Injured Workers Ass'n v. State
2016 UT 21
| Utah | 2016Background
- Utah attorneys representing injured workers in workers’ compensation cases have their fees set out of the worker’s award; the Legislature delegated authority to fix those fees to the Utah Labor Commission (Utah Code § 34A-1-309) and the Commission adopted a sliding-scale fee schedule plus an overall dollar cap.
- The Injured Workers Association of Utah (IWA) and member attorneys challenged the statute and the Commission’s rule as unconstitutional, arguing the Utah Supreme Court has exclusive authority to regulate the practice of law, which includes attorney-fee regulation.
- The district court upheld the statute and rule, relying on Thatcher v. Industrial Commission (1949) and on commentary to Rule 1.5 suggesting statutes may limit contingent fees.
- On appeal the Utah Supreme Court considered separation-of-powers principles, the 1985 constitutional amendment (art. VIII, § 4) granting the Supreme Court explicit rulemaking power and exclusive authority to govern the practice of law, and whether regulation of attorney fees falls within that authority.
- The Court held that (1) the Supreme Court has exclusive constitutional authority to govern the practice of law; (2) regulation of attorney fees is part of the practice of law; and (3) the statute and Commission rule delegating fee-setting authority to the Legislature/Labor Commission are unconstitutional encroachments on judicial power.
- The Court declined to adopt a new fee schedule itself at this time, reasoning record evidence did not convincingly favor a mandatory schedule and that attorneys remain constrained by Rule 1.5 and disciplinary enforcement.
Issues
| Issue | Plaintiff's Argument (IWA) | Defendant's Argument (State) | Held |
|---|---|---|---|
| Whether regulation of attorney fees for workers’ compensation falls within the Supreme Court’s power to govern the practice of law | Fee regulation is part of the practice of law and therefore exclusively vested in the Utah Supreme Court by art. VIII, § 4 | Thatcher allowed the Legislature to regulate fees; fee regulation is not exclusively judicial | Held: Fee regulation is within the practice of law and therefore exclusively judicial authority |
| Whether the Legislature may delegate fee-setting power to the Labor Commission (Utah Code § 34A-1-309) | Such delegation violates separation of powers because the Constitution does not permit legislative control over the practice of law | The Legislature historically (and in Thatcher) had authority under its police powers to regulate fees in workers’ comp cases | Held: The statute delegating fee-setting to the Labor Commission is unconstitutional under separation of powers |
| Whether Thatcher v. Industrial Commission controls | Thatcher is distinguishable/outdated because it predated the 1985 amendment that made judicial authority exclusive | Thatcher held Legislature could set fees under then-existing constitutional framework | Held: Thatcher is overruled to the extent it permitted legislative regulation of attorney fees post-1985 amendment |
| Whether the Court should adopt its own fee schedule for injured workers’ attorneys now | IWA urged invalidation of legislative scheme; did not press for a specific new judicial schedule as mandatory | State implicitly urged retention of some regulated schedule to protect unsophisticated claimants | Held: Court declines to adopt a fee schedule now; attorneys remain bound by Rule 1.5 and disciplinary enforcement |
Key Cases Cited
- Thatcher v. Industrial Commission, 207 P.2d 178 (Utah 1949) (held legislature had authority to fix attorney fees under pre-1985 constitutional framework)
- Bailey v. Utah State Bar, 846 P.2d 1278 (Utah 1993) (discusses inherent judicial authority to regulate the practice of law)
- In re Integration & Governance of the Utah State Bar, 632 P.2d 845 (Utah 1981) (court adopted rules for bar integration under inherent power)
- Barnard v. Utah State Bar, 804 P.2d 526 (Utah 1991) (recognizes court’s authority to regulate admission and discipline of attorneys)
- In re Schwenke, 89 P.3d 117 (Utah 2004) (emphasizes exclusive constitutional grant that the court controls the practice of law)