Opinion
CASE NO. 68-CRD-1-81
JULY 13, 1982
The claimant-appellant was represented by Jerome J. Sanchy, Esq.
The respondents-appellees were represented by Douglas Drayton, Esq.
This Petition for Review from the April 7, 1981 Decision of the Commissioner for the First District was argued December 1, 1981 before a Compensation Review Division panel consisting of Commissioners John Arcudi, Robin Waller and Gerald Kolinsky.
FINDING AND AWARD
The Finding and Award of the Commissioner for the First District is affirmed and adopted as the Finding and Award of the Compensation Review Division.
OPINION
Claimant's decedent sustained a compensable right inguinal hernia January 19, 1979 arising out and during the course of his employment with Allied Grocers Cooperative, Inc. in Windsor. The employer and its insurer accepted the compensability of the January 19, 1979 occurrence.
The deceased continued to work after the January 19, 1979 injury until January 29, 1979 when he became totally incapacitated. On February 2, 1979, corrective surgery for the hernia was performed at Charlotte Hungerford Hospital in Torrington. Medical complications from the surgery caused decedent's death March 30, 1979.
Respondents initially contested claimant widow's claim that the death had occurred in an unbroken chain of causation arising from, the original January 19, 1979 compensable injury. But they withdrew their contest at a hearing before the First District Commissioner November 7, 1980.
The claimant requested that respondents be ordered to pay an attorney's fee due to unreasonable contest as provided in Sec. 31-300, C.G.S. The claimant had agreed that the attorney's remuneration would be a 25% contingency fee of any lump sum settlement or reasonable commutation of a final award. After the award was rendered the claimant and her attorney had agreed that the fee would be $20,000 and requested the Commissioner's approval of said fee under Sec. 31-319, C.G.S.
The Commissioner found the attorney had appeared at least six times at the First District Office for hearings and conferences regarding the matter. He further found that the attorney had expended at least 51.5 hours of work on the case. The Commissioner then ruled that a percentage fee in the instant case was not acceptable to him and allowed an attorney's fee of $9,500.00.
This fee was set pursuant to the Commissioner's authority under Sec. 31-319. The Commissioner did not find the contest to be unreasonable and therefore did not award an attorney's fee under 31-300 to be paid by respondents. The Reasons of Appeal, 3 and 4, therefore presented the basic issues on which appellant originally relied when the Petition for Review was filed:
3. The Commissioner's denial of claimant's claim for attorney's fees.
4. The Commissioner's refusal to approve claimant's attorney's fees in the amount of $20,000.00.
But before the matter was heard, the attorney for the claimant withdrew any claim for a fee in excess of the $9,500.00 awarded by the Commissioner unless the review panel ruled that the respondents had unreasonably contested the matter and were therefore ordered to pay a fee under Sec. 31-300. In this way counsel avoided an apparent conflict of interest between himself and his client.
Appellant's main 31-300 arguments are as follows:
(1) The report of the post mortem examination of decedent's remains was available to all parties by the end of December, 1979; (2) At an informal hearing of March 18, 1980 the opinion of claimant's medical expert, based on the autopsy results and other available records and reports was communicated to respondents' counsel, and that opinion clearly established the causal connection between decedent's death and the hernia surgery; (3) Claimant's medical expert testified in person at a formal hearing of April 30, 1980 at which time he orally declared his expert opinion of the causal connection between the surgery and the death; (4) Despite the fact that the April 30 hearing was continued to September 3, 1980 in order to permit opposing counsel to cross-examine claimant's medical expert and present respondents' case in chief, in fact, respondents' counsel only completed cross-examination on September 3 and did not present a case in chief but asked for a further continuance, granted despite claimant's objection; (5) When the continued hearing was held November 7, 1980, respondents presented no evidence but accepted liability instead.
In his brief appellant's counsel cites Balkus vs. Terry Steam Turbine Co., 167 Conn. 170, 179 (1974). The Supreme Court in Balkus affirmed the Commissioner's holding that there was no unreasonable contest. But counsel argues that this affirmance rested on the fact that there was present some conflicting evidence which presented an issue of fact. This interpretation does not seem warranted by justice Bogdanski's language:
". . . . Although the lack of supporting medical opinion was certainly an element to be weighed in deciding whether the contest of liability was unreasonable, we cannot say it should have concluded the issue."
Balkus vs. Terry Steam Turbine Co., supra, 179.
