Representative Donald Bratton questioned the agency’s policy, which allows board members to hire any private lawyer of their choice to be paid for by the fund, the Associated Press reported. “We’ve got to set some parameters, some limits,” said Bratton, according to the report.
The news account said the issue surfaced at a Legislative Finance Committee meeting because of a recently approved ERB policy to pay for a private lawyer even when a state-paid attorney is provided to governing board members named as defendants in a lawsuit.
ERB chairman, Bruce Malott, has incurred about $300,000 in expenses for a private lawyer to represent him in pending federal investigations over state investments and lawsuits over failed investments. The lawsuits allege political considerations in Governor Bill Richardson’s administration influenced which firms got state investment business. The ERB plans to set aside $1.5 million out of the pension fund for private legal expenses and other costs of current and former board members.
Attorney General Gary King said one solution is to have the attorney general’s office approve the hiring of private lawyers who are going to represent appointees to governing boards.
Jan Goodwin, executive director of the educational pension program, told lawmakers the governing board approved its policy in March based on a very broad state law requiring the pension fund to indemnify its board members for all lawsuits, claims, damages or expenses “of any nature whatsoever” related to them carrying out their duties, according to the Associated Press. Goodwin said the agency has requested a nonbinding legal opinion from the attorney general about its indemnification policy, including whether the costs of a private lawyer must be paid if the board member has a state-provided attorney.