OK, let’s shine a light on the 800-pound gorilla in the room. Let’s talk about something no one likes to talk about, especially attorneys: attorneys’ fees.
Yes, greedy attorneys who want to get paid. I know. I know. It is impossible to talk about attorneys’ fees without immediate outcry about greedy attorneys. Why is that? Are attorneys greedy? I am an attorney, and I can say: to the extent that I someday want to retire on more that my social security check, yes, I am greedy. I am motivated, at least in part, by my desire to earn money. What capitalist isn’t? Isn’t that the point of business? I don’t see insurance companies crying on their way to the bank. I see them crying when attorneys like me make them pay what they should pay on their own without attorneys like me dragging them to court.
It’s Just Business
So, what happens when attorneys don’t get paid enough? They find other ways to make money. Just like any businessperson would. At times, that leads them to change their areas of practice. I have been practicing Florida Workers’ Compensation Law since 1995. During my 27 years in practice, I have watched the legislature in the State of Florida slowly tighten the noose on attorneys’ fees for injured workers in the Florida Workers’ Compensation system. Why do they do this? Because insurance companies have a huge lobby in Tallahassee and they don’t want lawyers like me in the system. Claimants’ attorneys, as we are called, make them pay benefits that they would otherwise wrongly deny.
The Assault on Injured Workers’ Attorneys’ Fees
In 1994, the Florida Legislature reduced the statutory guidelines for attorneys’ fees from 25/20/15% to 20/15/10%. In 2003, they removed the ability for injured workers’ attorneys to get paid an “reasonable fee” based on time expended for securing benefits that had been denied. I remember my first trial back in 2004 under the “new” 2003 law. When the insurance carrier denied my client’s claim, I tried the case and won. My client’s injury was not catastrophic (broken wrist with about 4 weeks of disability benefits), my fee was based on the 20/15/10%, which came to $750. The costs I advanced for my client were more than that. I had about 50 hours of time in the case. My “hourly rate” came to $15. My paralegal at the time was paid $25 per hour. This is not a sustainable business model. Fortunately, half of my practice involves personal injury claims, so at that time I resolved to take fewer workers’ compensation cases – as did many of my colleagues – and focus on my personal injury practice.
This shift resulted in two very distinct things happening: first, it became harder for injured workers to find competent counsel unless they had a very serious injury. Secondly, Claimant’s attorneys filed fewer petitions, which led to less litigation. This second fact led to yet another interesting development: defense firms stopped hiring associates and young lawyers stopped entering the workers’ compensation practice.
I’ve been practicing long enough to see the impact this has had on our practice.
As I sat at the Florida Worker’s Advocates 32nd Annual Educational Conference last week, I noticed something, and I asked my colleagues about it. I am 54 years old. I have been practicing for 27 years. I know a lot of workers’ compensation practitioners in their 50s, 60s and 70s. I have now met several in their early 30s. I can count the number of practitioners I know between the ages of 35 and 48 on one hand. Why? The answer is obvious. The legislature got what they wanted: fewer Claimant’s attorneys.
We Fought and Won
When the Florida Supreme Court said “no,” and declared the 2003 statute unconstitutional with Murray v. Mariner Health & ACE USA, 994 So. 2d 1051 (Fla. 2008), the Florida Legislature came back and removed the word “reasonable” from the statute in 2009. Imagine that: attorneys are no longer entitled to a reasonable fee. That lasted until 2016 when, in Castellanos v. Next Door Co., 192 So. 3d 431 (Fla. 2016), the Florida Supreme Court again smacked down the legislative attempt to make it impossible for injured workers to find lawyers.
That same year in Miles v. City of Edgewater Police Dep’t/Preferred Governmental Claims Solutions, 190 So. 3d 171, (Fla. App. First DCA 2016), the Florida First District Court of Appeal gave injured workers the right to contract and hire a lawyer of their choosing at a rate that would actually attract good lawyers. Workers’ Compensation Lawyers became able have a contract that mirrored other contingency fee agreements that were in line with the Rules Regulating the Florida Bar. Did they do that? Actually, the vast majority did not. While able to charge up to 40% of the recovery in some cases, the customary rate among workers’ compensation lawyers is now 25%. That doesn’t sound like the “greedy” lawyers the state legislature has been trying to protect….uh hem…injured workers from.
Think about that for a second. Until the Miles case, if you were injured on the job, you were limited in your ability to hire a lawyer. The State of Florida had restricted a person’s right to contract. Such government interference should be blasphemy to any Republican legislator or member of the Federalist Society. Why should you care about this? Because by restricting your right to contract with a lawyer, you are effectively being denied access to the courts. Your right to hire a lawyer is your right to hire a person to speak on your behalf, and as such, is protected by the Florida and United States Constitutions.
