It has been nearly ten years since Florida’s First District Court of Appeal handed down its landmark decision in Miles v. City of Edgewater Police Department, 190 So. 3d 171 (Fla. App. 1st DCA 2016). Since that time, the process of approving attorneys’ fees in workers’ compensation cases has been more, not less, cumbersome. Why?
I wrote a series of blogs in the Clearwater Legal Examiner back in June of 2022 on how I felt the Miles case was being misapplied across the state of Florida. I still have a difficult time following the logic in how Miles is being applied, so I thought I would revisit this issue, and try to get down to the brass tacks of statutory construction and case law interpretation to address my thoughts on how Miles is being misapplied and creating an enormous (and unnecessary) burden on Judges and Claimants’ attorneys alike.
The Plain Language of Miles
Although an attorney’s fee of 25% is above the statutory guideline percentages contained within F.S. 440.34(1), in Miles, the First District Court of Appeal held that a Claimant may waive statutory rights such as those in section 440.34, Florida Statutes, stating in relevant part:
For example, in In re Amendment to the Rules Regulating the Florida Bar — Rule 4-1.5(f)(4)(B) of the Rules of Professional Conduct, the Florida Supreme Court approved a Florida Bar rule that allowed medical malpractice plaintiffs to waive the constitutional caps on attorney’s fees, subject to certain conditions. 939 So. 2d at 1038-39. Notably, those conditions [**29] did not require judicial review of such waivers; whereas in the workers’ compensation context, the JCC must approve as reasonable the fee a claimant agrees to pay her attorney. Likewise, here, we see no reason why a workers’ compensation claimant should not be able to waive a limitation on claimant attorney’s fees and pay her attorney with her own (or someone else’s) funds, subject to a JCC’s finding that the fee is reasonable….
We conclude that the statutory restrictions are unconstitutional, and that the proper remedy is to allow an injured worker and an attorney to enter into a fee agreement approved by the JCC, notwithstanding the statutory restrictions. Accordingly, we reverse the orders of the JCC, and remand for a new hearing on the motion to approve the retainer agreements and on the petitions for benefits. Id at 24 (emphasis added).
The plain language of Miles is that approval of the fee agreement between the Claimant and their counsel is the proper course of action when F.S. 440.34(1) is waived, which in turn implies that such fee agreement should be approved at the outset of representation, as was mandated in Miles, supra.
The Process for Approval of a Fee Agreement per the Rules Regulating the Florida Bar
In examining the considerations and process for approval of a fee agreement under the Rules Regulating the Florida Bar, we may look to Rule 4-1.5(f)(4)(B)(ii), which states in relevant part:
If any client is unable to obtain a lawyer of the client’s choice because of the limitations set forth in subdivision (f)(4)(B)(i), the client may petition the court in which the matter would be filed, if litigation is necessary, or if that court will not accept jurisdiction for the fee approval, the circuit court in which the cause of action arose, for approval of any fee contract between the client and a lawyer of the client’s choosing.
While “Miles’ Fee” within the guidelines of Rule 4-1.5(f)(4)(B)(i), is technically not subject to Rule 4-1.5(f)(4)(B)(ii), Workers’ Compensation cases involving a waiver of F.S. 440.34(1) are analogous insofar as the fee is in excess of the statutory guideline, requiring court approval per Miles; therefore, this Rule is consistent with Miles, supra, and provides guidance for the process involving court approval of a fee agreement in workers’ compensation matters.
As noted, Rule 4-1.5(f)(4)(B)(ii) states: “that the client may petition the court in which the matter would be filed, if litigation is necessary.” This implies that litigation is not a pre-requisite to fee approval. Indeed, many cases are resolved without the need for litigation, in which case court approval would be necessary without the filing of a petition or complaint.
