Donald D. David v. Bartel Enterprises (Nitro Green), Relator, and SFM Mutual Insurance Company, Relator. , 856 N.W.2d 271 ( 2014 )

STATE OF MINNESOTA
IN SUPREME COURT
A13-2141
Workers’ Compensation Court of Appeals Anderson, J.
Dissenting, Stras, J.
Donald D. David,
Respondent,
vs. Filed: November 26, 2014
Office of Appellate Courts
Bartel Enterprises (Nitro Green),
Relator,
and
SFM Mutual Insurance Company,
Relator.
________________________
Scott H. Soderberg, David R. Vail, Soderberg Law Firm LLC, Minneapolis, Minnesota,
for respondent.
Andrew W. Lynn, Lynn, Scharfenberg & Hollick, Minneapolis, Minnesota, for relators.
________________________
SYLLABUS
As a matter of comity, we recognize the Legislature’s formulation of attorney fees
for workers’ compensation cases under Minn. Stat. § 176.081, subd. 1(a) (2012), as
presumptively reasonable, and will not, absent exceptional circumstances, review
whether the fee calculated using the statutory formula is excessive.
Affirmed.
1
OPINION
ANDERSON, Justice.
The issue presented by this case is whether Minn. Stat. § 176.081, subd. 1(a)
(2012),1 violates the separation of powers by requiring employers and insurers to pay
attorney fees calculated by a statutory formula not subject to judicial review. Although
we held in Irwin v. Surdyk’s Liquor, 599 N.W.2d 132, 134 (Minn. 1999), that a statutory
maximum on an attorney-fee award violated the separation of powers because there was
no final judicial review of that award, we have not considered whether an attorney-fee
award less than the statutory maximum must also be subject to judicial review. Relators
Bartel Enterprises and SFM Mutual Insurance Company contend that in the absence of
judicial review to ensure a fee award is not excessive, the statutory formula violates the
separation of powers and is unconstitutional. We conclude that, as a matter of comity, we
will recognize the Legislature’s statutory formula as presumptively reasonable, and that
absent exceptional circumstances, further judicial review of a presumptively reasonable,
correctly calculated attorney-fee award is unnecessary. Because Bartel and SFM did not
identify any exceptional circumstances that would overcome this strong presumption in
1
After the events in this case, the Legislature amended section 176.081 to simplify
the statutory formula, raise the maximum fee, and limit when employers must reimburse
employees for their attorney fees, among other things. See Act of May 16, 2013, ch. 70,
art. 2, §§ 3-4, 2013 Minn. Laws 362, 369-71. Because the provisions of the workers’
compensation law in effect on the date of injury control the rights and obligations of the
parties, however, we apply the pre-amendment version of the statute. See Sherman v.
Whirlpool Corp., 386 N.W.2d 221, 225 (Minn. 1986).
2
favor of concluding the fee award is reasonable, and there is no dispute that the fee was
calculated correctly using the statutory formula, we affirm.
Respondent Donald David injured his back while working for Bartel Enterprises.
David incurred medical expenses for surgery, other treatment, and hospitalization. Bartel
and its insurer, SFM Mutual Insurance Company, initially disputed liability under the
Workers’ Compensation Act, Minn. Stat. ch. 176 (2012), but, after negotiating with
David’s health-care providers, eventually agreed to pay $233,054.50 to settle all of
David’s medical bills.
For his work in representing David over the course of the dispute, David’s
attorney sought an award of contingent attorney fees in the amount of $36,810.90,
pursuant to Roraff v. State, 288 N.W.2d 15 (Minn. 1980), and Minn. Stat. § 176.081. The
claimed fee was calculated by applying the statutory formula in section 176.081 to the
dollar value of David’s medical benefits and disregarding the upper limit set by the
statutory formula.2 Bartel and SFM objected, arguing in part that the claimed fee
exceeded the statutory limit. See Minn. Stat. § 176.081, subd. 1(b) (“[F]ees . . . may not
exceed $13,000.”). Bartel and SFM also asserted that a mechanical application of the
statutory formula—without judicial review to determine whether the resulting fee award
was excessive—unconstitutionally intrudes upon judicial authority over attorneys and
attorney fees and therefore violates separation-of-powers principles.
