Court Opinion

ID: 2755766
Source: CourtListenerOpinion
Date Created: 2014-11-26 17:05:25.222619+00
Date Added: 2024-06-11T11:26:49.814049
License: Public Domain

STATE OF MINNESOTA

                                    IN SUPREME COURT

                                        A13-2141

Workers’ Compensation Court of Appeals                                        Anderson, J.
                                                                       Dissenting, Stras, J.
Donald D. David,

                     Respondent,

vs.                                                            Filed: November 26, 2014
                                                               Office of Appellate Courts
Bartel Enterprises (Nitro Green),

                     Relator,

and

SFM Mutual Insurance Company,

                     Relator.

                                ________________________

Scott H. Soderberg, David R. Vail, Soderberg Law Firm LLC, Minneapolis, Minnesota,
for respondent.

Andrew W. Lynn, Lynn, Scharfenberg & Hollick, Minneapolis, Minnesota, for relators.

                                ________________________

                                      SYLLABUS

       As a matter of comity, we recognize the Legislature’s formulation of attorney fees

for workers’ compensation cases under Minn. Stat. § 176.081, subd. 1(a) (2012), as

presumptively reasonable, and will not, absent exceptional circumstances, review

whether the fee calculated using the statutory formula is excessive.

       Affirmed.

                                             1
                                     OPINION

ANDERSON, Justice.

      The issue presented by this case is whether Minn. Stat. § 176.081, subd. 1(a)

(2012),1 violates the separation of powers by requiring employers and insurers to pay

attorney fees calculated by a statutory formula not subject to judicial review. Although

we held in Irwin v. Surdyk’s Liquor, 599 N.W.2d 132, 134 (Minn. 1999), that a statutory

maximum on an attorney-fee award violated the separation of powers because there was

no final judicial review of that award, we have not considered whether an attorney-fee

award less than the statutory maximum must also be subject to judicial review. Relators

Bartel Enterprises and SFM Mutual Insurance Company contend that in the absence of

judicial review to ensure a fee award is not excessive, the statutory formula violates the

separation of powers and is unconstitutional. We conclude that, as a matter of comity, we

will recognize the Legislature’s statutory formula as presumptively reasonable, and that

absent exceptional circumstances, further judicial review of a presumptively reasonable,

correctly calculated attorney-fee award is unnecessary. Because Bartel and SFM did not

identify any exceptional circumstances that would overcome this strong presumption in

1
        After the events in this case, the Legislature amended section 176.081 to simplify
the statutory formula, raise the maximum fee, and limit when employers must reimburse
employees for their attorney fees, among other things. See Act of May 16, 2013, ch. 70,
art. 2, §§ 3-4, 2013 Minn. Laws 362, 369-71. Because the provisions of the workers’
compensation law in effect on the date of injury control the rights and obligations of the
parties, however, we apply the pre-amendment version of the statute. See Sherman v.
Whirlpool Corp., 386 N.W.2d 221, 225 (Minn. 1986).

                                            2
favor of concluding the fee award is reasonable, and there is no dispute that the fee was

calculated correctly using the statutory formula, we affirm.

       Respondent Donald David injured his back while working for Bartel Enterprises.

David incurred medical expenses for surgery, other treatment, and hospitalization. Bartel

and its insurer, SFM Mutual Insurance Company, initially disputed liability under the

Workers’ Compensation Act, Minn. Stat. ch. 176 (2012), but, after negotiating with

David’s health-care providers, eventually agreed to pay $233,054.50 to settle all of

David’s medical bills.