It is now clear in the State of Florida that Workers’ Compensation Claimants are unable to find representation by qualified workers’ compensation lawyers under the guideline fees set forth in F.S. 440.34(1). The overwhelming majority of Claimant’s attorneys now charge a 25% contingent fee, such as the fee being charged in the present matter.
Approval of Fee Agreement as an
Obligatory Function of the Trial Court
The Comment to Rule 4-1.5 of the Rules Regulating the Florida Bar on “Contingent fee regulation,” relating to fee agreements for which approval must be obtained, states:
On a petition by a client, the trial court reviewing the waiver request must grant that request if the trial court finds the client: (a) understands the right to have the limitations in rule 4-1.5(f)(4)(B) applied in the specific matter; and (b) understands and approves the terms of the proposed contract. The consideration by the trial court of the waiver petition is not to be used as an opportunity for the court to inquire into the merits or details of the particular action or claim that is the subject of the contract (emphasis added).
This evaluation of a Petition for Approval of Fee Agreement on its merits is an obligatory function of the trial court – in workers’ compensation matters, the trial court is the Office of the Judges of Compensation Claims. This is a simple process. Why aren’t we doing it the way every other lawyer and court in the State of Florida handles fees in excess of guidelines?
Per the Rule, if the trial court finds that the client/claimant (a) understands the right to have the fee limitations applied in this specific matter AND (b) understands and approves of the terms of the proposed contract, it should grant the petition and approve the fee agreement.
It is important to note that under the Rule: The consideration by the trial court of the waiver petition is not to be used as an opportunity for the court to inquire into the merits or details of the particular action or claim. This implies that the only considerations are whether the client/claimant understands their rights under F.S. 440.34(1) and understands and approves of the terms of the contract. The evaluation ends there.
The effect of the Waiver of the Statutory Right provided in Section 440.34(1) is to waive the entirety of this section of the statute, which is to say that F.S. 440.34(1) is no longer the standard by which this fee and fee agreement are to be considered; rather, pursuant to Miles, supra, the fee is now subject solely to the Rules Regulating the Florida Bar.
While F.S. 440.34(1) states “the JCC is not required to approve any retainer agreement between the claimant and his or her attorney,” it also states that “the judge of compensation claims shall not approve…an agreement between a claimant and his or her attorney…which provides for an attorney’s fee in excess of the amount permitted by this section.”
Since F.S. 440.34(1) has been waived by the Claimant, neither of these points is applicable to the evaluation and approval of a fee agreement between Claimant and their counsel. In fact, by invoking the Rules Regulating the Florida Bar, the First DCA has impliedly mandated the procedures for fee approval contained therein.
Approval of the Fee Agreement
at the Outset of Representation
The Rules Regulating the Florida Bar requiring court approval of fee agreements, require that approval at the outset of representation. There is no provision anywhere in the Rules for evaluation of a contingent fee agreement after the contingency has occurred.
In cases with a statutory waiver, Miles, supra, now controls the fee and fee agreement, and Miles clearly and specifically states: “We conclude…that the proper remedy is to allow an injured worker and an attorney to enter into a fee agreement approved by the JCC.” Id at 184 (emphasis added). This is a mandate, not an option for anyone.
In Miles, supra, the First DCA “remand[ed] for a new hearing on the motion to approve the retainer agreements and on the petitions for benefits.” In other words, the First DCA held that the court should hold a new hearing on approving the fee agreement at the outset of the matter. While the fee in Miles was an hourly fee, not a contingent fee, the analysis should not differ because we are talking about an agreed upon fee to be paid in the future in both cases.
Since, unlike Medical Malpractice fee agreements, Workers’ Compensation fee agreements are subject to judicial approval, it is imperative that these waivers and fee agreements are approved in advance so that the parties to the agreement know that they have a valid contract for legal representation. Without approval at the outset of the representation there is no valid, enforceable contract upon which the Claimant and their counsel may rely.
