Untitled Texas Attorney General Opinion

THE ATTORNEY GENERAL
OF TEXAS
March 19, 1990
Honorable Hugh Parmer Opinion No. JM-1147
Chairman
Intergovernmental Relations Re: Rules of the Indus-
Committee trial Accident Board
Texas State Senate (RQ-1813)
P. 0. Box 12068
Austin, Texas 78711
Dear Senator Parmer:
You have requested an opinion a&ut the validity of
several rules adopted recently by the Industrial Accident
Board.
One of the rules you ask about deals with board
approval of attorney fees in worker's compensation cases.
28 T.A.C. 5 64.10. Section 7c of article 8306, V.T.C.S.,
provides in part:
All fees of attorneys for representing
claimants before the [Industrial Accident]
Board under the provisions of this law shall
be subject to the approval of the Board. No
attorneys' fees for representing claimants
before the Board shall be allowed or approved
against any party or parties not represented
by such attorney, nor exceeding an amount
equal to twenty-five per cent (25%) of the
total recovery, in addition to the reasonable
expenses incurred by the attorney in the
preparation and presentation of the said
claim before the Board, such expenses to be
allowed by the Board.
The new board rule provides:
(1) Attorney fees shall not total, more
than 25% of the claimant's recovery.
(2) A percentage fee of more than 15% of
the claimant's recovery will not be approved
unless the board determines that a higher
percentage is justified by the time expended
by an attorney on the claim.
P. 6056
Honorable Hugh Parmer - Page 2 (JM-1147)
28 T.A.C. § 64.10(c). In other words, the board rule
provides that attorney fees will be limited to an amount not
to exceed 15% of the claimant's recovery unless the attorney
shows that his time involved in the matter justifies a
higher percentage. We think that rule is unreasonable as a
matter of law. &&8 Allstate Ins. Co. v. State Bd. of In .,
401 S.W.Zd 131, 132 (Tex. Civ. App. - Austin 1966, writ
ref'd n.r.e.) (administrative rules must be reasonable).
There are a number of factors other than time that are
commonly considered by courts in approving attorney fee
awards. G If a ina . v. ofstedt, 188 S.W.Zd 155, 160
(Tex. 1945: (h%ng t:at in ascertaining reasonable value
of attorneys' services jury should consider nature of
litigation, amount involved, interests at stake, capacity
and fitness of lawyers for work, services and labor, time
involved, benefit to clients): International & G.N.R. Co. v.
Clark, 16 S.W. 631, 632 (Tex. 1891); Fox v. Boese, 566
S.W.Zd 682, 686 (Tex. Civ. App. - Houston [lst Dist.] 1978,
writ ref'd n.r.e.). The rule in question disregards those
factors and allows consideration only of time spent on a
case. Under that rule an experienced worker's compensation
lawyer who, by virtue of his experience and expertise, could
handle a case in fewer than average hours would be limited 4.
to a fee of 15 percent of his client's recovery. A lawyer
handling his .first worker's compensation case who had to
spend a number of hours learning the rudiments of worker's
compensation law might receive more than 15 percent of his
client's recovery. Consequently, we think that the rule in
question is unreasonable as a matter of law. See aeneralle
Attorney General Opinions JM-512 (1986); H-1162 (1978).
We also note. that the board hasauthority to ``allow*~
and "approve@' attorney fees in worker compensation cases,
whereas courts have authority to "allow" and "fix" attorney
fees. V.T.C.S. art. 8306, 5 7d. See aenerallv Texas
Emnlovers Insurance Association v. Motley 491 S.W.Zd 395
(Tex. 1973) (comparing authority of cour& and Industrial
Accident Board in regard to attorney fees in worker's
compensation cases). Because we conclude that the board's
new rule is invalid for a different reason, we need not
consider the argument raised that the new rule is an invalid
attempt to fix attorney fees.
You also ask about a board rule that would require an
attorney and a client in a worker's compensation case to
enter into an agreement for representation on a form
P. 6057
Honorable Hugh Parmer - Page 3 (JM-1147)
prescribed by the board.1 Inds. Act. Rd., Prop. Rule 14,
TX. Reg. 4681 (1989). Section 7c of article 8306, V.T.C.S.,
provides that the board shall approve attorney fees for
representing claimants before the board. Certainly the
authority to approve fees would authorize the board to
require attorneys to provide to the board written evidence
of representation and information relevant to the fees
attorneys are seeking in a particular worker's compensation
case. Even though the board's approval power would allow it
to disregard agreements between an attorney and a client
that would authorize fees not approved by the board, we do
not think that the authority to approve fees implies the
authority to mandate specific contractual arrangements
between lawyers and their clients. See aenerallv Fidelity
Casualtv Co. v. Daooerman, 53 S.W.Zd 845 (Tex. Civ. App. -
Amarillo, writ ref'd.) (contract for fee in worker's
compensation case not binding in light of court's authority
to fix fees); Gov't Code 82.065 (contingent fee contract. for
legal services must be in writing and signed by attorney and
client).
You also ask about section 64.20 of the board rules,
which provides:
(a) On the date the attorney disburses
the proceeds of a workers' compensation
claim, the attorney shall present the
claimant with a written disbursement state-
ment, on a form prescribed by the board,
setting out:
(1) the monetary amount received by
the claimant(s); and
(2) the monetary amounts retained by
the attorney, itemized by specific charge.
(b) The claimant(s) and the attorney
shall sign the disbursement statement.
(c) The attorney shall retain the dis-
bursement statement for four years from the
date of disbursement.
1. We understand that the board has not adopted by
rule a particular form contract. G. 28 T.A.C. § 53.40
(specifying exact working of transmittal letter by which a
carrier tenders a lump sum payment for medical disabilities
to a claimant).
p. 6058
Honorable Hugh Parmer - Page 4 (JM-1147)
--.
(d) The board may request the disburse-
ment statement at any time within the reten-
tion period established in subsection (c) of
this section. The attorney shall comply
within 10 days of receiving a request.
Although the board has only limited disciplinary authority
over attorneys, m V.T.C.S. art. 8307, 5 4(d) (board may
bar persons guilty of fraudulent or unethical conduct from
practicing before the board), we think that the board's
authority to approve attorney fees includes the authority to
require some evidence of disbursement. Whether the rules
set out above are reasonable also involves resolution of
fact issues. We cannot resolve those issues in the opinions
process.
You also ask about a new board rule that defines
"recovery" for purposes of calculating attorney fees. 28
T.A.C. § 64.10(a). The historical interpretation of section
7c is relevant to your question. Because the briefs sub-
mitted to us in regard to your request did not address that
aspect of the question, we will reserve answering the
question until interested parties have had an opportunity to
respond. In addition, YOU ask us to determine whether
certain types of rules would conflict with the worker's
compensation statutes. In the absence of specific rules, we
cannot make those determinations.
SUMMARY
A rule adopted by the Industrial Accident
Board to govern the amount of attorney fees in
worker's compensation cases. is unreasonable as
a matter of law and therefore invalid. The
board can require written evidence of repre-
sentation and disbursement of attorney fees in
a worker's compensation case.
J
Very truly y
A
JIM MATTOX
Attorney General of Texas
MARY KELLER
First Assistant Attorney General
JUDGE ZOLLIE STEAELEY
Special Assistant Attorney General
P. 6059
Honorable Hugh Parmer - Page 5 (JM-1147)
RENEA HICKS
Special Assistant Attorney General
RICK GILPIN
Chairman, Opinion Committee
Prepared by Sarah Woelk
Assistant Attorney General
p. 6060