OPINION 310
January 1966

ATTORNEY'S FEE WORKMEN'S COMPENSATION SETTLEMENT HOSPITAL BILL DISBURSING CLIENT'S MONEY ILLEGAL FEE. It is unethical for a workmen's-compensation claimant's attorney (1) to retain as his fee, out of settlement money and by deduction from hospital bill payment an amount in excess of the fee agreed to by the client and allowed by the court or (2) to obtain the court's approval, by concealment of the fee agreement, of a fee in excess of the agreed fee.

Canons 1, 10, 19.

Question

An attorney represented a workman's compensation claimant in connection with a claim in which there was a substantial hospital bill. The insurance carrier denied liability and appealed from a decision of the Industrial Accident Board awarding weekly compensation to the claimant for a number of weeks and approving the hospital bill. After the case reached the District Court it was settled. The attorney for the claimant agreed with his client that he would not charge a contingent fee on the portion of the settlement representing the hospital bill. The insurance company paid the entire settlement to the claimant and his attorney and the attorney forwarded his check to the hospital but deducted his 30% contingent fee from that portion of the settlement representing the hospital bill. The attorney for the claimant had no contract or arrangement with the hospital and no agreement concerning the payment of any fee. Our question is whether or not it is ethical for the attorney to deduct the contingent fee from the portion of the settlement representing the hospital bill.

Opinion

We assume that the District Court entered a judgment approving the settlement and fixing the amount of the attorney's fee. It would be unethical for the attorney to deduct and retain any amount from the payment to the hospital, such amount being in excess of the agreed fee. In such event, he would be disbursing his client's money, and he would violate Canon 10 by retaining any part thereof for his own use. Furthermore, it would be unethical for the attorney to accept or retain as his fee a total amount in excess of the fee allowed by the court, if we assume, as we believe, that such excess fee would be illegal under the Workmens' Compensation Law.

If the attorney's fee allowed by the court and fixed in the judgment was 30% of the total amount of the settlement (including the hospital bill), then it would appear that the court allowed the attorney a larger fee than his client had agreed to pay and he had agreed to accept, which would be highly improbable if the court was informed of the fee agreement. If the attorney obtained such a judgment without disclosing his fee agreement to the court, it is the opinion of the committee that he would violate his duty to the court under Canons 1 and 19 as well as his duty to his client. (9-0.)