No reasonable person – lawyer, client or otherwise – would engage in an economic venture without the certainty of understanding the fee to be paid or charged out the outset. When a fee agreement is not approved in advance, the parties to the contract risk the fee being something other than bargained for at the time of the contract. Therefore, approval of the fee agreement at the outset of representation is necessary for the Claimant and their counsel to know and understand that the fee agreement would be approved or denied prior to commencement of representation. There is no other area of the law in the State of Florida that allows a client and their attorney to proceed in a case and then seek approval of the terms of their fee agreement after all of the work on the case has been done. Such a system defies logic, economics and the Rules Regulating the Florida Bar.
Precedent for Approval of the Fee Agreement by the JCC
In Cifello v. Speedway, LLC/Sedgwick CMS, OJCC No. 25-017695JPM, the Honorable John P. Moneyham, Judge of Compensation Claims, Tampa District, approved a fee agreement at the outset of representation.
Judge Moneyham found:
I find that Miles mandates an analysis of whether the contracted fee arrangement is permissible under the terms of the Contract and the Rules Regulating the Florida Bar. I find that the holding in Miles permits approval of the fee agreement set forth in the Contract. “At the end of the” Miles “decision immediately before reversing the JCC’s orders and remanding the case ‘for a new hearing on the motion to approve the retainer agreements and on the petitions for benefits,’ the court provided that “[w]e conclude that the statutory restrictions are unconstitutional, and that the proper remedy is to allow an injured worker and an attorney to enter into a fee agreement approved by the JCC, notwithstanding the statutory restrictions.”3 (emphasis added). “In conclusion, the restrictions in sections 440.105 and 440.34, when applied to a claimant’s ability to retain counsel under a contract that calls for the payment of a reasonable fee by a claimant (or someone on his or her behalf), are unconstitutional violations of a claimant’s rights to free speech, free association, and petition—and are not permissible time, place, or manner restrictions on those rights.” (emphasis added) Miles, 190 So. 3d at 184. As evidenced by the bolded language from Miles in the two proceeding sentences, it is clear that a Miles fee agreement is what the judge should consider for approval of a requested Miles fee and that an attorney’s fee that is permitted by such fee agreement and the Rules Regulating the Florida Bar is a legally permissible attorney’s fee.
Judge Moneyham’s analysis is straight forward and in line with what is the most sensible reading of Miles, supra, and the Rules Regulating The Florida Bar.
The Great Misunderstanding of Miles:
Lee Engineering Analysis Does Not Apply to the
Approval of Fee Agreements between Claimant & Counsel
Until Miles, the factors contained in Lee Engineering and Rule 4-1.5(b) of the Rules Regulating the Florida Bar had never been used to evaluate a fee agreement of any kind anywhere in the State of Florida where there is privity of contract between client and lawyer. The great misunderstanding of trial courts in applying Miles, has been to use the Lee Engineering factors in evaluating an attorney’s fee paid by a client to a lawyer pursuant to a contingent fee agreement.
Citing Jacobson v. Se. Pers. Leasing, Inc., 113 So. 3d 1042, 1048 (Fla. 1st DCA 2013), Miles states:
Thus, we conclude that, to the extent these statutes prohibit a workers’ compensation claimant (or a claimant’s union) from paying attorney’s fees out of their own funds for purposes of litigating a workers’ compensation claim, these statutes are unconstitutional, because they impermissibly infringe on a claimant’s rights to free speech and to seek redress of grievances. Additionally, any fee agreement “must nonetheless, like all fees for Florida attorneys, comport with the factors set forth in Lee Engineering & Construction Co. v. Fellows, 209 So. 2d 454, 458 (Fla.1968), and codified in the Rules Regulating the Florida Bar at rule 4-1.5(b).” Jacobson, 113 So. 3d at 1052. Consequently, we hold that no attorney accepting fees in this situation may be prosecuted under section 440.105(3)(c), Florida Statutes.” Miles at 181, 182.
