Opinion ID: 2570497
Heading Depth: 1
Heading Rank: 8

Heading: Impairment of a Contract and Lien

Text: The legislature also enacted K.S.A. 44-536(b), which states: (b) All attorney fees in connection with the initial or original claim for compensation shall be fixed pursuant to a written contract between the attorney and the employee or the employee's dependents, which shall be subject to approval by the director in accordance with this section. Every attorney, whether the disposition of the original claim is by agreement, settlement, award, judgment or otherwise, shall file the attorney contract with the director for review in accordance with this section. The director shall review each such contract and the fees claimed thereunder as provided in this section and shall approve such contract and fees only if both are in accordance with all provisions of this section. Any claims for attorney fees not in excess of the limits provided in this section and approved by the director shall be enforceable as a lien on the compensation due or to become due. The director shall specifically and individually review each claim of an attorney for services rendered under the workers compensation act in each case of a settlement agreement under K.S. 44-521 and amendments thereto or a lump-sum payment under K.S. 44-531 and amendments thereto as to the reasonableness thereof. (Emphasis added.) In reaching its conclusion, the majority disregards the fact that the attorney was a preferred creditor in the workers compensation award and by statute had a lien on the award and the right to satisfy the lien out of the monthly payments of the judgment. I agree that reversal of a judgment on appeal is an inherent risk of litigation, and contingent fees are subject to the final judgment obtained. However, the case before this court does not concern a reversal of a judgment appealed; it concerns an award granted in a workers compensation case which was later modified because the worker perpetrated fraud to increase the award. An eventual finding that a client committed fraud in securing a workers compensation award or a judgment in a civil action is not an inherent risk of a secured creditor. Requiring an attorney to insure a fee granted in a workers compensation action until the statute of limitations has expired for fraud of another individual is unreasonable. Under the guise of the responsibility to supervise Kansas attorneys, the majority has ignored the legislative acts and exceeded its constitutional power by creating a cause of action based solely upon the fee arrangement and the public policy of the court. Since this state was admitted into the Union, the common law, as modified by constitutional and statutory law, judicial decisions, and the conditions and wants of the people, shall remain in force in aid of the General Statutes of this state; but the rule of the common law, that statutes in derogation thereof shall be strictly construed, shall not be applicable to any general statute of this state, but all such statutes shall be liberally construed to promote their object. K.S.A. 77-109. Although the common law is subject to modification by judicial decision in light of changed conditions, the declaration of public policy is normally the function of the legislative branch of government. Ling v. Jan's Liquors, 237 Kan. 629, Syl. ¶ 5, 703 P.2d 731 (1985). This case does not concern the examination of applicants for admission to the bar, attorney discipline, or attorney disbarment. Therefore, K.S.A. 7-103 does not provide authority for the Supreme Court to order Goertz to reimburse Excel under the guise of supervision of Goertz as an officer of the court. Kansas lawyers, beware of the contingent fee contract. The fee you honestly earned in obtaining a judgment for your client is not final but subject to reimbursement in a separate court-created action until the statute of limitations for the possible fraudulent acts of your client has expired. You, not the honest doctor whose expert testimony swayed the jury to award your client the judgment, stand alone as an insurer of your client's honesty. To my colleagues in the majority: Please note that this court's new responsibility to supervise attorneys who enter into contingent fee contracts is not limited to workers compensation awards. There are other laws and codes enacted by the legislature to protect individuals who have been defrauded. And finally, a simple thought: Are judicially-created laws outside the United States Constitution's prohibition of state government impairing the obligation of contracts? Here, pursuant to legislative acts, the attorney had a contract approved by the director and had exercised his right to obtain a statutory lien on the amount paid as compensation to the worker in the original action! The statutory contract and lien have been abolished by a judicial decree of public policy. `In a well-ordered society it is important that people know what their legal rights are, not only under constitutions and legislative enactments, but also as defined by judicial precedent, and having conducted their affairs in reliance thereon, ought not to have their rights swept away by judicial decree. And this is especially so where rights of property are involved.... And it should be left to the legislature to make any change in the law, except perhaps in a most unusual exigency.' F. Arthur Stone & Sons v. Gibson, 230 Kan. 224, 233, 630 P.2d 1164 (1981) (quoting Freeman v. Stewart, 2 Utah 2d 319, 322, 273 P.2d 174 [1954]). ALLEGRUCCI, J., joins the foregoing concurring and dissenting opinion.