2
David’s counsel later recognized that he had made an arithmetic error and the
correct amount of his fee request should have been $46,810.90 instead of $36,810.90.
3
The compensation judge concluded that $13,000, the fee calculated by applying
the statutory formula, would adequately compensate David’s attorney for his work and
that a fee award above the statutory limit was unwarranted. Relying on decisions of the
Workers’ Compensation Court of Appeals (WCCA), the compensation judge refused to
consider whether the statutory fee was reasonable in light of the factors identified in
Irwin for an award exceeding the statutory limit. See Irwin, 599 N.W.2d at 142.
Bartel and SFM appealed to the WCCA, arguing that the fee award was
unreasonable and again asserting a constitutional challenge based on Irwin, 599 N.W.2d
132. The WCCA acknowledged that it lacked the jurisdiction to address the
constitutional challenge. David v. Bartel Enters. (Nitro Green), No. WC13-5567, 2013
WL 5911429, at *4 (Minn. WCCA Oct. 23, 2013) (citing Irwin, 599 N.W.2d at 139-40);
see Minn. Stat. § 175A.01, subd. 5 (2012). The WCCA then concluded, “Irwin did not
invalidate application of the [statutory] formula to attorney fees amounting to the
statutory maximum or less,” and therefore affirmed the compensation judge’s fee award
decision. David, 2013 WL 5911429, at *4. Bartel and SFM sought review by writ of
certiorari.
I.
The constitutional interpretation of a statute presents a question of law, which we
review de novo. E.g., Gluba ex rel. Gluba v. Bitzan & Ohren Masonry, 735 N.W.2d 713,
719 (Minn. 2007). We apply the plain meaning of unambiguous statutes, e.g., Larson v.
State, 790 N.W.2d 700, 703 (Minn. 2010); see also Minn. Stat. § 645.16 (2012), and
4
declare statutes unconstitutional “only when absolutely necessary,” Gluba, 735 N.W.2d
at 719; see also Minn. Stat. § 645.17 (2012).
To put the dispute in its proper context, we begin with an overview of the workers’
compensation statutory attorney fee provisions that govern this case. Minnesota Statutes
§ 176.081 governs the fees that attorneys may receive in contested workers’
compensation cases. It provides a formula to use in calculating “[a]ll fees” for attorneys
representing employees. Id., subd. 1(a). The formula generates a fee equal to 25 percent
of the first $4,000 in compensation benefits recovered by the employee plus 20 percent of
the next $60,000 in benefits recovered. Id. Typically, the fee award is withheld from the
periodic payments the employee receives, see Minn. Stat. § 176.081, subd. 1(c)
(providing for making the fee a lien against the amount payable to the employee),
although, as here, the employer may be liable for the fee. See id., subd. 1(a)(1) (“In cases
where the contingent fee is inadequate the employer or insurer is liable for attorney fees
based on the formula . . . .” (emphasis added)); id., subd. 7 (requiring the employer or
insurer to reimburse the employee for a portion of the fee).