This language relating to Lee Engineering, supra, is dicta relating to the unconstitutionality of F.S. 440.105(3)(c), and criminal penalties for attorneys, not the evaluation of the fee agreement. It is not a mandate for judicial review of the fee agreement per the factors found in Rule 4-1.5(b) of the Rules Regulating the Florida Bar. It does not say: “the JCC must apply the factors of Lee Engineering.” It is a mere statement of the obvious that has caused massive confusion regarding how to interpret Miles when approving a fee agreement.
Privity of Contract = No Lee Engineering
In reality, Lee Engineering, supra, and Rule 4-1.5(b) are standards by which disputed fees are to be evaluated, not stipulated fees or contractual fees by agreement between two competent parties such as lawyer and client. Lee Engineering, supra, was not a case with a stipulated fee agreement; the amount of fee was in dispute. In fact, Lee Engineering specifically states:
In summary, where there is not a stipulation between the parties fixing a dollar value for the services rendered, there should be satisfactory proof from which the Deputy Commissioner can determine the value of the service in the light of the views expressed herein. Id at 458, 459 (emphasis added).
There is not an appellate case in the State of Florida that states Lee Engineering, supra, or Rule 4-1.5(b) of the Rules Regulating the Florida Bar should be used to evaluate a stipulated fee agreement such as the one entered into by the Claimant and their counsel in the present matter.
When to Apply Lee Engineering
The application of Rule 4-1.5(b) by the courts was initiated in Florida Patient’s Compensation Fund v. Rowe, 472 So. 2d 1145 (Fla. 1985) when the Florida Supreme Court stated:
Although the amount of an attorney fee award must be determined on the facts of each case, we believe that it is incumbent upon this Court to articulate specific guidelines to aid trial judges in the setting of attorney fees. We find the federal lodestar approach, explained below, provides a suitable foundation for an objective structure. See Lindy Bros. Builders v. American Radiator & Standard Sanitary Corp., 487 F.2d 161 (3d Cir. 1973) and 540 F.2d 102 (3d Cir. 1976) (Lindy II); City of Detroit v. Grinnell Corp., 495 F.2d 448 (2d Cir. 1974) and 560 F.2d 1093 (2d Cir. 1977) (Grinnell II); Copper Liquor, Inc. v. Adolph Coors Co., 624 F.2d 575 (5th Cir. 1980). See also Derfner; Berger, Court Awarded Attorneys’ Fees: What is “Reasonable”, 126 Pa. L. Rev. 281 (1977); Leubsdorf, The Contingency Factor in Attorney Fee Awards, 90 Yale L.J. 473 (1981).
In determining reasonable attorney fees, courts of this state should utilize the criteria set forth in Disciplinary Rule 2-106(b) [now Rule 4-1.5(b)] of The Florida Bar Code of Professional Responsibility. Rowe, supra (emphasis added).
Rowe was the beginning of the application of Rule 4-1.5(b) by Florida Courts in determining a reasonable attorney’s fee. It is a crucial point that Rowe dealt with an analysis of how to determine a disputed fee in a fee-shifting case. The primary reason the Rowe Court made this determination was to have a uniform guideline for courts to follow in determine a reasonable fee in a very specific situation: fee-shifting cases where the party paying the fee has not agreed to pay a fee based upon a contract:
Recently, partially because of the substantial increase in the number of matters in which courts have been directed by statute to set attorney fees, great concern has been focused on a perceived lack of objectivity and uniformity in court-determined reasonable attorney fees.
The contingency risk factor is significant in personal injury cases. Plaintiffs benefit from the contingent fee system because it provides them with increased access to the court system and the services of attorneys. Because the attorney working under a contingent fee contract receives no compensation when his client does not prevail, he must charge a client more than the attorney who is guaranteed remuneration for his services. When the prevailing party’s counsel is employed on a contingent fee basis, the trial court must consider a contingency risk factor when awarding a statutorily-directed reasonable attorney fee. However, because the party paying the fee has not participated in the fee arrangement between the prevailing party and that party’s attorney, the arrangement must not control the fee award. Rowe, supra (emphasis added).