As the Florida Supreme Court has stated: “The right to contract is one of the most sacrosanct rights guaranteed by our fundamental law. It is expressly guaranteed by article I, section 10 of the Florida Constitution, and is equally enforceable in labor contracts by operation of article I, section 6 of the Florida Constitution.” Chiles v. United Faculty of Florida, 615 So. 2d 671 (Fla. 1993).
The right to contract for legal services to petition for redress is a right that is related to the First Amendment, and any impairment of that right not only adversely affects the right of the lawyer to receive his fee but the right of the party to obtain, by contract, competent legal representation to ensure meaningful access to courts to petition for redress. The United States Supreme Court has stated, “We hold that the freedom of speech, assembly, and petition guaranteed by the First and Fourteenth Amendments gives petitioner the right to hire attorneys on a salary basis to assist its members in the assertion of their legal rights.” United Mine Workers of America, Dist. 12 v. Illinois State Bar Ass’n, 389 U.S. 217, 221-22, 88 S.Ct. 353, 19 L.Ed.2d 426 (1967) (vacating judgment enjoining union from hiring salaried attorney to assist members in assertion of legal rights with respect to workers’ compensation claims). This same constitutional right extends to a party’s right and practical ability to retain an attorney by contingency fee contract in order to have meaningful access to courts. See Searcy, Denney, Scarola, Barnhart & Shipley v. State, 209 So. 3d 1181, 1191 (Fla. 2017).
After this long fight that has been going on since 1993 and which led to the Miles decision giving the parties a right to contract in workers’ compensation cases, injured workers and their lawyers finally seemed to be in the clear. Well, in the immortal words of Borat: not so much. Enter the Office of the Judges of Compensation Claims.
The Office of Judges of Compensation Claims & The Last Hope of Insurance & Industry to Get Rid of Claimants’ Attorneys
Judges of Compensation Claims are administrative law judges. While subject to the Judicial Qualifications Commission and Code of Judicial Conduct, the Judges of Compensation Claims are political appointees, which is fine, unless and until they are swayed by politics and partisan interests.
(B)(2) A judge shall be faithful to the law and maintain professional competence in it. A judge shall not be swayed by partisan interests, public clamor, or fear of criticism.
Many judges are political appointees. It is a well-known and accepted part of our legal system that one party favors “conservative” judges and one party favors more “liberal” judges. That is fine. If a judge follows the law with a “conservative” or “liberal” philosophy, it is perfectly acceptable so long as they remain impartial and follow the law. When a judge ceases to follow the law and instead follows the partisan political winds or acts out of fear of criticism, that is a direct violation of Canon 3 of the Code of Judicial Conduct. This has never been more apparent than in aftermath of the case of Judge Thomas W. Sculco, former Judge of Compensation Claims for the Orlando District Office of the OJCC.
If you ask lawyers on both sides of the bar, defense and claimants’ attorneys alike, you will find that Judge Sculco was a very well-respected member of the judiciary. You would be hard-pressed to find any lawyer who would criticize him. Yet, he was not reappointed to the bench. Why not? He recently approved an attorneys’ fee where the contract between the injured worker and his lawyer called for a fee equal to 25% of the recovery. The problem? It resulted in a very high hourly rate. The partisan political winds were harsh in their criticism, and while the reason Judge Sculco was not reappointed may never be truly known, Occam’s Razor suggests that it was because he approved this fee.
The chilling affect that swept through the Office of the Judges of Compensation Claims was swift and immediate. The “word on the street” is now that some judges will not approve fees that result in an hourly rate of over $300 per hour. A fee that results in an hourly rate of $1,000? Forget about it. Is this following the law?
Before I go further, I must say that after 27 years of practice, I have tremendous respect for our judges of compensation claims, several of whom I consider my friends. They are hard-working, dedicated public servants. Perhaps they are not swayed by the political winds and partisan interests, nor fear of criticism as it may appear. Indeed, there are some who are not. But the Canons of Judicial Ethics state that judges should avoid the appearance of impropriety. So, if they are not succumbing to partisan political pressure or fear of criticism, they have work to do to avoid that appearance.
What is a “Reasonable” Fee?
The Florida Bar’s Results of the 2018 Economics and Law Office Management Survey show that over 85% of lawyers charge in excess of $200 per hour, 49% of lawyers charge in excess of $300 per hour, and 33% of lawyers charge in excess of $350 per hour. The results of this survey are found here. This may sound like a lot, but remember: we have staff; we have offices; we have a lot to pay for out of that hourly rate. If half of the lawyers in the State of Florida charge more than $300 per hour and nearly a third charge more than $350 per hour, how in the wide wide world of sports can an entire area of practice be limited to $300 per hour? Where is the law on that? Keep in mind: these hourly rates are NOT based upon contingent fees. They are based upon guaranteed fees that are often paid to the lawyer in advance.