We have recognized that the legislative policies underlying the statutory fee
formula include “(1) protecting compensation claimants from excessive legal fees which
might otherwise severely deplete funds badly needed by the employee and his or her
dependents; and (2) insuring that attorneys who represent claimants will receive
reasonable compensation, so that competent counsel will be available to injured
employees.” Mack v. City of Minneapolis, 333 N.W.2d 744, 749 (Minn. 1983) (citing
Kahn v. Univ. of Minn., 327 N.W.2d 21, 24 (Minn. 1982)); see also Sarja v. Pittsburgh
5
Steel Co., 154 Minn. 217, 219, 191 N.W. 742 (1923) (“[F]or the purpose of securing to
those intended to be protected or aided by the [Workers’ Compensation] act the full
benefits thereof, [a fee provision] was enacted.”). But, section 176.081 uses mandatory
language that does not contemplate adjustments to the fee amount generated by the
statutory formula. See Minn. Stat. § 176.081, subd. 1(a) (providing that a fee calculated
by applying the formula to an employee’s monetary compensation “is the maximum
permissible fee and does not require approval by the commissioner, compensation judge,
or any other party” (emphasis added)).
In Irwin v. Surdyk’s Liquor, we held that Minn. Stat. § 176.081 was
unconstitutional as a violation of the “doctrine of separation of powers . . . to the extent it
impinges on [the judiciary’s] inherent power to oversee attorneys and attorney fees and
deprives us of a final, independent review of attorney fees.” 599 N.W.2d 132, 142
(Minn. 1999). We noted in particular that because “the judiciary retains final control
over attorneys,” id. at 140, legislation that regulates attorney fees must allow for judicial
review, see id. at 141-42 (“Legislation that prohibits this court from deviating from the
precise statutory amount of awardable attorney fees impinges on the judiciary’s inherent
power to oversee attorneys and attorney fees by depriving this court of a final,
independent review of attorney fees.”). Thus, while we did “not take issue with the
actual percentage or dollar limitations adopted by” the Legislature, we required judicial
review for the “legislative guidelines to be constitutionally permissible.” Id. at 141. To
the extent that Minn. Stat. § 176.081 “impinges on our inherent power to oversee
6
attorneys and attorney fees and deprives us of a final, independent review of attorney
fees,” we held the statute unconstitutional. Irwin, 599 N.W.2d at 142.
Bartel and SFM now argue that Irwin’s reasoning compels a similar conclusion
here—that the statute is unconstitutional to the extent it precludes judicial review of
whether fee awards under the formula are excessive. We agree that the central point of
Irwin—the judiciary’s final control over attorneys—applies regardless of whether a
statutory formula establishes a ceiling or a floor for a fee award. See id. at 140. Though
we acknowledged in Irwin that the “portions of section 176.081 that do not violate the
doctrine of separation of powers remain valid,” we ultimately concluded that a statute
that precludes the judiciary from reviewing an award of attorney fees violates the
separation of powers doctrine. Id. at 142.
II.
While we reaffirm the holding in Irwin today, we conclude that it is unnecessary
to decide the extent to which Irwin applies to a presumptively reasonable fee award,
calculated according to statute, that is alleged to be excessive. As we have done on other
occasions when the Legislature has encroached on a judicial function in violation of the
separation of powers, we choose to recognize the legislative formula in Minn. Stat.
§ 176.081 as a matter of comity. See, e.g., State v. McCoy, 682 N.W.2d 153, 160 (Minn.
2004) (choosing to “exercise our supervisory power over Minnesota courts by adopting a
reasonable statute,” even though that statute conflicted with an earlier court rule
regarding the admission of evidence); Cowern v. Nelson, 207 Minn. 642, 647, 290 N.W.
795, 797 (1940) (accepting, by comity, a law authorizing non-lawyers to act as real estate
7
brokers, even though such actions could be construed as the unauthorized practice of
law). We acknowledge that “[d]ue respect for the co-equal branches of government
commands us to exercise great restraint before striking down a statute as
unconstitutional.” McCoy, 682 N.W.2d at 160 (citation omitted) (internal quotation
marks omitted). Restraint is particularly appropriate in a workers’ compensation matter,
which is “solely a creature of statute” based on “policy decisions” that “are properly for
the Legislature.” Meils by Meils v. Nw. Bell Tel. Co., 355 N.W.2d 710, 713 (Minn.
1984); see also Maxwell Commc’ns v. Webb Publ’g Co., 518 N.W.2d 830, 834 (Minn.
