When investment advice turns to litigation advice

I was initially interested in this story because, in its introduction, it recites Guam law to a "T", indicating that New Mexico also bases its procurement law on the ABA Model Procurement Code, at least as far as its general purposes and policies. Reading further just became more interesting. You might like to read the whole article yourself (click on the article's headline).

N.M. AG sees problem with state contract given to firm

The Procurement Code imposes certain safeguard requirements on the contracting process.

"The purposes of the Procurement Code are to provide for the fair and equitable treatment of all persons involved in public procurement, to maximize the purchasing value of public funds and to provide safeguards for maintaining a procurement system of quality and integrity."

The code also sets up a series of mechanisms for public bodies to procure services from companies in a transparent process.

New Mexico Attorney General Gary King, in an advisory letter issued last month, said a State Investment Council ["SIC"] contract with a law firm "has problems."

The SIC, Jennings explained, originally entered into the contract with the law firm in August 2005.

Pursuant to the contract's "scope of work," the firm would "(s)erve as legal counsel to the SIC for the purpose of reviewing documentation relating to direct securities investments, and advising the General Counsel (of the SIC) as to securities law matters generally" and "(c)onduct negotiations, if requested, with respect to investments or other investment management matters."

The original contract term was for one year and the compensation paid to the firm during the term was not to exceed $30,000.

Since entering into the original contract, the SIC and the law firm have amended the contract six times. amendments also increased the compensation, up to $5.8 million under the last amendment.

In addition to the original scope, the fifth amendment provided that the law firm would "(p)rovide advice and assist with reviewing documentation and responding to subpoenas, requests and inquiries from regulators and other government agencies, and document requests made pursuant to public disclosure laws."

The sixth amendment added that the firm would "(c)onduct, and provide advice relating to and in connection with an internal review of issues raised in connection with the matters described [in the fifth amendment]."

Assistant Attorney General Elaine Lujan, in her June 14 advisory letter, said while the original contract may not have been subject to the code, the contract became subject to the code once the scope of work was expanded in the fifth and sixth amendments.

Additionally, Lujan said, the contract fell within the parameters of the code once the scope of work was broadened to include matters that were not investment-related.

However, once the scope expanded outside the parameters of subsection CC, the SIC should have issued a request for proposals and otherwise followed the Procurement Code, she said.

The story included discussion of another topic and AG opinion regarding the right of school districts to hire their own legal counsel for certain matters, concluding:

The Legislature also has expressly granted public school boards the authority to "contract for the expenditure of money" as long as it is done according to the provisions of the Procurement Code, it said.

a public school district may contract with consultants or lawyers to represent the district during collective bargaining negotiations, provided the district complies with the Procurement Code.