       For his work in representing David over the course of the dispute, David’s

attorney sought an award of contingent attorney fees in the amount of $36,810.90,

pursuant to Roraff v. State, 288 N.W.2d 15 (Minn. 1980), and Minn. Stat. § 176.081. The

claimed fee was calculated by applying the statutory formula in section 176.081 to the

dollar value of David’s medical benefits and disregarding the upper limit set by the

statutory formula.2      Bartel and SFM objected, arguing in part that the claimed fee

exceeded the statutory limit. See Minn. Stat. § 176.081, subd. 1(b) (“[F]ees . . . may not

exceed $13,000.”). Bartel and SFM also asserted that a mechanical application of the

statutory formula—without judicial review to determine whether the resulting fee award

was excessive—unconstitutionally intrudes upon judicial authority over attorneys and

attorney fees and therefore violates separation-of-powers principles.

2
       David’s counsel later recognized that he had made an arithmetic error and the
correct amount of his fee request should have been $46,810.90 instead of $36,810.90.

                                             3
       The compensation judge concluded that $13,000, the fee calculated by applying

the statutory formula, would adequately compensate David’s attorney for his work and

that a fee award above the statutory limit was unwarranted. Relying on decisions of the

Workers’ Compensation Court of Appeals (WCCA), the compensation judge refused to

consider whether the statutory fee was reasonable in light of the factors identified in

Irwin for an award exceeding the statutory limit. See Irwin, 599 N.W.2d at 142.

       Bartel and SFM appealed to the WCCA, arguing that the fee award was

unreasonable and again asserting a constitutional challenge based on Irwin, 599 N.W.2d

132.    The WCCA acknowledged that it lacked the jurisdiction to address the

constitutional challenge. David v. Bartel Enters. (Nitro Green), No. WC13-5567, 2013

WL 5911429, at *4 (Minn. WCCA Oct. 23, 2013) (citing Irwin, 599 N.W.2d at 139-40);

see Minn. Stat. § 175A.01, subd. 5 (2012). The WCCA then concluded, “Irwin did not

invalidate application of the [statutory] formula to attorney fees amounting to the

statutory maximum or less,” and therefore affirmed the compensation judge’s fee award

decision. David, 2013 WL 5911429, at *4. Bartel and SFM sought review by writ of

certiorari.

                                            I.

       The constitutional interpretation of a statute presents a question of law, which we

review de novo. E.g., Gluba ex rel. Gluba v. Bitzan & Ohren Masonry, 735 N.W.2d 713,

719 (Minn. 2007). We apply the plain meaning of unambiguous statutes, e.g., Larson v.

State, 790 N.W.2d 700, 703 (Minn. 2010); see also Minn. Stat. § 645.16 (2012), and

                                            4
declare statutes unconstitutional “only when absolutely necessary,” Gluba, 735 N.W.2d

at 719; see also Minn. Stat. § 645.17 (2012).

       To put the dispute in its proper context, we begin with an overview of the workers’

compensation statutory attorney fee provisions that govern this case. Minnesota Statutes

§ 176.081 governs the fees that attorneys may receive in contested workers’

compensation cases. It provides a formula to use in calculating “[a]ll fees” for attorneys

representing employees. Id., subd. 1(a). The formula generates a fee equal to 25 percent

of the first $4,000 in compensation benefits recovered by the employee plus 20 percent of

the next $60,000 in benefits recovered. Id. Typically, the fee award is withheld from the

periodic payments the employee receives, see Minn. Stat. § 176.081, subd. 1(c)

(providing for making the fee a lien against the amount payable to the employee),

although, as here, the employer may be liable for the fee. See id., subd. 1(a)(1) (“In cases

where the contingent fee is inadequate the employer or insurer is liable for attorney fees

based on the formula . . . .” (emphasis added)); id., subd. 7 (requiring the employer or

insurer to reimburse the employee for a portion of the fee).