1994) (Coyne, J., concurring specially) (noting that the workers’ compensation system is
“a creature of statute without counterpart in the common law”).
We therefore return to the policies underlying section 176.081. In order to provide
quick and efficient delivery of benefits to injured workers at a reasonable cost to
employers, the Legislature created a system of workers’ compensation that, while
offering numerous benefits to all parties, also requires a mutual renunciation of rights and
remedies that were available to employers and employees at common law. Minn. Stat.
§ 176.001; see also Boryca v. Marvin Lumber & Cedar, 487 N.W.2d 876, 879 n.3 (Minn.
1992) (“The whole scheme of workers’ compensation is one of reciprocal concessions by
the employer and employee.”). The Legislature also sought to balance the interests of the
injured employee and retained counsel by “protecting compensation claimants from
excessive legal charges and at the same time . . . ensuring that their counsel receive
reasonable fees for their services” through regulation of attorney fees. In re Award of
8
Attorney’s Fees (Rock v. Bloomington Sch. Dist. #271), 269 N.W.2d 360, 363 (Minn.
1978).
The formula for calculating workers’ compensation attorney fees designed by the
Legislature in Minn. Stat. § 176.081 is based on the contingent-fee model, which has a
long tradition in workers’ compensation cases. Stewart Jay, The Dilemmas of Attorney
Contingent Fees, 2 Geo. J. Legal Ethics 813, 815 (1989) (“Contingent fees became
prevalent in an era of escalating industrial and transportation accidents, whose victims
frequently could not afford lawyers to obtain redress for their injuries.”); see also
Krueger v. State Dep’t of Highways, 295 Minn. 514, 516, 202 N.W.2d 873, 875 (1972)
(upholding findings that employee and attorney entered into contingent-fee agreement
and a fee in accordance with that agreement was reasonable). We have previously
explained:
Contracts for contingent fees are as much for the benefit of the client as for
the attorney, because if the client has a meritorious cause of action, but no
means with which to pay for legal services unless he can, with the sanction
of the law, make a contract for a contingent fee to be paid out of the
proceeds of the litigation, he cannot obtain the services of a law-abiding
attorney . . . .
Hollister v. Ulvi, 199 Minn. 269, 276-77, 271 N.W. 493, 497 (1937) (quoting 2 R.C.L.
§ 121). Similarly, we have acknowledged that the Legislature’s contingent-fee structure
in section 176.081 is not unreasonable. Mack, 333 N.W.2d at 751 (“[T]he legislature
could reasonably believe that 20-25% is a fair contingent fee for handling compensation
matters of moderate size.”).
9
While in a particular case the Legislature’s formula may result in a higher fee than
the attorney might receive if paid by the hour or under a different formula, see Krueger,
295 Minn. at 516-17, 202 N.W.2d at 876 (concluding that a 33 percent contingent fee
was not unreasonable, even though “the time and effort devoted to the settlement of
respondent’s claim may not have been extensive or difficult”), this feature is always an
element of the risk-spreading inherent in contingent fee formulas. See Lester Brickman,
Effective Hourly Rates of Contingency-Fee Lawyers: Competing Data and Non-
Competitive Fees, 81 Wash. U. L.Q. 653, 655-56 (2003) (“Contingency fees are designed
to—and do—yield higher effective hourly rates than do hourly rate fees to reflect the
risks that lawyers bear.”); Katherine M. Mongoven, Impact of Contingency Fee
Agreements on “Reasonable” Attorney Fees Awarded Pursuant to Wisconsin Fee-
Shifting Statutes, 88 Marq. L. Rev. 1013, 1023-24 (2005) (arguing that because of the
risk of no compensation in some cases, attorneys must be allowed to “recover fees in the
amount of their contingent fee—no more or no less—despite that the fee may seem
‘unreasonable’ for the amount of work they performed in a particular case”). We are
“reluctant to set the exact amount of attorneys fees . . . in any compensation case, . . .
because in our view it is impossible to say that only one figure represents a proper
award.” In re Award of Attorney’s Fees, 269 N.W.2d at 362. To promote its objective of
ensuring the “quick and efficient delivery” of benefits to injured workers at a reasonable
cost, Minn. Stat. § 176.001, the Legislature reasonably adopted a formula for calculating
fee awards that mimics the risk-spreading features of contingent-fee retainer agreements.