There is too much to discuss in this blog about the nature of contingency fees but suffice it to say that they come with risk. Risk of not getting paid a fee at all. Risk of losing money for the costs advanced on behalf of a client. That is why courts have traditionally placed great weight on what is known as the “contingency risk factor.” There are many contingency fee cases that result in hourly rates well below $100 per hour. They are not meant to be judged solely by their “hourly rate.” The rule says so. There is zero basis in the law to say that an hourly rate in a contingent fee should be limited to a set amount per hour. Yet following the non-reappointment of Judge Sculco, the OJCC seems to think that is all that matters.
The OJCC is now scrutinizing attorneys’ fees to an absurd degree. Some are demanding time records. Contingency fee attorneys are not obligated to keep time records in our cases (although many of us do) because we are not supposed to be paid by our clients based upon our time. We are supposed to be paid as a percentage of recovery. Here is what Rule 4-1.5(f)(4)(B) of the Rules Regulating the Florida Bar allow attorneys to charge their clients in contingency fee cases:
(B) The contract for representation of a client in a matter set forth in subdivision (f)(4) may provide for a contingent fee arrangement as agreed on by the client and the lawyer, except as limited by the following provisions:
(i) Without prior court approval as specified below, any contingent fee that exceeds the following standards are presumed, unless rebutted, to be clearly excessive:
(a)Before the filing of an answer or the demand for appointment of arbitrators or, if no answer is filed or no demand for appointment of arbitrators is made, the expiration of the time period provided for such action:
- 33 1/3% of any recovery up to $1 million; plus
- 30% of any portion of the recovery between $1 million and $2 million; plus
- 20% of any portion of the recovery exceeding $2 million.
(b)After the filing of an answer or the demand for appointment of arbitrators or, if no answer is filed or no demand for appointment of arbitrators is made, the expiration of the time period provided for such action, through the entry of judgment:
- 40% of any recovery up to $1 million; plus
- 30% of any portion of the recovery between $1million and $2 million; plus
- 20% of any portion of the recovery exceeding $2 million
What is the legal basis for OJCC scrutiny of fees that are within the above guidelines? They are doing this because they say the Miles decision requires them to scrutinize the fee at the time it is being paid and apply the principles of the Rule 4-1.5 of the Rules Regulating the Florida Bar. Miles does NOT say that. Here is what Miles says:
Likewise, here, we see no reason why a workers’ compensation claimant should not be able to waive a limitation on claimant attorney’s fees and agree to pay her attorney with her own (or someone else’s) funds, subject to a JCC’s finding that the fee is reasonable….We conclude that the statutory restrictions are unconstitutional, and that the proper remedy is to allow an injured worker and an attorney to enter into a fee agreement approved by the JCC….(emphasis added).
Approving the Fee Agreement
Miles doesn’t say that the actual fee being paid should be approved. It says that the fee agreement should be approved. This means that the Judge is supposed to approve the fee agreement if the agreement itself is reasonable. Plain and simple. Black and white. Right? They aren’t doing that. They are waiting until the case settles and evaluating the fee being charged. On what planet would any person agree to perform work at a set rate without knowing that they will actually get paid that rate? Isn’t that the point of a contract? So that both parties know and agree to what will be paid? Interestingly, there is no parity of fee alteration by the judges (nor would a lawyer ask for this); in other words, if the fee results in an hourly rate of $20 per hour, lawyers are not asking judges to increase the fee to a “reasonable hourly rate.” No, we take our lumps because that is what we contracted to do. That is part and parcel of any contingent fee agreement. Sometimes we get paid a little. Sometimes we get paid a lot. Sometimes we don’t get paid at all.
Is there precedence for having a judge approve a fee agreement in advance? The Florida Bar Rules allow and require a lawyer to seek court approval of any fee that is in excess of Rule 4-1.5(f)(4)(B). That is what county and circuit court judges do. If reasonable and appropriate, they approve the fee agreement at 40% or 45% or 50%. They do not go back after that approval and scrutinize the fee like the Judges of Compensation Claims do. Here is what the OJCC should be doing: approving the fee agreement in advance, if reasonable, and then approving the fee based upon the fee agreement they approved in advance. Just like every other judge in the State of Florida. They won’t do that. Why not? The only basis in the law for what they are doing has been created by them. They will cite cases and interpret them to say they are required to go through the contingent fee factors at the conclusion of the case, as they do when attorney’s fees and costs are being taxed against the opposing party.
When should the fee be scrutinized at the conclusion of the case? When it is being paid by the adverse party who did not enter into a contract with the lawyer whom they must pay.
