Utah Declares Workers’ Comp Fee Schedules Unconstitutional

The Utah Supreme Court has held that the system of compensating attorneys in workers’ compensation claims is unconstitutional

In Utah, attorneys representing injured workers in workers’ compensation claims receive their fees out of the compensation awarded to the worker. By statute, the legislature delegated the authority to regulate these fees to the Utah Labor Commission. UTAH CODE § 34A-1-309. The Labor Commission created a sliding-scale fee schedule and an overall cap on the maximum amount of attorney fees for attorneys representing injured workers. UTAH ADMIN. CODE R602-2-4(C)(3).

The Injured Workers Association of Utah and several of its member attorneys (collectively, IWA) challenge the statute and the Labor Commission’s fee schedule as unconstitutional. IWA argues that under the Utah constitution, the Utah Supreme Court is vested with exclusive authority to regulate the practice of law, and that this authority extends to the regulation of attorney fees.’

We agree with IWA and hold that the regulation of attorney fees is included within the power to govern the practice of law. Because the Utah Supreme Court is vested with exclusive inherent and constitutional authority to govern the practice of law—and the court cannot under the separation-of-powers doctrine delegate the regulation of attorney fees to the legislature or the Commission—we hold both the Commission’s fee schedule and its authorizing statute unconstitutional.

The court

We are persuaded at this time that the absence of a fee schedule will allow injured workers the flexibility to negotiate appropriate fees with their attorneys. For very simple cases, the attorney and injured worker can negotiate a small fee, perhaps even less than that mandated by the current fee schedule. For more complex cases, the attorney and injured worker can come up with an appropriate fee that will not cause the lawyer to lose money by taking on the case and will still give the injured worker the representation needed to receive an adequate award. Fears about unscrupulous attorneys preying upon unsophisticated injured workers are exaggerated, as attorneys are still constrained by rules of professional conduct.

And those constraints are sufficient. (Mike Frisch)