10
To be sure, the contingent-fee award in some workers’ compensation cases is paid
by the employer, rather than under a contract between the employee and the employee’s
attorney. See Minn. Stat. § 176.081, subd. 1(a)(1). But this feature reflects a legislative
policy choice that we have previously upheld. Kahn, 327 N.W.2d at 24 (“[T]he statute is
designed to protect [employees] from excessive legal charges which might otherwise
severely deplete funds badly needed by the employee . . . .”).
Conducting a case-by-case determination of attorney fees, as urged by the relators,
neglects this legislative policy, would disrupt the risk-spreading and incentive features of
the current fee-formula structure, and would undermine other legislative objectives. See,
e.g., Kahn, 327 N.W.2d at 24 (statutory authority for attorney fees furthers “the public
policy of this state that injured employees have access to representation by competent
counsel knowledgeable of the intricacies of the workers’ compensation law”). It is also
worth noting that the public policy choice made by the Legislature to permit contingent
fees reflects the reality that there are any number of ways attorney fees could be
calculated (including, but not limited to, contingent fees, flat fees, hourly fees, and
various combinations of types of awards), and the implicit assumption by Bartel and SFM
that an hourly based fee is superior is just that—an assumption. This assumption, at least
for baseline attorney fee calculations in workers’ compensation matters, is not one that is
shared by the Legislature.
The dissent would have us intervene here, as we did in Irwin. We apply comity on
an as-needed basis and it does not follow that merely because we deployed constitutional
principles in Irwin we must necessarily apply them here. That said, there are differences
11
between the circumstances here and those in Irwin. We explained in Irwin that we “do
not take issue with the actual percentage or dollar limitations adopted by the legislature in
Minn. Stat. § 176.081.” 599 N.W.2d at 141. Instead, we challenged the Legislature’s
“prohibit[ion on] any deviation from the statutory maximum.” Id. Unlike the fee-
formula structure at issue here, the statutory maximum is a stark departure from the
contingent-fee framework that the Legislature adopted. Because this case does not
invoke the statutory maximum, we need not employ Irwin’s reasoning.
III.
Thus, we elect to recognize as a matter of comity the legislative determination that
a fee calculated according to the statutory formula is not excessive. We therefore will not
review the reasonableness of a correctly calculated fee to determine whether it is
excessive, absent exceptional circumstances. We have previously said that contingent
fees are condemned “only where an attorney has taken advantage of a client’s
circumstances to exact an unreasonable or unconscionable proportion of the client’s
claim.” Holt v. Swenson, 252 Minn. 510, 514, 90 N.W.2d 724, 727-28 (1958). On the
other hand, we have recognized that a fee is reasonable even though the “time and effort
devoted to the . . . claim may not have been extensive or difficult, [if] . . . services were in
fact performed and . . . such services materially contributed to a most favorable result on
the client’s behalf.” Krueger, 295 Minn. at 516-17, 202 N.W.2d at 876. We see no
reason to conclude that a fee award calculated consistently with the statutory formula
requires judicial review to ensure it is not excessive when the Legislature has already
established a reasonable and fair balance between the interests of employer and employee
12
in achieving a speedy, efficient, and inexpensive resolution of a dispute. Absent
exceptional circumstances, we presume a correctly calculated fee that does not exceed the
statutory limit is reasonable.3
Bartel and SFM have not presented any exceptional circumstances here. Bartel
and SFM’s primary evidence that the fee is excessive is that it equates to an hourly rate of
$1,000 as compared to the attorney’s normal hourly billing rate of $300.4 But the central
feature of a contingent fee is the possibility of an award that exceeds the value of fees on
an hourly basis. In other words, it “would make no economic sense for the attorney to
accept a contingent case unless the effective hourly rate for work would exceed by some
amount that which otherwise could be earned from noncontingent sources.” Jay, supra,
at 837. Thus, the mere fact that the contingent fee, when translated to an hourly rate, is
higher than an attorney’s billing rate in a noncontingent case, does not overcome the
presumption that the statutory formula generates a fee that is not excessive.
