In a perfect storm of facts meeting law, a recent Workers Compensation Court of Appeals decision, Jurgensen v. Dave Perkins Contracting, Inc. upheld an ALJ’s decision to deny requested excess attorneys’ fees. A decision which denied excess fee recovery was recently upheld, when a Judge determined that the statutory cap of recovery on a lump sum settlement, was deemed sufficient compensation for very little legal activity performed.
FACTS OF THE MATTER
This matter involved a worker with an admitted left shoulder injury for which he underwent two surgeries. He retained counsel, but initially there were no disputes, with all benefits being paid. Eventually a dispute arose over the correct permanent disability rating and ongoing restrictions needed. The Employer and insurer filed a Notice of Intent to Discontinue benefits (NOID), and the employee issued a settlement demand.
Parties agreed to mediation with no further litigation occurring. The matter resolved with a high lump sum settlement under which the contingency attorney fee recovery was limited to the statutory maximum – $26,000 under Minn. Stat. § 176.081. Parties agreed to a $4,000 Excess Fee to be deducted from the lump sum settlement, as a fair and reasonable resolution. Under the rules, Employee’ counsel filed an Excess Fee Exhibit in support of his request. The Exhibit documented total hourly time spent by his office of $9,972.50 to represent the employee.
The Compensation Judge awarded a partial Award when approving the Stipulation. As to the $4,000 in excess fee request, parties were ordered to escrow this total pending a hearing on whether excess fees were appropriate.
At hearing, the Judge applied the Irwin factors [these include the amount at issue; time/expense needed to prepare for trial; responsibility assumed by counsel; experience of counsel; difficulty of the issues; proof involved; and results obtained] to consider the entire settlement amount. It was noted that there was only one pleading filed by this employee’s attorney (a Notice of Appearance) and little discovery occurred (no IME, no depositions needed). Ultimately the Judge felt that the $26,000 recoverable as contingency fees by statute adequately compensated the employee attorney’s time on this matter. Excess fees were denied.
THE APPEAL
On appeal, it was argued: (1) the Judge did not have jurisdiction to override the parties’ stipulation to “reasonable” attorney fees; and (2) even if found to have authority, the Judge abused her discretion denying excess fees. The W.C.C.A. rejected both of employee’s attorney argument. In doing so, the W.C.C.A. noted rules and case law which require a review by a compensation judge of any claim for excess fees. It was also noted that excess fees are appropriate under statue only when the contingent fees as allowed by statute (here $26,000), are inadequate compensation for the work expended. The W.C.C.A. found no abuse of discretion by the compensation Judge in this claim, as the correct standards were applied to deem $26,000 an appropriate recovery for the work needed to achieve resolution.
THE TAKEAWAY
Excess fee awards are very fact specific decisions. If the compensation judge hearing the matter deems an attorney should recovery more than the contingency fee agreement (or statutory cap) allows, excess fees will be awarded. However, this ruling does allow hope that when an employee’s attorney recovers a large settlement with limited work expended (here, basically filing one pleading and negotiating a settlement), not all judges will automatically grant an excess fee request simply because the statutory cap on contingent attorney fee recovery was reached. Depending on the facts and the judge hearing a case, this decision may have a cooling effect on some of the requests for excess fees, or at provide Employer-Insurers a little more support for arguing against some excess fees requests.
A link to the Jurgensen case: https://mn.gov/workcomp-stat/2024/Jurgensen%20-%2003.05.24.html
And a final note: we are aware of legislative proposals currently pending which, if passed, would increase the amount employee attorneys can recover in workers compensation matters. We will of course keep you updated if those changes take place.