On the contrary, Balkus is consistent with the Commissioner's conclusion here.
This becomes more apparent when we compare the time lags involved in Balkus and the instant matter. The Balkus injury was May 12, 1968 with complications May 21, surgery in December, and return to work July 15, 1969. The Commissioner's award was issued April 20, 1971, some thirty-five months after the injury. In the instant matter the time lag is nineteen months between date of death and acceptance of liability by respondents.
We are aware that the 31-300 language declares that an undue time lag is the trigger for an interest award while unreasonable contest for an award of attorney's fees, but the statutory language does not exclude consideration of undue delay in evaluating reasonableness of contest. In fact, appellant's argument relies on the time delay after the autopsy results were communicated in December, 1979 as one of the indicia of unreasonableness
Appellant also relied on a Pennsylvania decision, R. M. Friction Materials Co. vs. Workmen's Compensation Appeals Board, 415 A.2d 965. That case held that the failure of the employer to produce any conflicting medical evidence in and of itself constituted unreasonable contest. The Pennsylvania statute provides for award of attorney's fees, but such award "may be excluded when a reasonable basis for the contest has been established." Thus Pennsylvania shifts the burden of proof to the employer to show reasonableness whereas Connecticut places the burden on the claimant to show unreasonableness. But forgetting arguendo that the two statutes are not identical, this hardly seems a precedent Connecticut should follow. To do so would only result eventually in prolonging proceedings. Respondents would be tempted never to concede the validity of a worker's claims unless they first presented a conflicting medical opinion in order to avoid the award of attorney's fees.
Moreover when we consider the facts and the record, although it is not for us to substitute our judgment for that of the Commissioner, it hardly seems unreasonable for the respondent employer initially to contest the assertion that decedent's death was causally related to the right inguinal hernia injury. Counsel seems to concede as much when he argues that the persistence of the denial after the December, 1979 autopsy report was the unreasonable contest that should have been found by the Commissioner.
Having thus examined the entire record and fully considered appellant's argument, we cannot conclude that the Commissioner erred in failing to rule that respondents' contest was unreasonable. Our holding on this issue is dispositive of the entire matter given counsel's commendable concession to avoid any appearance of conflict of interest. However, the subject of what are reasonable fees in Workers' Compensation matters remains one of pressing concern for practitioners and therefore merits some comment.
Disciplinary Rule 2-106 of the Code of Professional Responsibility, Connecticut Practice Book Sets out the guidelines:
"(A) A lawyer shall not enter into an agreement for, charge, or collect an illegal or clearly excessive fee.
(B) A fee is clearly excessive when, after a review of the facts, a lawyer of ordinary prudence would be left with a definite and firm conviction that the fee is in excess of a reasonable fee. Factors to be considered as guides in determining the reasonableness of a fee include the following:
(1) The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly.
(2) The likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer.
(3) The fee customarily charged in the locality for similar legal services.
(4) The amount involved and the results obtained.
(5) The time limitations imposed by the client or by the circumstances.
(6) The nature and length of the professional relationship with the client.
(7) The experience, reputation, and ability of the lawyer or lawyers performing the service.
(8) Whether the fee is fixed or contingent."
Ethical Considerations 2-20 of that code speaks to contingent fees:
"Contingent fee arrangements in civil cases have long been commonly accepted in the United States in proceedings to enforce claims. The historical bases of their acceptance are that (1) they often, and in a variety of circumstances, provide the only practical means by which one having a claim against another can economically afford, finance, and obtain the services of a competent lawyer to prosecute his claim, and (2) a successful prosecution of the claim produces a res out of which the fee can be paid. Although a lawyer generally should decline to accept employment on a contingent fee basis by one who is able to pay a reasonable fixed fee, it is not necessarily improper for a lawyer, where justified by the particular circumstances of a case, to enter into a contingent fee contract in a civil case with any client who, after being fully informed of all relevant factors, desires that arrangement. Because of the human relationships involved and the unique character of the proceedings, contingent fee arrangements in domestic relations cases are rarely justified. In administrative agency proceedings contingent fee contracts should be governed by the same considerations as in other civil cases. Public policy properly condemns contingent fee arrangements in criminal cases, largely on the ground that legal services in criminal cases do not produce a res with which to pay the fee."