This last statement forms the basis of each and every case that follows in which a court applies Rule 4-1.5(b) in determining a reasonable attorney’s fee, and it has been used only when the payor did not agree to the fee in advance through contract.
A review of appellate case law surrounding this question reveals this to be true: in a court’s evaluation of the reasonableness of an attorney’s fee, Rule 4-1.5(b) is invoked only in circumstances with there is no privity of contract between lawyer and payor, and there is a dispute regarding the fee.
To illustrate this fact, it is important to understand three different types of parties who may pay an attorney’s fee:
- a) Contracting Parties: a party (client) who contracts directly with an attorney for representation (Privity of Contract);
- b) Absent Parties: A party (client) who, such as an absent member of a class in class-action or common fund cases, is represented by a lawyer as a part of that class but did not enter into a retainer agreement with that lawyer (No Privity of Contract).
- c) Adverse Parties: A party, adverse to the party whom the lawyer represents, that is ordered to pay the lawyer’s fees as a result of a fee-shifting provision in a contract or statute (No Privity of Contract).
In workers’ compensation cases, we deal with (a) Contracting Parties & (c) Adverse Parties. While (b) Absent Parties do not exist in workers’ compensation cases, the body of law surrounding attorneys’ fees in Common Fund cases, which are brought as “class actions,” is a clear statement on the importance and weight given to a Contingent Fee Contract between a lawyer and a client.
There is a significant distinction between Contracting Parties on the one side and Absent & Adverse Parties on the other: Absent & Adverse Parties have no privity of contract with the lawyer to whom they must pay a fee, whereas Contracting Parties have specifically agreed to pay a certain fee in advance. Why is this distinction important? Because it will determine how and whether a court should intervene and evaluate the reasonableness of a fee.
In Kuhnlein v. Dep’t of Revenue, 662 So. 2d 309, 1995 Fla. LEXIS 1618, 56 A.L.R.5th 831, 20 Fla. L. Weekly S 526 (Fla. 1995), the Florida Supreme Court highlighted this difference:
Similarly, in common-fund cases brought pursuant to the classification procedure of Florida Rule of Civil Procedure 1.220, most class members do not enter into written contingency fee agreements with class counsel. As in this case, contingency fee agreements in common-fund cases generally are entered only by the named plaintiffs who are a small portion of the class. Consequently, if the court allowed the written fee agreements to control the fee to be awarded from the common fund, it would be enforcing fee agreements to which the vast majority of class members did not consent. Thus, the fact that class counsel and the named parties agreed that attorney fees would be calculated on a percentage basis cannot control what approach the court should use in exercising its inherent power to determine reasonable attorney fees to be paid from the common fund.
The significance of this distinction is what leads Florida Courts to evaluate the “reasonableness” of a contingent fee where there no privity of contract between lawyer and payor. The Kuhnlien Court noted the similarity between cases where is no privity of contract:
Furthermore, there is a compelling similarity between common-fund and fee-shifting cases which causes us to disagree with counsel’s contention that the fee agreement between class counsel and the named parties should control the approach used to set a reasonable fee. In both cases the court is setting a fee that binds individuals or entities who have not entered a fee agreement. In fee-shifting cases the party paying the fee has not participated in the fee agreement between the prevailing party and that party’s attorney. Rowe, 472 So. 2d at 1151. Consequently, the fee agreement does not control the amount of the fee. Id. We noted in Rowe that “‘were the rule otherwise, courts would find themselves as instruments of enforcement, as against third parties, of excessive fee contracts.'” 472 So.2d at 1151 (quoting Trustees of Cameron-Brown Inv. Group v. Tavormina, 385 So. 2d 728 (Fla. 3d DCA 1980)).
