Lawmakers last week filed legislation that would limit the amount of legal fees New Jersey pays for bond counsel services.
The measure would restrict the state, municipalities, and authorities from paying more than 1% of the principal amount of a bond transaction to law firms working on the deal, with fees not to surpass $125,000. Along with the fee ceiling, the bill would require the attorney general to competitively bid for bond counsel services on bond sales totaling $1 million or more.
Republican Assemblywoman Marcia Karrow sponsored the bill. She said larger bond deals do not necessitate additional work or longer hours for bond lawyers and therefore government spending on legal fees should be capped to limit runaway legal costs.
“My experience doing school bonding and county bonding and local bonding and state bonding is that a bond is a bond is a bond, and what counsel does is basically the same thing no matter the size of the bond,” Karrow said. “It’s basically the same amount of work.”
Karrow said Gov. Jon Corzine’s proposal to sell up to $38 billion of bonds backed by a 50% increase in tolls to pay down half of the state’s $32 billion of outstanding debt and help finance transportation infrastructure for 75 years prompted her to re-file the measure. She previously filed the initiative in 2006 but the bill died in committee. Karrow said as bond deals increase in size, the state should be mindful of unnecessary legal fees attached to bond deals.
“I’ve always liked my bond counsels on all levels of government, but $125,000 is more than twice the average salary of an average worker in New Jersey, so how much is enough?” she said.
The bill is currently before the Assembly Budget Committee, which Karrow sits on.