By law, all fees for workers’ compensation cases must be approved by the Industrial Commission. It is illegal and unethical for a lawyer to take a fee outside of the Commission’s approval. A lawyer can ask for whatever he wants – but the Industrial Commission approves fees of 25%. It is extremely rare for the Industrial Commission to approve a fee request higher than that. We’ve never seen an instance that the Industrial Commission approved a 33% fee request for an attorney going to a hearing.
This brings us to a delicate topic. We know that some attorneys have Fee Agreements that says that their fee is 25% if the case settles at mediation or before a hearing but that the fee will be 33% if the case goes to a hearing. We have never seen the Industrial Commission approve such a request.
Why would an attorney put that into a fee contract? We cannot state what goes through other attorneys’ minds so we cannot answer the question. But consider this situation: an injured worker has a mediation and the defense offers $30,000.00. If you took the settlement your attorney would get $7,500.00 and you would get $22,500.00. Mediations are relatively easy but hearings are a lot of work for an attorney. We actually like hearings because they are a challenge. And our firm goes to hearing a lot more frequently than many of our competitors do. But hearings are clearly a lot of work. If the attorney wants to avoid going to a hearing he can pull out the fee contract and tell you that if he goes to a hearing and gets the same result as at the mediation you will pay a $10,000.00 fee and only get $20,000.00. Thus a Fee Agreement that calls for a higher fee if the case goes to a hearing could easily be used to pressure a client into a lower settlement that allows the attorney to avoid a hearing. What makes us a little uneasy about this is that while the client doesn’t know any different the attorney likely knows that it is extremely unlikely that the higher fee would be approved by the Industrial Commission. As such we question whether it is appropriate to even put it in a Fee Agreement particularly when it could be, or appear to be, misused.
We want to hasten to point out that this is true for worker’s compensation claims only. It is very common in personal injury and medical malpractice claims to have two levels of a fee. And we certainly agree that a hearing is a lot of work. But we’ve seen more instances of this type of Fee Agreement being used to browbeat a client than we’ve ever seen of it being used to help a client.
While the Industrial Commission generally approves a fee of 25% there are a number of circumstances in which we ask for less than that amount.