From the above, it is clear that in the eyes of the Florida Supreme Court, when there is no privity of contract, the fee agreement does not control the amount of the fee; therefore, the court should evaluate the reasonableness of the attorney’s fee by using Rule 4-1.5(b). This makes perfect sense. You should not enforce a contract against someone who is not privy to that contract.
If that is the case, then the inverse must also be true: where there is a written fee contract, the fee agreement does control the amount of the fee. If it does not, then why make the distinction? Why would the Florida Supreme Court make such a distinction between the two if they did not intend to give the deference to the fee agreement between a lawyer and their client that is given by Rule 4-1.5(d) of the Rules Regulating the Florida Bar regarding the enforceability of fee agreements? In Kuhnlien, the Court’s basis for stating that the Contingent Fee Agreement did not control the fee is that the absent class members were not parties to the original contract between the attorneys and the named plaintiffs.
The Kuhnlein Court noted that this was a question in common-fund, class-action type claims and in statutory fee-shifting cases because they involved parties who had not entered into a contract with the lawyer for the given percentage:
In Tenney, this Court recognized those who received the benefit of the creation of a common fund through a class action should share equitably in the burden of paying attorney fees and costs necessary to the creation of the common fund. 11 So. 2d at 190. To insure that each class member paid his or her equitable share of the fees, the Court approved the payment of the amount of the attorney fees based upon a percentage contingency fee contract which the court stated was “agreed to freely and voluntarily by those who benefited.” Id. at 190. In that class action, however, unlike the class action presently before us, there were 232 claimants, of which 170 contracted on a contingent basis for one-third of the amount recovered. The Tenney Court found that there was ample evidence to support the reasonableness of the contract relative to those who executed the contract. Id. at 190. The case was remanded for the chancellor to determine whether that contract was also reasonable for the 62 claimants who had not agreed to it. Id. at 193 (Chapman, J., concurring specially).
Based upon the fact that there was no privity of contract, they used Rule 4-1.5(b) to determine a reasonable fee, and used the lodestar method for fee calculation, which is based upon time expended (which, by the way, resulted in a lodestar multiplier of 5.0 times the hourly rate in Kuhnlien).
If the basis for doing an evaluation of Rule 4-1.5(b) is that there is no privity of contract, where does that leave us in evaluating a fee where there is privity of contract? While Rule 4-1.5(b) is applicable (“any fee agreement must nonetheless, like all fees for Florida attorneys, comport with the factors set forth in Lee Engineering….” Miles, supra, at 181, 182), an analysis under Rule 4-1.5(b) and the Lee Engineering factors is not appropriate in the evaluation of the subject fee agreement, per Kuhnlein and Tenney, supra.
With privity of contract, in the absence of evidence that the fee is in dispute or constitutes clear overreaching or an unconscionable demand on the part of the lawyer in violation of Rule 4-1.5(a), there is no reason to apply Rule 4-1.5(b) to a contingent fee agreement such as the contingent fee agreement in the present matter.
Why Are We Making This So Cumbersome?
If you were to explain to lawyers outside of the workers’ compensation practice how attorneys’ fees are approved in work comp cases, they would look at you like you had four heads. It makes no sense. It does not follow precedent. It calls for claimants and their lawyers to enter into agreements which may or may not be approved by the court after all the work has been done. It creates a process of evaluation of attorneys’ fees which completely ignores the nature and benefit of contingent fees. It places a burden which adds hours of time for both lawyers and judges to evaluate the actual work done on a case. It’s like hiring a general contractor to renovate your house, then having a city or county official step in after-the-fact to evaluate the work performed and tell the general contractor that you don’t have to pay them what you agreed to pay them. It’s actually insane when you think about it. Let’s stop the insanity and follow the plain language of Miles by approving the fee agreement at the outset of representation, as happens in every other area of the law involving judicial approval of attorney’s fees.