Ethical Consideration 2-18 lists some criteria of reasonableness:
"The determination of the reasonableness of a fee requires consideration of all relevant circumstances, including those stated in the Disciplinary Rules. The fees of a lawyer will vary according to many factors, including the time required, his experience, ability, and reputation, the nature of the employment, the responsibility involved, and the results obtained. It is a commendable and long-standing tradition of the bar that special consideration is given in the fixing of any fee for services rendered a brother lawyer or a member of his immediate family."
Both the Disciplinary Rules and the Ethical Considerations cited derive from Canon 2 of the Canons of Ethics:
"A lawyer should assist the legal profession in fulfilling its duty to make legal counsel available."
As Second District Commissioner William C. Fox pointed out in an unreported decision, the role of the attorney in the compensation system as originally conceived was intended to be a limited one. The administrative law remedy created an adjudicatory entity in the executive rather than in the judiciary. "Its procedure contemplates a speedy investigation and hearing by a Commissioner without the formalities of a court and without, as a general rule, the employment of an attorney." Powers vs. Hotel Bond, 89 Conn. 143, 147 (1915).
After some seven decades of the law's history, it remains true that in the vast majority of compensation cases no attorney is required. In those cases it is the duty of the ethical practitioner so to advise a prospective client. But if a client insists on representation in such a case, then the attorney is certainly entitled to be paid a reasonable amount for the time spent. That is not the type of case where a contingent fee would seem appropriate.
Commissioner Fox cited a type of case where a contingent fee might be appropriate:
"Not infrequently, a claimant is offered, or is quite sure of a certain sum of money as specific compensation but, in an effort to secure a larger sum, retains counsel. In those cases where the efforts of the attorney result in a greater sum being paid, the fee must normally be based on the larger net payment to the claimant, not the total sum. Except in the most unusual case, it would seem the claimant should profit rather than lose because of the employment of a lawyer."
In the instant case, the Commissioner failed to approve a contingent fee arrangement. Instead he granted a $9,500.00 fee for 51.5 hours of work. This amounted to an hourly rate of more than $184.00. This was certainly a reasonable exercise of discretion under Sec. 31-319. That is not to say that all contingent fees are forbidden in compensation matters. On the contrary, the Canons of Ethics, the Ethical Considerations and the Disciplinary Rules make clear that the contingent fee arrangement may be the only way in which a worker without funds will be able to obtain proper representation. Note 8 of the Balkus decision makes this clear, Balkus vs. Terry Steam Turbine Co., supra, 179-180.
We are aware that in this state an understanding prevails that the attorney's fee in compensation cases should be 20%. That by itself is not a bad criterion in cases where contingent fees are permissible. But The question is 20% of what? If respondents initially deny the claim and the worker retains counsel who succeeds in getting weekly temporary total payments to commence, does that entitle counsel to be paid 20% of each weekly check? We think definitely not.
The more usual case is that referred to by Commissioner Fox above. If there is a dispute between the claimant and the insurer and the insurer offers to pay claimant a specific for 10% of the back, 52 weeks at $250.00 per week or $13,000.00, and a lawyer is retained who succeeds in getting the insurer to pay a 15% specific or $19,500.00 over 78 weeks, does that entitle the lawyer to receive a $3,900.00 fee? We think not.
Again we cite Commissioner Fox:
"In all cases the percentage rule is a check, fixing a maximum rather than a minimum fee. Use of a percentage rule must not be confused with the scale of percentages frequently and quite properly used by the bar in a contingent fee contract covering a common law negligence case. It is necessary to keep in mind that in compensation cases there is no writ, summons and complaint, no pleadings or short calendar preliminaries, no long delays in trial, rarely is liability seriously in dispute, the rules of evidence are no problem, the adversary's records and reports are readily accessible, there is no element of damage for pain and suffering over and above special damages,. . . . ."
Obviously times have changed since 1915 when Justice Wheeler wrote Powers vs. Hotel Bond. They have even changed from the early 60's when Commissioner Fox wrote, and the maximum compensation rate was $52.00. Now the maximum is $310.00 per week, and the annual total of workers' compensation benefits paid in Connecticut approaches two hundred million dollars. Settlements in excess of one hundred thousand dollars, though rare, are not unheard of. Especially, because the sums involved are much larger and because, probably as a consequence, more claimants are retaining attorneys, the exercise of the Commissioner's power under Sec. 31-319 to set fees has become more important. Whenever, there is even a hint of dissatisfaction between claimant and counsel over the fee arrangement practitioners should seek the advice of the Commissioner and ask that the power granted in 31-319 be exercised.