On June 27, 2016, the Texas Attorney General released Opinion KP-0099 (2016) on “Whether a school district board of trustees may enter into a contract for legal services under a flat fee arrangement.”
The summary to the opinion states:
“Under the test articulated by the Texas Supreme Court, a school district's contract for legal services would violate article III, section 52(a) of the Texas Constitution if (1) the expenditure's predominant purpose does not accomplish a public purpose, but instead benefits private parties; (2) sufficient control over the expenditure is not retained to ensure that the public purpose is accomplished; (3) the school district does not receive a return benefit; and ( 4) the expenditure fails to provide a clear public benefit in return. Whether a public purpose is served by a particular expenditure raises fact questions that cannot be answered in an attorney general opinion and would be a decision for the school district in the first instance, subject to judicial review.
In utilizing this test to evaluate public expenditures, Texas courts have suggested that (1) an incidental benefit to individual trustees does not invalidate the expenditure if the contract is predominantly for the direct accomplishment of a legitimate public purpose of the school district; (2) the principal constitutional concern regarding control measures is not who is implementing them but whether such controls are put into place to begin with; and (3) what constitutes an adequate return benefit depends on a variety of specific circumstances but is called into doubt if there is such a. gross disparity in the relative values exchanged as to show unconscionability, bad faith, or fraud.
To the extent that circumstances forming the basis for an alleged violation of the Texas Disciplinary Rules for Professional Conduct suggest that an expenditure does not comport with the requirements of article III, section 52(a), a court would rely on the test articulated by the Texas Supreme Court to make that determination. However, it is unlikely that a court would consider conduct subsequent to a contract's execution in determining whether the contract itself violates article III, section 52(a).”
To read the Opinion, click on the link below.
https://www.texasattorneygeneral.gov/opinions/opinions/51paxton/op/2016/kp0099.pdf