Attorney Fees and Interests

The lawyer's job is to zealously represent the client's interests to the best of his or her abilities, no matter what "side" it is.

Most people don't get that. Most people feel that a lawyer's representation is indicative or underscores that lawyer's general philosophy, and are surprised if a lawyer in workers' compensation switches sides periodically.

A debate opened up by the Texas Division of Workers' Compensation has lawyers for both claimants and the defense pitted against insurance companies - one of those times where it is graphically demonstrated that the lawyer job is not isolated to what side the lawyer represents.

I'm talking about the matter of getting paid, and what is a fair hourly rate.

The Texas DWC announced an informal rule proposal to change the state's attorney fee caps for the first time in 20 years. Since 199128 Texas Administrative Code §152.4 has set the maximum attorney fee rate in the state's workers' compensation system at $150 per hour and the maximum legal assistant rate at $50 per hour.

Carriers in the state are objecting to any rate increase, which would apply to both defense and claimant counsel. Unlike most states, defense lawyer's hourly rate is also capped. Claimant attorneys fees are also subject to a 25% maximum limitation against income benefits.

There are a number of competing interests in the attorney fee rate debate.

Insurance/employer interests rightly argue that increasing fees paid to lawyers increases lawyer participation, which, ergo, increases claim frequency and severity. Let's face it, when claimants can hire lawyers litigation increases, and generally the amount of indemnity, and sometimes medical care, also increases because a lawyer emphasizing workers' compensation legal practice is going to know the subtleties of the law, the people behind the decision making processes, and how to navigate complex systems.

Those whose primary interest are injured workers argue that artificially restricting attorney fees, claimant or defense, but in particular claimant attorney fees, denies injured workers of adequate legal representation against entities with much greater resources, thus artificially suppressing costs at the expense of individuals who rightly deserve greater benefits but for the inability to navigate the system competently.

And of course the truth lies somewhere in the middle.

Many state work comp systems have fee caps. Some are hourly based, some are contingency based - most however apply only to claimant attorneys. The philosophy is that defense attorneys are a market component that carriers can freely negotiate with against retaining house counsel or competing defense firms.

I was practicing law in 1990. The hourly rate charged by my firm then was around $85 per hour for defense work. Applicant work was 12% of an award, and of course subject to approval by a judge. Over time, until my exit from the active practice of workers' compensation law, the hourly rate went up to $125 for a senior partner - that was in 1999.

So Texas, compared to California, paid relatively well and particularly well if one considered the cost of living in Texas compared to California.

But I think the debate is irrelevant - a cap on attorney fees, or any fees for that matter, simply invites creativity in billing, and of course that begets bill review and adjustment - more expense. At some point capitalism interjects a variable into the equation to generate as much money as possible given any constriction, natural or artificial, for any given particular service.

The debate should not be about what the maximum hourly rate should be for attorneys. The debate should be whether the system adequately compensates legal representation to ensure a balance of representation for competing interests.

In other words, is the fee structure sufficient to ensure that those who need legal representation actually get it? Because lawyers aren't going to participate in the system if there isn't any money in it - and if this acts against the better interests of injured workers who are unfairly, or unreasonably, being denied benefits they are otherwise entitled to under the law, then there is a problem.

Capping hourly rates is simply a red herring. DWC should be asking if there is a problem in legal representation, and if so, what is causing the problem. And if the answer is that there is a problem because lawyers won't participate due to inadequacy of fees, then it's time to examine how to structure appropriate compensation for legal representation in most cases.

This may or may not entail adjustment of the hourly cap.

Regardless, comments received by DWC from both the defense bar and the claimant bar are aligned in seeking some increase in the hourly rate. Lawyers may represent one interest or another, but have the same interests when it comes to the bottom line.