       We have recognized that the legislative policies underlying the statutory fee

formula include “(1) protecting compensation claimants from excessive legal fees which

might otherwise severely deplete funds badly needed by the employee and his or her

dependents; and (2) insuring that attorneys who represent claimants will receive

reasonable compensation, so that competent counsel will be available to injured

employees.” Mack v. City of Minneapolis, 333 N.W.2d 744, 749 (Minn. 1983) (citing

Kahn v. Univ. of Minn., 327 N.W.2d 21, 24 (Minn. 1982)); see also Sarja v. Pittsburgh

                                             5
Steel Co., 154 Minn. 217, 219, 191 N.W. 742 (1923) (“[F]or the purpose of securing to

those intended to be protected or aided by the [Workers’ Compensation] act the full

benefits thereof, [a fee provision] was enacted.”). But, section 176.081 uses mandatory

language that does not contemplate adjustments to the fee amount generated by the

statutory formula. See Minn. Stat. § 176.081, subd. 1(a) (providing that a fee calculated

by applying the formula to an employee’s monetary compensation “is the maximum

permissible fee and does not require approval by the commissioner, compensation judge,

or any other party” (emphasis added)).

       In Irwin v. Surdyk’s Liquor, we held that Minn. Stat. § 176.081 was

unconstitutional as a violation of the “doctrine of separation of powers . . . to the extent it

impinges on [the judiciary’s] inherent power to oversee attorneys and attorney fees and

deprives us of a final, independent review of attorney fees.” 599 N.W.2d 132, 142

(Minn. 1999). We noted in particular that because “the judiciary retains final control

over attorneys,” id. at 140, legislation that regulates attorney fees must allow for judicial

review, see id. at 141-42 (“Legislation that prohibits this court from deviating from the

precise statutory amount of awardable attorney fees impinges on the judiciary’s inherent

power to oversee attorneys and attorney fees by depriving this court of a final,

independent review of attorney fees.”). Thus, while we did “not take issue with the

actual percentage or dollar limitations adopted by” the Legislature, we required judicial

review for the “legislative guidelines to be constitutionally permissible.” Id. at 141. To

the extent that Minn. Stat. § 176.081 “impinges on our inherent power to oversee

                                              6
attorneys and attorney fees and deprives us of a final, independent review of attorney

fees,” we held the statute unconstitutional. Irwin, 599 N.W.2d at 142.

      Bartel and SFM now argue that Irwin’s reasoning compels a similar conclusion

here—that the statute is unconstitutional to the extent it precludes judicial review of

whether fee awards under the formula are excessive. We agree that the central point of

Irwin—the judiciary’s final control over attorneys—applies regardless of whether a

statutory formula establishes a ceiling or a floor for a fee award. See id. at 140. Though

we acknowledged in Irwin that the “portions of section 176.081 that do not violate the

doctrine of separation of powers remain valid,” we ultimately concluded that a statute

that precludes the judiciary from reviewing an award of attorney fees violates the

separation of powers doctrine. Id. at 142.

                                             II.

      While we reaffirm the holding in Irwin today, we conclude that it is unnecessary

to decide the extent to which Irwin applies to a presumptively reasonable fee award,

calculated according to statute, that is alleged to be excessive. As we have done on other

occasions when the Legislature has encroached on a judicial function in violation of the

separation of powers, we choose to recognize the legislative formula in Minn. Stat.

§ 176.081 as a matter of comity. See, e.g., State v. McCoy, 682 N.W.2d 153, 160 (Minn.

2004) (choosing to “exercise our supervisory power over Minnesota courts by adopting a

reasonable statute,” even though that statute conflicted with an earlier court rule

regarding the admission of evidence); Cowern v. Nelson, 207 Minn. 642, 647, 290 N.W.

795, 797 (1940) (accepting, by comity, a law authorizing non-lawyers to act as real estate

                                             7
brokers, even though such actions could be construed as the unauthorized practice of

law). We acknowledge that “[d]ue respect for the co-equal branches of government

commands us to exercise great restraint before striking down a statute as

unconstitutional.”   McCoy, 682 N.W.2d at 160 (citation omitted) (internal quotation

marks omitted). Restraint is particularly appropriate in a workers’ compensation matter,

which is “solely a creature of statute” based on “policy decisions” that “are properly for

the Legislature.” Meils by Meils v. Nw. Bell Tel. Co., 355 N.W.2d 710, 713 (Minn.