All of the appellate cases that scrutinize the actual attorneys’ fees being paid (not the fee agreement itself) deal with fees that are awarded by the court and paid by an adverse party. In those cases, the lawyer seeking to tax attorney’s fees and costs against the adverse party (as Claimant’s attorneys often do against workers’ compensation insurers) must use the Factors to Be Considered in Determining Reasonable Fees and Costs found in Rule 4-1.5(b). Why is this necessary? Because there is no contract between the lawyer and the party paying the fee. For contractual contingent fees, the fee agreement should be approved in advance if it falls within the guidelines of Rule 4-1.5(f)(4)(B). Period. Paragraph. The end.
That is not what is happening. Why not? I again invoke Occam’s Razor: the partisan political winds are blowing and the OJCC is being swayed. Not by the law. By fear of criticism. Fear of job security.
Am I wrong? Show Me.
Some Judges will tell you: the hourly rate is not the only thing they look at. To them I say: I’m from Missouri. Show me. Approve a fee that comes to over $1,000 per hour. I dare you. In Joyce v. Federated Nat’l Ins. Co., 228 So. 3d 1122 (Fla. 2017), the Florida Supreme Court clarified the standard by which a Contingency Multipliers of 1.5 to 3.0 may be applied based upon Florida Patient’s Compensation Fund v. Rowe, 472 So.2d 1145 (Fla. 1985), by using the lodestar method and applying Rowe, which states:
Based on our review of the decisions of other jurisdictions and commentaries on the subject, we conclude that in contingent fee cases, the lodestar figure calculated by the court is entitled to enhancement by an appropriate contingency risk multiplier in the range from 1.5 to 3. When the trial court determines that success was more likely than not at the outset, the multiplier should be 1.5; when the likelihood of success was approximately even at the outset, the multiplier should be 2; and, when success was unlikely at the time the case was initiated, the multiplier should be in the range of 2.5 and 3.
Why is Rowe relevant in the context of judicial approval of workers’ compensation attorneys’ fees? For one thing, it discusses the importance of the contingency risk factor in personal injury cases (such as workers’ compensation cases), and that contingency fee lawyers must be paid more than lawyers whose fees are guaranteed. The Rowe Court stated:
The contingency risk factor is significant in personal injury cases. Plaintiffs benefit from the contingent fee system because it provides them with increased access to the court system and the services of attorneys. Because the attorney working under a contingent fee contract receives no compensation when his client does not prevail, he must charge a client more than the attorney who is guaranteed remuneration for his services (emphasis added).
There you have it: the Florida Supreme Court says that contingency fee lawyers must charge more than an attorney who is guaranteed remuneration. Well, if 33% of lawyers who are guaranteed remuneration charge over $350 per hour as shown in the Florida Bar’s 2018 Survey referenced above, then workers’ compensation lawyers must charge more than that. At least according to the Florida Supreme Court they must.
Clearly Excessive Fees?
The law is clear that a contract between a client and their lawyer is sacrosanct (see Chiles, supra). So that contract should stand unless a court finds the fee agreement to be “clearly excessive” per Rule 4-1.5(a), which states:
(1) after a review of the facts, a lawyer of ordinary prudence would
be left with a definite and firm conviction that the fee or the cost
exceeds a reasonable fee or cost for services provided to such a
degree as to constitute clear overreaching or an unconscionable
demand by the lawyer (emphasis added).
As stated earlier, the hourly rate is not the controlling factor here, but since we apparently must discuss it to get our fees approved by the OJCC: a contingency multiplier of 3.0 could bring in hourly rates of over $2,000 per hour, so don’t tell me that $2,000 per hour “shocks your conscience” when other courts are not only approving such fees but awarding them against adverse parties. A fee is not clearly excessive just because the hourly rate is much higher than that charged by lawyers who are paid in advance. Contingent fees are supposed to be higher, per Rowe. So show me. Show me you are not following the partisan political winds. Show me that you have no fear of criticism. Show me that you can put your job before your job.
Attorney’s fees are the canary in the coal mine for injured workers. I am now once again faced with the question: do I abandon my workers’ compensation practice and limit myself to personal injury claims? I will most likely continue in the practice of workers’ compensation for the time being. Not because I want to make money, because it doesn’t seem like I will be able to. No, I’ll stick with it because I enjoy helping injured workers and sticking it to insurance companies when they are bad actors, which is often. However, I can imagine that this chilling effect will reverberate through our ranks and result in fewer quality practitioners electing a career as a Florida Workers’ Compensation Lawyer, just as happened between 2003 and 2016. This is bad for injured workers, bad for consumers, and bad for the practice of law.
Who can stop this? Only the Judges of Compensation Claims can stop it, by standing up for what is right, following the law, and damn the partisan politics of it all. Will they do it? Time will tell. I will be eagerly waiting for them to Show Me.