3
We note that an “exceptional circumstances” standard for review of alleged
excessive fees is consistent with standards previously adopted by the Legislature, see
Minn. Stat. § 176.081, subd. 4 (1984) (providing for review of fee award “upon the
ground that it is arbitrary and unwarranted by the evidence”), repealed, Act of May 22,
1985, ch. 234, § 22, 1985 Minn. Laws 739, 755, and with the ethical standards that
govern licensed lawyers, see In re Dvorak, 554 N.W.2d 399, 403 (Minn. 1996)
(concluding that a fee that is in excess of that authorized by statute or court order is
unreasonable); In re Simmonds, 415 N.W.2d 673, 675-76 (Minn. 1987) (detailing
“exorbitance” in fees).
4
Contrary to the dissent’s assertion that we lack sufficient evidence to reach this
conclusion, our review of the record uncovers no facts that would support a finding of
exceptional circumstances, making a remand to the compensation judge unnecessary.
13
Therefore, because we exercise a strong presumption against finding that the
statutory formula in Minn. Stat. § 176.081 results in an excessive attorney fee, and
because Bartel and SFM have not presented any exceptional circumstances to challenge
this presumption, we affirm.
Affirmed.
14
DISSENT
STRAS, Justice (dissenting).
In Irwin v. Surdyk’s Liquor, we held that Minn. Stat. § 176.081, subd. 1(a) (2012),
infringes on the judicial power by prohibiting judicial review of statutory awards of
attorney fees to ensure that they provide adequate compensation for attorneys litigating
claims for workers’ compensation benefits. 599 N.W.2d 132, 141-42 (Minn. 1999); see
also Minn. Const. art. III, § 1. This case presents the other side of the same question:
whether the statute violates the separation of powers by prohibiting judicial review of
excessive attorney-fee awards under the statute.
I continue to harbor doubts about our decision in Irwin, because the Legislature
typically has the authority to regulate recoveries in civil actions, including the amount of
attorney fees available, particularly when a case involves a statutory cause of action like a
claim for workers’ compensation benefits. Cf. Irwin, 599 N.W.2d at 144-46 (Anderson,
Russell, J., dissenting). Irwin, nonetheless, is good law, and no one has asked us to
modify it here. Our task is simply to clarify whether Irwin’s holding that we must retain
“final, independent review” over an award of attorney fees that is too low, id. at 142,
extends to instances in which an award is too high. As the court recognizes, the answer
to that question is straightforward, because “the central point of Irwin . . . applies
regardless of whether a statutory formula establishes a ceiling or a floor for a fee award.”
In my view, the foregoing analysis fully answers the question presented and I would
proceed no further.
D-1
I.
Instead, as a matter of comity, the court declines to apply Irwin’s constitutional
reasoning here.1 When we have deferred to the Legislature as a matter of comity, even
when a statute encroaches on the judicial power, as it does here, our decision to defer to
the Legislature is itself an exercise of judicial power. Cf. State v. Willis, 332 N.W.2d
180, 184 (Minn. 1983) (deciding to enforce a statute as a matter of comity “since it
neither interferes with nor impairs a judicial function”). However, unlike in those
instances in which we have elected to enforce a statutory provision that would otherwise
violate the separation of powers, there is good reason not to do so here.