1984); see also Maxwell Commc’ns v. Webb Publ’g Co., 518 N.W.2d 830, 834 (Minn.

1994) (Coyne, J., concurring specially) (noting that the workers’ compensation system is

“a creature of statute without counterpart in the common law”).

       We therefore return to the policies underlying section 176.081. In order to provide

quick and efficient delivery of benefits to injured workers at a reasonable cost to

employers, the Legislature created a system of workers’ compensation that, while

offering numerous benefits to all parties, also requires a mutual renunciation of rights and

remedies that were available to employers and employees at common law. Minn. Stat.

§ 176.001; see also Boryca v. Marvin Lumber & Cedar, 487 N.W.2d 876, 879 n.3 (Minn.

1992) (“The whole scheme of workers’ compensation is one of reciprocal concessions by

the employer and employee.”). The Legislature also sought to balance the interests of the

injured employee and retained counsel by “protecting compensation claimants from

excessive legal charges and at the same time . . . ensuring that their counsel receive

reasonable fees for their services” through regulation of attorney fees. In re Award of

                                             8
Attorney’s Fees (Rock v. Bloomington Sch. Dist. #271), 269 N.W.2d 360, 363 (Minn.

1978).

         The formula for calculating workers’ compensation attorney fees designed by the

Legislature in Minn. Stat. § 176.081 is based on the contingent-fee model, which has a

long tradition in workers’ compensation cases. Stewart Jay, The Dilemmas of Attorney

Contingent Fees, 2 Geo. J. Legal Ethics 813, 815 (1989) (“Contingent fees became

prevalent in an era of escalating industrial and transportation accidents, whose victims

frequently could not afford lawyers to obtain redress for their injuries.”); see also

Krueger v. State Dep’t of Highways, 295 Minn. 514, 516, 202 N.W.2d 873, 875 (1972)

(upholding findings that employee and attorney entered into contingent-fee agreement

and a fee in accordance with that agreement was reasonable). We have previously

explained:

         Contracts for contingent fees are as much for the benefit of the client as for
         the attorney, because if the client has a meritorious cause of action, but no
         means with which to pay for legal services unless he can, with the sanction
         of the law, make a contract for a contingent fee to be paid out of the
         proceeds of the litigation, he cannot obtain the services of a law-abiding
         attorney . . . .

Hollister v. Ulvi, 199 Minn. 269, 276-77, 271 N.W. 493, 497 (1937) (quoting 2 R.C.L.

§ 121). Similarly, we have acknowledged that the Legislature’s contingent-fee structure

in section 176.081 is not unreasonable. Mack, 333 N.W.2d at 751 (“[T]he legislature

could reasonably believe that 20-25% is a fair contingent fee for handling compensation

matters of moderate size.”).

                                               9
      While in a particular case the Legislature’s formula may result in a higher fee than

the attorney might receive if paid by the hour or under a different formula, see Krueger,

295 Minn. at 516-17, 202 N.W.2d at 876 (concluding that a 33 percent contingent fee

was not unreasonable, even though “the time and effort devoted to the settlement of

respondent’s claim may not have been extensive or difficult”), this feature is always an

element of the risk-spreading inherent in contingent fee formulas. See Lester Brickman,

Effective Hourly Rates of Contingency-Fee Lawyers: Competing Data and Non-

Competitive Fees, 81 Wash. U. L.Q. 653, 655-56 (2003) (“Contingency fees are designed

to—and do—yield higher effective hourly rates than do hourly rate fees to reflect the

risks that lawyers bear.”); Katherine M. Mongoven, Impact of Contingency Fee

Agreements on “Reasonable” Attorney Fees Awarded Pursuant to Wisconsin Fee-

Shifting Statutes, 88 Marq. L. Rev. 1013, 1023-24 (2005) (arguing that because of the

risk of no compensation in some cases, attorneys must be allowed to “recover fees in the

amount of their contingent fee—no more or no less—despite that the fee may seem

‘unreasonable’ for the amount of work they performed in a particular case”). We are

“reluctant to set the exact amount of attorneys fees . . . in any compensation case, . . .

because in our view it is impossible to say that only one figure represents a proper

award.” In re Award of Attorney’s Fees, 269 N.W.2d at 362. To promote its objective of

ensuring the “quick and efficient delivery” of benefits to injured workers at a reasonable

cost, Minn. Stat. § 176.001, the Legislature reasonably adopted a formula for calculating

fee awards that mimics the risk-spreading features of contingent-fee retainer agreements.

