Opinion
No. 77-1014
Decided July 6, 1978.
Recipient of workmen's compensation award challenged the amount of fees claimed by the attorneys who had represented her in the proceedings, and referee, acting without notice, set $4,012 as being a reasonable fee. The attorneys sought review.
Order Set Aside
1. WORKERS' COMPENSATION — Widow — Decedent Employee — Same Relative Position — Claimant Employee — Entitled to Determination — Reasonableness — Attorneys' Fees. Widow of decedent employee that is seeking workmen's compensation benefits as a result of her husband's death is in the same relative position as an employee who might be a claimant before the Industrial Commission and thus is entitled to make application to the director of the division of employment in order to have the reasonableness of her attorneys' fees determined.
2. Attorney-Client Fee Contract — Presented for Determination — Reasonableness of Fee — Minimum Due Process — Opportunity — Present Evidence — No Hearing — Order Set Aside. Where, in workmen's compensation proceeding, the attorney-client fee contract has been properly brought before the director of the department of labor under statute which permits the director to determine the reasonableness of the fee charged, due process requires, at the very least, that the attorney and client thereafter be afforded an opportunity to present evidence for the director's consideration; thus, where, in such a situation, the referee decided to determine an appropriate attorney's fee, his failure to hold a hearing or tender an opportunity for such a hearing requires that his order setting a reasonable fee be set aside.
Review of Order from the Industrial Commission of the State of Colorado
West Weaver, P.C., John W. Weaver, for petitioner.
J. D. MacFarlane, Attorney General, David W. Robbins, Deputy Attorney General, Edward G. Donovan, Assistant Attorney General, Louis L. Kelley, Assistant Attorney General, for respondents.
This controversy involves the amount of attorneys' fees allowed to petitioner in a workmen's compensation case. We set aside the order and remand for hearing.
Claimant retained petitioner attorneys to represent her in an industrial commission case which sought compensation for the death, from an automobile accident, of her husband. She signed a contingent fee contract with said attorneys which stated that although the attorneys' normal rate was $40 per hour, claimant desired that the attorneys handle the matter on a contingent fee basis, and that the attorneys would receive for their service one-fourth of the recovery if the matter was resolved prior to hearing, and one-third if the matter was contested.
The claim was contested; it culminated in an award to claimant. Thereafter petitioners billed the claimant for $12,865.85, on the basis of the contingency fee agreement. Upon receiving the bill, claimant wrote to the referee and advised him that although she was satisfied with the services of the attorneys, under the circumstances she felt that one-third of the recovery was excessive. She requested the division to set the attorneys' fees at the same time as it acted upon her request for a lump sum distribution. The referee then wrote to the attorneys advising them of the claimant's request and asking for information about "the services performed, hours expended and other factors which should be considered in determining . . . reasonable attorneys fees."
The attorneys responded with a three-page letter detailing the services performed. They stated that their present fee was $60 per hour and asked that the contingent fee arrangement be approved. Thereupon, without notice to either party, and acting pursuant to § 8-52-111(1), C.R.S. 1973 (1976 Cum. Supp.), which provides that "at the request of either an employee or his attorney, the director may determine the reasonableness of the fee charged by such attorney," the referee entered an order stating that a fee based on the hours submitted by the attorneys at the rate of $40 per hour was a reasonable fee. He therefore set the fee at $4,102 plus $312 reimbursement for costs expended on behalf of the client.
[1] The attorneys appeal, contending first that the right to have the reasonableness of attorney fees determined by the commission is restricted to employees and that the widow of an employee is not an employee within the meaning of the statute. We do not agree. Claimant is in the same relative position as an employee who might be a claimant before the Industrial Commission and is entitled to make application to the director in order to have the reasonableness of fees determined.
[2] The attorneys also contend on appeal that the contingent fee agreement with claimant is reasonable, valid, and enforceable. After the request was made by claimant to determine the reasonableness of the contingent fee, the attorneys responded to the letter from the referee, but no opportunity was given to either party to present evidence and cross-examine witnesses. Where the attorney-client fee contract has been properly brought before the director by virtue of § 8-52-111(1), C.R.S. 1973, due process requires, at the very least, that the attorney and client thereafter be afforded an opportunity to present evidence for the director's consideration. See In re the Marriage of Nichols, 38 Colo. App. 80, 553 P.2d 77. Thus, after the referee decided to determine an appropriate fee, his failure to hold such a hearing or tender the opportunity for such a hearing was sufficient in itself to require that the order setting reasonable fees be set aside.
Order set aside and cause remanded to the Commission to hold a hearing on the reasonableness of the attorneys' fees.
JUDGE SMITH and JUDGE BERMAN concur.