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State high court says comp attorney fee schedule unconstitutional

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The Utah Supreme Court has invalidated the state's attorney fee schedule just three weeks after Florida's attorney fee provision was deemed unconstitutional by that state's Supreme Court.

The Injured Workers Association of Utah and several of its member attorneys had brought a suit against the state arguing that the Utah Labor Commission's long-established attorney fee schedule is unconstitutional since the Utah Supreme Court has the exclusive authority to regulate attorney fees, court records show.

The state Supreme Court on Wednesday ruled unanimously in favor of the association, stating that “under the separation-of-powers doctrine” the court can't “delegate the regulation of attorney fees to the legislature or the commission.”

This came after a judge for Utah's 5th District Court in St. George granted summary judgment in favor of the state.

Meanwhile, the Florida Supreme Court on April 28 ruled 5-2 in Marvin Castellanos v. Next Door Co. et al. that Florida's attorney fee schedule violates due process under state and federal law.

Lawyers for Mr. Castellanos, who suffered cuts on his head, neck and right shoulder during a 2009 altercation with a co-worker at the Miami company, successfully secured workers comp benefits, but received only $1.53 per hour for 107.2 hours of legal work, according to court records.

In Utah, attorneys representing injured workers also receive their fees out of the compensation awarded to the worker, records show.

According to records, Utah's sliding-scale fee schedule has been adjusted several times for inflation. It currently grants successful attorneys 25% for the first $25,000 of the award, 20% for the next $25,000, and 10% for amounts higher than $50,000.

The labor commission added a fee cap in 1991. It's currently $18,590 for “all legal services rendered through final commission action,” records show.

In its ruling, the Utah Supreme Court declined to adopt a new fee schedule for regulating the fees of injured workers' attorneys at this time.

“We are persuaded at this time that the absence of a fee schedule will allow injured workers the flexibility to negotiate appropriate fees with their attorneys,” the ruling states.

The court suggests that attorneys and injured workers negotiate a small fee, “perhaps even less than that mandated by the current fee schedule,” for simple cases. For complex cases, the court says the parties can decide on an “appropriate fee that will not cause the lawyer to lose money by taking on the case and will still give the injured worker the representation needed to receive an adequate award.”

The ruling notes that “fears about unscrupulous attorneys preying upon unsophisticated injured workers are exaggerated, as attorneys are still constrained by rules of professional conduct.”

Associate Chief Justice Thomas Rex Lee concurred in part, writing that “the question of whether to adopt such a fee schedule is not properly presented for our consideration … there is little or no evidence in the record to support the court's conclusions regarding the policy pros and cons of such a schedule.”