                                           10
       To be sure, the contingent-fee award in some workers’ compensation cases is paid

by the employer, rather than under a contract between the employee and the employee’s

attorney. See Minn. Stat. § 176.081, subd. 1(a)(1). But this feature reflects a legislative

policy choice that we have previously upheld. Kahn, 327 N.W.2d at 24 (“[T]he statute is

designed to protect [employees] from excessive legal charges which might otherwise

severely deplete funds badly needed by the employee . . . .”).

       Conducting a case-by-case determination of attorney fees, as urged by the relators,

neglects this legislative policy, would disrupt the risk-spreading and incentive features of

the current fee-formula structure, and would undermine other legislative objectives. See,

e.g., Kahn, 327 N.W.2d at 24 (statutory authority for attorney fees furthers “the public

policy of this state that injured employees have access to representation by competent

counsel knowledgeable of the intricacies of the workers’ compensation law”). It is also

worth noting that the public policy choice made by the Legislature to permit contingent

fees reflects the reality that there are any number of ways attorney fees could be

calculated (including, but not limited to, contingent fees, flat fees, hourly fees, and

various combinations of types of awards), and the implicit assumption by Bartel and SFM

that an hourly based fee is superior is just that—an assumption. This assumption, at least

for baseline attorney fee calculations in workers’ compensation matters, is not one that is

shared by the Legislature.

       The dissent would have us intervene here, as we did in Irwin. We apply comity on

an as-needed basis and it does not follow that merely because we deployed constitutional

principles in Irwin we must necessarily apply them here. That said, there are differences

                                            11
between the circumstances here and those in Irwin. We explained in Irwin that we “do

not take issue with the actual percentage or dollar limitations adopted by the legislature in

Minn. Stat. § 176.081.” 599 N.W.2d at 141. Instead, we challenged the Legislature’s

“prohibit[ion on] any deviation from the statutory maximum.” Id. Unlike the fee-

formula structure at issue here, the statutory maximum is a stark departure from the

contingent-fee framework that the Legislature adopted.          Because this case does not

invoke the statutory maximum, we need not employ Irwin’s reasoning.

                                              III.

       Thus, we elect to recognize as a matter of comity the legislative determination that

a fee calculated according to the statutory formula is not excessive. We therefore will not

review the reasonableness of a correctly calculated fee to determine whether it is

excessive, absent exceptional circumstances. We have previously said that contingent

fees are condemned “only where an attorney has taken advantage of a client’s

circumstances to exact an unreasonable or unconscionable proportion of the client’s

claim.” Holt v. Swenson, 252 Minn. 510, 514, 90 N.W.2d 724, 727-28 (1958). On the

other hand, we have recognized that a fee is reasonable even though the “time and effort

devoted to the . . . claim may not have been extensive or difficult, [if] . . . services were in

fact performed and . . . such services materially contributed to a most favorable result on

the client’s behalf.” Krueger, 295 Minn. at 516-17, 202 N.W.2d at 876. We see no

reason to conclude that a fee award calculated consistently with the statutory formula

requires judicial review to ensure it is not excessive when the Legislature has already

established a reasonable and fair balance between the interests of employer and employee

                                              12
in achieving a speedy, efficient, and inexpensive resolution of a dispute.          Absent

exceptional circumstances, we presume a correctly calculated fee that does not exceed the

statutory limit is reasonable.3

       Bartel and SFM have not presented any exceptional circumstances here. Bartel

and SFM’s primary evidence that the fee is excessive is that it equates to an hourly rate of