The court justifies its decision by emphasizing that the formula for calculating
attorney fees under the statute resembles a contingent-fee arrangement.2 See Minn. Stat.
§ 176.081, subd. 1(a) (2012) (providing for a fee equal to 25 percent of the first $4,000
recovered plus 20 percent of the next $60,000). “[T]he Legislature reasonably adopted a
formula for calculating fee awards that mimics the risk-spreading features of contingent-
1
The court insists it is “reaffirm[ing] the holding in Irwin,” and therefore attorneys
representing injured employees should not worry. See Irwin, 599 N.W.2d at 142. But if
a party responsible for paying an attorney (the employer and an insurer in this case, but
perhaps an employee in a different case) wants to argue that the statutory fee is excessive,
the court will refuse to entertain such a challenge absent exceptional circumstances. In
short, the court decides to err on the side of overcompensating attorneys—an approach
that is in tension with Minn. R. Prof. Conduct 1.5(a) (“A lawyer shall not make an
agreement for, charge, or collect an unreasonable fee or an unreasonable amount for
expenses.”).
2
Of course, as illustrated by this case, the statutory scheme governing attorney fees
in workers’ compensation cases differs from a normal contingent-fee arrangement
because it sometimes requires the employer or an insurer, rather than the employee, to
pay the employee’s attorney. See Minn. Stat. § 176.081, subd. 1(a)(1).
D-2
fee retainer agreements,” the court explains, so it is natural that, “in a particular case, the
Legislature’s formula may result in a higher fee than the attorney might receive if paid by
the hour or under a different formula.” Thus, according to the court, there is no reason
for the court to review the fee to ensure that it is not excessive.
The flaw in the court’s argument, however, is that its rationale applies equally to
the situation in Irwin. The possibility that “the Legislature’s formula may result in a
[lower] fee than the attorney might receive if paid by the hour or under a different
formula” is just as much “an element of the risk-spreading inherent in contingency
formulas” as is the possibility of the formula generating a higher fee in a particular case.
Indeed, the fact that the attorney bears the risk of a low recovery, or even non-recovery,
in an unsuccessful case is precisely what justifies charging the higher fee in a successful
case. Cf. Gisbrecht v. Barnhart, 535 U.S. 789, 810 (2002) (Scalia, J., dissenting)
(explaining that a contingent-fee arrangement “assign[s] the risk of an unsuccessful
outcome to the attorney, in exchange for a percentage of the recovery from a successful
outcome that will (because of the risk of loss the attorney has borne) be higher . . . than
what the attorney would receive in hourly billing for the same case”). Accordingly, the
fact that the Legislature has adopted a contingent-fee approach for setting attorney-fee
awards in workers’ compensation cases does not provide a basis for adopting a different
approach here than in Irwin.
II.
The court also asserts that adhering to Irwin in this case would undermine the
legislative objectives embodied in Minn. Stat. § 176.081, subd. 1(a). What the court fails
D-3
to acknowledge, however, is that our decision in Irwin has already undermined the
legislative scheme. The court does not assert, nor could it, that the text of Minn. Stat.
§ 176.081, or of any other provision of the Workers’ Compensation Act for that matter,
expresses a legislative preference for judicial review of only those attorney-fee awards
that are allegedly too low, while leaving intact awards that are potentially too high. In
fact, by reviewing only attorney-fee awards that may be too low, the court is likely doing
more damage to the legislative scheme by creating an asymmetric preference in favor of
higher attorney-fee awards in workers’ compensation cases. Enforcing only part of the
statute, in other words, has the potential to undermine the delicate “compromise struck in
the workers’ compensation statute balancing certain, but limited, benefits provided to
employees injured in the course of their employment with the limitations on the ability of
workers to recover damages in tort actions.” Stringer v. Minn. Vikings Football Club,
LLC, 705 N.W.2d 746, 755-56 (Minn. 2005).
