NJ spent $54M on outside lawyers last year, prompting lawmaker’s concern • New Jersey Monitor

New Jersey’s law division spent almost $54 million on outside counsel last year, even though it’s the single largest employer of lawyers in the state, with about 550 on staff.

The state’s bill for farming out legal work has spiked 140% since 2019, when the division — which acts as the government’s law firm — paid outside counsel $22.3 million, according to budget documents.

The state’s outside counsel costs have raised eyebrows among legislators looking for ways to scale back spending amid ongoing discussions about Gov. Mikie Sherrill’s record-high $60.7 billion budget proposal for the fiscal year that begins July 1. Sherrill has called for broad cuts in an effort to shrink the state’s structural deficit and prepare the state to weather a potential recession.

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Assemblyman Al Barlas (R-Essex) questioned Attorney General Jen Davenport, who oversees the division, about outside counsel during a budget hearing Wednesday in Trenton. He told the New Jersey Monitor Thursday that he has concerns about the costs, which totaled almost $250 million since 2019.

“Listen, I understand that sometimes you have to have outside counsel for certain specialties. It makes sense,” Barlas said.

But with so many attorneys on the state’s payroll, “are we really spending the money wisely by constantly just going to outside counsel?” he said. “Are we better off building up the legal department within the Attorney General’s Office? I’m certainly also not advocating for growth in bureaucracy, but sometimes you have to weigh out the pros and cons.”

A budget document listing all of the division’s cases that involved outside counsel last year through mid-March of this year runs on for 98 pages, totaling over 3,000 cases. The division, which is one of 10 divisions under the state Department of Law and Public Safety, provides legal advice to state agencies, defends the state in civil lawsuits, and brings civil enforcement actions against people, businesses, and others that harm the state and its residents.

Davenport, who started in her post in January, defended spending on outside counsel as necessary when the state has a conflict of interest in a matter, has insufficient capacity due to attorney workload or attrition, or needs someone who specializes in a particular area of law where there’s no in-house expertise. The division also sometimes relies on outside counsel when the state is sued in out-of-state jurisdictions and when outside attorneys agree to work on a contingency basis, a way for the state to outsource risk, budget documents show.

Large, complex cases also can balloon outside counsel costs, Davenport said. She pointed to the outside review former Gov. Phil Murphy commissioned in 2022 of the state’s response to the COVID-19 pandemic and litigation stemming from New Jersey challenging New York’s congestion pricing plan.

Those cases accounted for close to $10 million alone, she said. The pandemic review, done by the firms Montgomery McCracken and Connell Foley, cost almost $8.4 million, while the congestion pricing fight, handled by King & Spalding, totaled nearly $1.1 million, according to budget documents.

“It is difficult to predict when these types of unique engagements will arise and therefore difficult to predict any future trends,” department officials wrote in budget documents.

But they likely will continue to climb higher, they added, because the hourly rates the state pays for outside counsel rose in January 2025 (to $99 for paralegals up to $250 for partners).

The division billed various state agencies almost $145 million last year for legal services done in-house — but that’s lower than their true cost because not all in-house legal services are billed, officials noted. The division has about 29,000 legal matters now pending in federal and state trial and appellate courts and administrative forums, according to its website.

Barlas said he’ll explore the issue further with Davenport and his legislative colleagues.

“There still is more deep diving that we need to do into that to get a fuller picture of: Is this truly a value add that we’re doing by farming this out, or are we just sort of rewarding the legal system?” he said.