$1,000 as compared to the attorney’s normal hourly billing rate of $300.4 But the central

feature of a contingent fee is the possibility of an award that exceeds the value of fees on

an hourly basis. In other words, it “would make no economic sense for the attorney to

accept a contingent case unless the effective hourly rate for work would exceed by some

amount that which otherwise could be earned from noncontingent sources.” Jay, supra,

at 837. Thus, the mere fact that the contingent fee, when translated to an hourly rate, is

higher than an attorney’s billing rate in a noncontingent case, does not overcome the

presumption that the statutory formula generates a fee that is not excessive.

3
       We note that an “exceptional circumstances” standard for review of alleged
excessive fees is consistent with standards previously adopted by the Legislature, see
Minn. Stat. § 176.081, subd. 4 (1984) (providing for review of fee award “upon the
ground that it is arbitrary and unwarranted by the evidence”), repealed, Act of May 22,
1985, ch. 234, § 22, 1985 Minn. Laws 739, 755, and with the ethical standards that
govern licensed lawyers, see In re Dvorak, 554 N.W.2d 399, 403 (Minn. 1996)
(concluding that a fee that is in excess of that authorized by statute or court order is
unreasonable); In re Simmonds, 415 N.W.2d 673, 675-76 (Minn. 1987) (detailing
“exorbitance” in fees).
4
       Contrary to the dissent’s assertion that we lack sufficient evidence to reach this
conclusion, our review of the record uncovers no facts that would support a finding of
exceptional circumstances, making a remand to the compensation judge unnecessary.

                                            13
      Therefore, because we exercise a strong presumption against finding that the

statutory formula in Minn. Stat. § 176.081 results in an excessive attorney fee, and

because Bartel and SFM have not presented any exceptional circumstances to challenge

this presumption, we affirm.

      Affirmed.

                                        14
                                       DISSENT

STRAS, Justice (dissenting).

       In Irwin v. Surdyk’s Liquor, we held that Minn. Stat. § 176.081, subd. 1(a) (2012),

infringes on the judicial power by prohibiting judicial review of statutory awards of

attorney fees to ensure that they provide adequate compensation for attorneys litigating

claims for workers’ compensation benefits. 599 N.W.2d 132, 141-42 (Minn. 1999); see

also Minn. Const. art. III, § 1. This case presents the other side of the same question:

whether the statute violates the separation of powers by prohibiting judicial review of

excessive attorney-fee awards under the statute.

       I continue to harbor doubts about our decision in Irwin, because the Legislature

typically has the authority to regulate recoveries in civil actions, including the amount of

attorney fees available, particularly when a case involves a statutory cause of action like a

claim for workers’ compensation benefits. Cf. Irwin, 599 N.W.2d at 144-46 (Anderson,

Russell, J., dissenting). Irwin, nonetheless, is good law, and no one has asked us to

modify it here. Our task is simply to clarify whether Irwin’s holding that we must retain

“final, independent review” over an award of attorney fees that is too low, id. at 142,

extends to instances in which an award is too high. As the court recognizes, the answer

to that question is straightforward, because “the central point of Irwin . . . applies

regardless of whether a statutory formula establishes a ceiling or a floor for a fee award.”

In my view, the foregoing analysis fully answers the question presented and I would

proceed no further.

                                            D-1
                                             I.

       Instead, as a matter of comity, the court declines to apply Irwin’s constitutional

reasoning here.1 When we have deferred to the Legislature as a matter of comity, even

when a statute encroaches on the judicial power, as it does here, our decision to defer to

the Legislature is itself an exercise of judicial power. Cf. State v. Willis, 332 N.W.2d

180, 184 (Minn. 1983) (deciding to enforce a statute as a matter of comity “since it

neither interferes with nor impairs a judicial function”).      However, unlike in those

instances in which we have elected to enforce a statutory provision that would otherwise

violate the separation of powers, there is good reason not to do so here.

