May a lawyer actively seek his statutory attorney's fee at a fee hearing when the client objects because the fee comes out of her recovery?

Plain-English summary

An attorney representing a claimant in a worker's compensation proceeding under the Interim Act asked whether he could actively seek his fees under NMSA 1978, Section 52-1-54, when the client objected to any fee being awarded. That statute requires the hearing officer to set the attorney's fee, paid out of the claimant's recovery and capped at percentages of the recovery. The attorney had a written agreement basing the fee on the Workmen's Compensation Act. At the fee hearing the client said she did not consent to a procedure in which her attorney argues for a fee that reduces her benefits. The attorney asked whether seeking his fee would violate ethical rules or doctrines of separation of powers, equal protection, or due process.

The committee concluded the attorney may actively seek his fee and that doing so may terminate the attorney-client relationship for purposes of the fee hearing. It saw the situation as no different from any post-representation fee dispute. On Rule 15-304 (accepting compensation only from the client or with consent), it concluded the client's written agreement to a fee under the Act served as consent, and that the rule is aimed at third-party payers who might influence the attorney, which was not the case here. On zealous advocacy and conflicts of interest, it relied on New Mexico Advisory Opinion 1986-7 that those considerations do not apply in fee disputes after the representation is concluded, and cited Lewis v. Secretary of Health and Human Services (the attorney-client relationship terminated for purposes of a social security fee hearing where attorney and claimant took adverse positions). On using information to the client's disadvantage, it noted the long-standing exception permitting a lawyer to use information to collect his fee (Rule 16-106(D)).

The committee concluded that where the client is informed of how the fee will be set and consents, the client cannot later frustrate the attorney's entitlement to a reasonable fee by changing her mind. It noted Rule 16-105(B) requires communicating the basis of fees, preferably in writing, before or within a reasonable time after the representation begins, and observed that a fuller explanation of the Workmen's Compensation Act procedure at that time might have eliminated the client's later objection.

Currency note

This opinion was issued in 1988, under the New Mexico Rules of Professional Conduct effective January 1, 1987 (Rules 15-304, 16-105, 16-106, 16-107, and 16-108). It predates the State Bar of New Mexico's November 3, 2008 revisions to those Rules (the New Mexico adoption of the ABA Ethics 2000 changes), and the cited worker's-compensation fee statute may have changed. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a lawyer argue for his own fee when the client objects because it reduces her recovery?

A: The opinion concluded the lawyer may actively seek his statutory fee, treating it like any post-representation fee dispute, since the client had consented in writing to the fee basis.

Q: Do conflict-of-interest and zealous-advocacy rules bar seeking the fee?

A: The committee concluded those considerations do not apply in a fee dispute after the representation is concluded, relying on its earlier Opinion 1986-7 and the Lewis decision.

Q: Does seeking the fee end the attorney-client relationship?

A: The committee concluded that actively seeking the fee may terminate the attorney-client relationship for purposes of the fee hearing.

Q: How could the dispute have been avoided?

A: The committee noted that a fuller explanation of the worker's-compensation fee procedure when the fee basis was first communicated (as Rule 16-105(B) contemplates) might have eliminated the client's later objection.

Background and rules framework

The opinion applied Rule 15-304 (compensation from one other than the client), Rule 16-105(B) (communicating the basis of fees), Rule 16-106(D) (using information to collect a fee), Rule 16-107(B) (conflicts of interest), and Rule 16-108(B) (use of information to the client's disadvantage), read against NMSA 1978, Section 52-1-54. These correspond to current Model Rules 1.5, 1.7, 1.8, and 1.6.

Citations and references

Rules of Professional Conduct:

• Rule 15-304 (compensation from a third party); Rule 16-105(B) (communicating the basis of fees)
• Rule 16-106(D) (using information to collect a fee); Rule 16-107(B) (conflicts); Rule 16-108(B) (use of information to client's disadvantage)

Statutes:

• NMSA 1978, Section 52-1-54 (Cum. Supp. 1986) (worker's-compensation attorney fees)

Cases:

• Lewis v. Secretary of Health and Human Services, 707 F.2d 246 (6th Cir. 1983), attorney-client relationship terminated for the fee hearing

Other opinions cited:

• NM Advisory Opinion 1986-7 (conflict considerations do not apply in post-representation fee disputes)

See also

• NM Ethics Op. 1988-7: Collecting Unpaid Fees

Source

• Landing page: https://www.sbnm.org/Leadership/Committees/Ethics-Advisory-Committee/Ethics-Advisory-Opinions
• Original PDF: https://www.sbnm.org/Portals/NMBAR/AboutUs/committees/Ethics/1988/1988-10.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Advisory Opinion 1988-10
An attorney representing the claimant in a worker's compensation proceeding under the Interim Act has asked whether he may actively seek his fees under NMSA 1978, Section 52-1-54 (Cum. Supp. 1986) when his client objects to him being awarded any fee. Section 52-1-54 requires the hearing officer to set the amount of the attorney's fee and requires it to be paid out of the claimant's recovery. The statute provides that the fee shall not exceed certain percentages of the recovery depending on how big the recovery is. The attorney has a written agreement with the client providing that the fee would be based on the New Mexico Workmen's Compensation Act. When the hearing on fees was scheduled, the client announced she did not consent to a "procedure in which her attorney is arguing for a fee when that fee works to reduce the benefits paid to the client." The attorney requests our opinion on whether his seeking his fee would violate various ethical and related rules or the legal doctrines involving separation of powers, equal protection, or due process. It is our opinion that the attorney may actively seek his fee and that such action may cause a termination of the attorney-client relationship for purposes of the fee hearing.
The Committee does not see the situation presented by the attorney as being materially different than any other potential fee dispute encountered between attorneys and clients after the completion of the substantive representation. In particular, the attorney is concerned with SCRA 1986, 15-304, providing that attorneys accept no compensation from anyone other than the client or with his consent; the Preamble to the Rules of Professional Conduct, providing that an attorney shall zealously advocate his client's position; SCRA 1986, 16-107(B), prohibiting conflicts of interest; and SCRA 1986, 16-108(B), prohibiting the use of information to the disadvantage of the client.
With respect to Rule 15-304, the client's written agreement to a fee in accordance with the Workmen's Compensation Act serves as consent. Moreover, the rule is intended to operate where a third party is paying the fee on behalf of the client and there is a danger that the third party will bring influence to bear on the attorney. This rule has no application here.
With respect to zealous advocacy and conflicts of interest, we have opined that these considerations do not apply in fee disputes after the representation is concluded. New Mexico Advisory opinion 1986-7. At least one court in an analogous case, where the attorney for a social security claimant was entitled to a maximum of 25% of the recovery and where the attorney and the claimant took adverse positions in the fee hearing, held that the attorney-client relationship was terminated for purposes of the hearing on the fee petition. Lewis v. Secretary of Health and Human Services, 707 F.2d 246 (6th Cir. 1983). With respect to the use of information to the disadvantage of the client, a long-standing exception has always been that a lawyer is permitted to use information to collect his fee. SCRA 1986, 16-106(D).
In short, we believe that, where the client is informed of how the fee will be set and consents thereto, the client cannot thereafter frustrate the attorney's entitlement to a reasonable fee by changing his mind. We note that SCRA 1986, 16-105(B) requires the basis of fees to be communicated to the client, preferably in writing, before or within a reasonable time after the commencement of the representation. We would encourage counsel to fully explain to clients the probable procedure under the Workmen's Compensation Act at the time the basis of the fees is communicated to the client. A fuller explanation or clearer agreement in this case may have eliminated the client's objection to the procedure at a later date.