Moreover, the various legislative policies that the court claims would be
undermined by judicial review of attorney-fee awards were announced in cases under
prior versions of the Workers’ Compensation Act that expressly permitted judicial review
of attorney-fee awards. See, e.g., Mack v. City of Minneapolis, 333 N.W.2d 744, 752
(Minn. 1983) (noting that, under the Workers’ Compensation Act, “ultimately we can
review all attorney fees decisions”); see also Minn. Stat. § 176.081, subds. 3-4 (1982)
(providing that an employee could seek review of an award of attorney fees in the
workers’ compensation court of appeals and in this court); Minn. Stat. § 176.081, subd. 4
(1980) (providing that an employee could seek review of an award of attorney fees in this
D-4
court); Minn. Stat. § 8201 (1913) (“No claim for legal services or disbursements
pertaining to any demand made or suit brought under the provisions of this act shall be
[valid] . . . unless the same be approved in writing by the judge presiding at the trial
. . . .”). Indeed, some of the decisions applied versions of the statute that required courts
to review fee awards under a list of factors that were almost identical to the factors that
we adopted in Irwin. Compare Minn. Stat. § 176.081, subd. 5(d) (1982), and Minn. Stat.
§ 176.081, subd. 5(d) (1980), with Irwin, 599 N.W.2d at 142. The court does not explain
how the possibility of judicial review in this case would undermine legislative policies
that our previous decisions have said were furthered by a similar type of judicial review
for reasonableness. E.g., Kahn v. Univ. of Minn., 327 N.W.2d 21, 24 (Minn. 1982)
(noting that the “statutory scheme for application and review of attorney fee requests [by
the agency] evinces two distinct purposes”: to protect claimants from excessive charges
and to insure that the attorneys representing them receive reasonable compensation).
Finally, the court fails to directly address the argument made by the employer and
the insurer (collectively, “the relators”). According to the court, the relators urge us to
review attorney-fee awards by “[c]onducting a case-by-case determination of attorney
fees.” However, the relators actually request a “determination of an attorney fee pursuant
to the Irwin factors,” through consideration of, among other things, “the amount
involved, the time and expense necessary to prepare for trial, the responsibility assumed
by counsel, the experience of counsel, the difficulties of the issues, the nature of the proof
involved, and the results obtained.” Irwin, 599 N.W.2d at 142. The court fails to explain
D-5
how the sort of review the relators actually seek, based on the factors that we already
endorsed in Irwin, undermines the statute.
III.
The court also purports to create an exception for truly excessive awards in
“exceptional circumstances,” but then deprives the relators of the benefit of that
exception based on another misreading of their argument. This time, the court
conclusively determines that the relators “have not presented any exceptional
circumstances” because they did not present evidence that the fee in this case was
excessive. The problem is that the relators had no reason to present evidence of the
excessiveness of the fee to this court, and no way of knowing that they were supposed to
do so, because they did not ask this court to hold that the particular fee in this case was
excessive. Rather, what the relators requested was that the “matter be reversed and
remanded to the Compensation Judge” for review of the statutory-fee award. That is
what we did in Irwin, 599 N.W.2d at 142 (remanding to the workers’ compensation court
of appeals, not to a compensation judge, because the compensation judges had already
made findings regarding the reasonableness of the fees), and the relators would have had
no reason to know that, in this case, the court would create a new barrier to judicial
review of a statutory-fee award. Because they expected to have a chance to prove
excessiveness before the compensation judge in the first instance, in accordance with
Irwin, they could not have known that they needed to prove the excessiveness of the fee
to this court.
D-6
In short, the court penalizes the relators for failing to meet a standard that had not
yet been announced because they failed to present evidence that they would have had no
reason to present to this court. Even if I agreed that this case is distinguishable from
Irwin, the court’s decision simply goes too far.
IV.
For the foregoing reasons, I respectfully dissent.
D-7