       The court justifies its decision by emphasizing that the formula for calculating

attorney fees under the statute resembles a contingent-fee arrangement.2 See Minn. Stat.

§ 176.081, subd. 1(a) (2012) (providing for a fee equal to 25 percent of the first $4,000

recovered plus 20 percent of the next $60,000). “[T]he Legislature reasonably adopted a

formula for calculating fee awards that mimics the risk-spreading features of contingent-

1
        The court insists it is “reaffirm[ing] the holding in Irwin,” and therefore attorneys
representing injured employees should not worry. See Irwin, 599 N.W.2d at 142. But if
a party responsible for paying an attorney (the employer and an insurer in this case, but
perhaps an employee in a different case) wants to argue that the statutory fee is excessive,
the court will refuse to entertain such a challenge absent exceptional circumstances. In
short, the court decides to err on the side of overcompensating attorneys—an approach
that is in tension with Minn. R. Prof. Conduct 1.5(a) (“A lawyer shall not make an
agreement for, charge, or collect an unreasonable fee or an unreasonable amount for
expenses.”).
2
       Of course, as illustrated by this case, the statutory scheme governing attorney fees
in workers’ compensation cases differs from a normal contingent-fee arrangement
because it sometimes requires the employer or an insurer, rather than the employee, to
pay the employee’s attorney. See Minn. Stat. § 176.081, subd. 1(a)(1).

                                            D-2
fee retainer agreements,” the court explains, so it is natural that, “in a particular case, the

Legislature’s formula may result in a higher fee than the attorney might receive if paid by

the hour or under a different formula.” Thus, according to the court, there is no reason

for the court to review the fee to ensure that it is not excessive.

        The flaw in the court’s argument, however, is that its rationale applies equally to

the situation in Irwin. The possibility that “the Legislature’s formula may result in a

[lower] fee than the attorney might receive if paid by the hour or under a different

formula” is just as much “an element of the risk-spreading inherent in contingency

formulas” as is the possibility of the formula generating a higher fee in a particular case.

Indeed, the fact that the attorney bears the risk of a low recovery, or even non-recovery,

in an unsuccessful case is precisely what justifies charging the higher fee in a successful

case.   Cf. Gisbrecht v. Barnhart, 535 U.S. 789, 810 (2002) (Scalia, J., dissenting)

(explaining that a contingent-fee arrangement “assign[s] the risk of an unsuccessful

outcome to the attorney, in exchange for a percentage of the recovery from a successful

outcome that will (because of the risk of loss the attorney has borne) be higher . . . than

what the attorney would receive in hourly billing for the same case”). Accordingly, the

fact that the Legislature has adopted a contingent-fee approach for setting attorney-fee

awards in workers’ compensation cases does not provide a basis for adopting a different

approach here than in Irwin.

                                              II.

        The court also asserts that adhering to Irwin in this case would undermine the

legislative objectives embodied in Minn. Stat. § 176.081, subd. 1(a). What the court fails

                                             D-3
to acknowledge, however, is that our decision in Irwin has already undermined the

legislative scheme. The court does not assert, nor could it, that the text of Minn. Stat.

§ 176.081, or of any other provision of the Workers’ Compensation Act for that matter,

expresses a legislative preference for judicial review of only those attorney-fee awards

that are allegedly too low, while leaving intact awards that are potentially too high. In

fact, by reviewing only attorney-fee awards that may be too low, the court is likely doing

more damage to the legislative scheme by creating an asymmetric preference in favor of

higher attorney-fee awards in workers’ compensation cases. Enforcing only part of the

statute, in other words, has the potential to undermine the delicate “compromise struck in

the workers’ compensation statute balancing certain, but limited, benefits provided to

employees injured in the course of their employment with the limitations on the ability of

workers to recover damages in tort actions.” Stringer v. Minn. Vikings Football Club,

LLC, 705 N.W.2d 746, 755-56 (Minn. 2005).

