordingly, no estimate can be made about the amount of savings, if any, to the state.



    Person submitting Fiscal Note: Dana F. Eddy
    Email Address: Dana.F.Eddy@wv.gov