This is an archived article that was published on sltrib.com in 2016, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Nearly a century ago, the Utah Legislature gave the state Industrial Commission the authority to regulate the fees of attorneys representing injured workers in workers' compensation claims.

Last week, the Utah Supreme Court took away that power, saying in a 4-0 opinion that the law granting that authority to the state agency is unconstitutional because it violates the separation-of-powers doctrine.

The justices also ruled the fee schedule set up by the Utah Labor Commission, which replaced the Industrial Commission in 1997, is unconstitutional. That schedule includes a cap of $18,590 on overall fees and applies only to the workers' attorneys — the fees for lawyers representing employers and insurance companies have never been regulated by the commission, according to court documents.

Writing for the court, Justice Christine Durham said that under the Utah Constitution, the state Supreme Court has the exclusive authority to govern the practice of law, which "undoubtedly" includes the regulation of attorney fees. The court, she said, could delegate that authority to the state Bar and maintain oversight, but "cannot delegate the power to govern the practice of law to the Legislature or the Labor Commission."

"This would violate the separation-of-powers clause because the ability to delegate this authority to another branch of our state government is not 'expressly directed or permitted' in the text of the Utah Constitution," Durham wrote.

The ruling is a victory for the Injured Workers Association of Utah (IWA) and several of its member attorneys who challenged the statute granting to the commission the power to regulate fees.

Virginius "Jinks" Dabney, a St. George lawyer who represented the challengers in the case, said the fee schedule has discouraged attorneys from practicing workers' compensation law. He estimated about 13,000 worker accidents of the 80,000 to 90,000 per year in Utah lead to lost time at work and said those employees often have trouble finding a lawyer to take their cases.

"I consider this a very significant decision," Dabney said Friday. "This gives injured workers more choice."

In addition, the ruling means settlement amounts will go up now that the fee cap is gone and attorneys can afford to spend more time on cases, according to Dabney.

The Utah attorney general's office, which argued in favor of the law, is evaluating the decision and had no comment, spokesman Dan Burton said.

The Legislature enacted the Workers' Compensation Act in 1917 and a few years later granted the Industrial Commission "full power to regulate and fix the fee charge" of attorneys involved in those cases, according to court documents. In 1921, a policy gave attorneys a minimum fee of $10, plus 5 percent of the injured worker's award. The fee schedule was adjusted several times since its inception, typically for inflation.

The latest regulation granted workers' lawyers who were successful in cases a fee of 25 percent for the first $25,000 of the award, 20 percent for the next $25,000 and 10 percent of an amount awarded in excess of $50,000. (Attorneys of unsuccessful claimants are entitled to nothing, even if they contracted with the worker to handle the case at an hourly rate.)

A fee cap was instituted in 1991 and adjusted to the $18,590 limit in 2011, court documents say. Some additional fees are awarded if the case is appealed.

The IWA sued in 2009 in 5th District Court, arguing that the statute authorizing the commission to regulate fees and the fee schedule are unconstitutional. In response, the attorney general's office cited a 1949 case in which the state Supreme Court recognized its power to govern the practice of law, but also said it was unaware of any power it had to regulate attorney fees.

In 2013, 5th District Judge John Walton found in favor of the state; in addition to the 1949 case, he relied on a comment in the Utah Rules of Professional Conduct for attorneys that stated the law may impose limitations on contingent fees, such as a ceiling on the allowable percentage, according to court documents. That ruling led to the Supreme Court appeal.

The Labor Commission created the fee schedule to protect "unsophisticated litigants," the Supreme Court decision said, but fears of unscrupulous attorneys preying on workers are exaggerated.

And, the court noted, lawyers who handle workers' compensation matters are bound by the professional conduct rules — just as in any other case — and can charge only reasonable fees.

Twitter: PamelaMansonSLC