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State Bar’s audit report draws lawmaker criticism, call for legislation

By MARY SELL, Alabama Daily News

A south Alabama lawmaker says he’ll sponsor legislation next year to ensure more oversight of quasi-government agencies’ spending, including when it comes to non-disclosure agreements.

“We’re not going to be paying people off anymore with taxpayer money,” Rep. Chris Pringle, R-Mobile, said recently during a meeting of the Legislative Contract Review Committee. 

His comment was directed at Terri Lovell, the new executive director of the Alabama State Bar.

A May report from the Alabama Examiners of Public Accounts, the state office that audits state and local government agencies, found that Bar leadership, during a two-year period, executed separation agreements with three former employees, which it didn’t have the authority to do. And two of those agreements included “confidentiality and non-disparagement” clauses requiring the employees to keep confidential the existence of the agreements and “refrain from disclosing its terms, contents, benefits to employees, conditions, proceedings and negotiations.”

After signing the document, the employees received pay after their official end dates, as well as other benefits.

The Examiners’ report, which looked at the Bar’s actions from Oct. 1, 2019 through Sept. 30, 2021, found 10 other violations of state laws and regulations.

Pringle said he’s working on a bill for the 2023 legislative session calling for more oversight and said the Bar isn’t the only regulatory body with questionable spending practices. 

“These are state agencies and they’re forcing people to sign NDA, non-disclosure agreements, to not discuss the malfeasance that’s been found out within their organization,” Pringle said. “They use the taxpayers’ money to pay these NDAs. They’re buying people’s silence using taxpayers’ money.”

The Bar is the licensing and regulatory agency for lawyers in Alabama, as well as the trade’s association. The Bar is funded through fees paid by members. The Legislature appropriates those fees back to the Bar each year. For fiscal year 2023, it’s about $6.7 million. Pringle argues that licensure fees are taxes, subject to public review.

“My argument is the Legislature has given them the right to levy taxes — which is what a license fee is — it’s a tax on the citizens of Alabama.”

Banning all NDAs within state agencies could be problematic, especially given how economic development and tourism deals depend on them. Still, Pringle said the Bar and other agencies have a fiduciary responsibility to be accountable for how they spend taxpayer money.

The Examiners’ report time frame included about the last year of former Alabama State Bar Executive Director Phillip McCallum. Inside Alabama Politics reported in January 2021 that McCallum had resigned the previous October after three years amid allegations of 17 state ethics violations. In 2021, McCallum was fined $100,000 but he was not prosecuted, WSFA reported at the time.

The Examiners’ report, as well as a lawsuit filed against the Bar and McCallum by a previous employee, were reported in June by Mobile-based Lagniappe.

Because of that lawsuit, the Bar now has a contract with an outside attorney. That contract brought Lovell before Pringle and the rest of the contract review committee last week.

Lovell didn’t argue with Pringle and said the attorneys’ association would respect any future legislation regarding non-disclosure agreements.

Later, the Bar in a written statement told Alabama Daily News that since Lovell became executive director in June of 2021, “her focus has been on building goodwill with all stakeholders through integrity, accountability, compliance and ethical behavior.”

“Our leaders, staff, and 19,000-plus members have been inspired by the consistent culture of excellence she models and expects from all of us at the Bar, and we look forward to continuing this positive direction going forward.”

The Examiners’ report also said the Bar:

  • Did not verify five employees’ employment eligibility through E-Verify by the third business day;
  • Did not adhere to state rules for employee pay for leave upon separation from the agency;
  • Does not have effective internal controls to accurately review contracts for compliance with state laws;
  • Reimbursed six vendors for professional services without executing contracts;
  • Issued payments to vendors for legal services prior to the contracts being reviewed by the Contract Review Permanent Legislative Oversight Committee;
  • Reimbursed attorneys for legal services at an hourly rate that exceeded the $195 per hour rate set by the governor;
  • Did not post notice of a meeting held on July 17, 2021 to the Secretary of State’s website;
  • Did not follow the procedures for convening an executive session;
  • Did not maintain accurate records for two meetings;
  • Did not submit information pertaining to board members to the Secretary of State.

The Bar said that since receiving the audit report earlier this year, it has worked to correct the areas of noncompliance “while also putting new protocols in place to ensure we meet the various legal requirements that apply to both professional associations and state agencies.”

In 2020, Pringle said state regulatory bodies, including the Alabama State Board of Medical Examiners, should be more transparent in their spending. That legislative session was cut short by the COVID-19 pandemic.

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