      Moreover, the various legislative policies that the court claims would be

undermined by judicial review of attorney-fee awards were announced in cases under

prior versions of the Workers’ Compensation Act that expressly permitted judicial review

of attorney-fee awards. See, e.g., Mack v. City of Minneapolis, 333 N.W.2d 744, 752

(Minn. 1983) (noting that, under the Workers’ Compensation Act, “ultimately we can

review all attorney fees decisions”); see also Minn. Stat. § 176.081, subds. 3-4 (1982)

(providing that an employee could seek review of an award of attorney fees in the

workers’ compensation court of appeals and in this court); Minn. Stat. § 176.081, subd. 4

(1980) (providing that an employee could seek review of an award of attorney fees in this

                                           D-4
court); Minn. Stat. § 8201 (1913) (“No claim for legal services or disbursements

pertaining to any demand made or suit brought under the provisions of this act shall be

[valid] . . . unless the same be approved in writing by the judge presiding at the trial

. . . .”). Indeed, some of the decisions applied versions of the statute that required courts

to review fee awards under a list of factors that were almost identical to the factors that

we adopted in Irwin. Compare Minn. Stat. § 176.081, subd. 5(d) (1982), and Minn. Stat.

§ 176.081, subd. 5(d) (1980), with Irwin, 599 N.W.2d at 142. The court does not explain

how the possibility of judicial review in this case would undermine legislative policies

that our previous decisions have said were furthered by a similar type of judicial review

for reasonableness. E.g., Kahn v. Univ. of Minn., 327 N.W.2d 21, 24 (Minn. 1982)

(noting that the “statutory scheme for application and review of attorney fee requests [by

the agency] evinces two distinct purposes”: to protect claimants from excessive charges

and to insure that the attorneys representing them receive reasonable compensation).

       Finally, the court fails to directly address the argument made by the employer and

the insurer (collectively, “the relators”). According to the court, the relators urge us to

review attorney-fee awards by “[c]onducting a case-by-case determination of attorney

fees.” However, the relators actually request a “determination of an attorney fee pursuant

to the Irwin factors,” through consideration of, among other things, “the amount

involved, the time and expense necessary to prepare for trial, the responsibility assumed

by counsel, the experience of counsel, the difficulties of the issues, the nature of the proof

involved, and the results obtained.” Irwin, 599 N.W.2d at 142. The court fails to explain

                                             D-5
how the sort of review the relators actually seek, based on the factors that we already

endorsed in Irwin, undermines the statute.

                                             III.

       The court also purports to create an exception for truly excessive awards in

“exceptional circumstances,” but then deprives the relators of the benefit of that

exception based on another misreading of their argument.            This time, the court

conclusively determines that the relators “have not presented any exceptional

circumstances” because they did not present evidence that the fee in this case was

excessive. The problem is that the relators had no reason to present evidence of the

excessiveness of the fee to this court, and no way of knowing that they were supposed to

do so, because they did not ask this court to hold that the particular fee in this case was

excessive. Rather, what the relators requested was that the “matter be reversed and

remanded to the Compensation Judge” for review of the statutory-fee award. That is

what we did in Irwin, 599 N.W.2d at 142 (remanding to the workers’ compensation court

of appeals, not to a compensation judge, because the compensation judges had already

made findings regarding the reasonableness of the fees), and the relators would have had

no reason to know that, in this case, the court would create a new barrier to judicial

review of a statutory-fee award. Because they expected to have a chance to prove

excessiveness before the compensation judge in the first instance, in accordance with

Irwin, they could not have known that they needed to prove the excessiveness of the fee

to this court.

                                             D-6
       In short, the court penalizes the relators for failing to meet a standard that had not

yet been announced because they failed to present evidence that they would have had no

reason to present to this court. Even if I agreed that this case is distinguishable from

Irwin, the court’s decision simply goes too far.

                                            IV.

       For the foregoing reasons, I respectfully dissent.

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