Can a lawyer pursue unreimbursed litigation costs directly from a worker's compensation client outside the compensation proceeding itself?

Plain-English summary

Opinion E-87-10 arose under section 102.26 of the Wisconsin Statutes, which allows the department to order an attorney's fee of up to 20 percent of a worker's compensation recovery paid directly to the employee's attorney (subject to departmental scrutiny under subsection (2)) and, at the claimant's request, to order medical expenses, witness fees, and other charges paid from the award, with no provision for departmental scrutiny of costs as there is for fees. The statute also makes charging or receiving any fee in violation of the section unlawful, subject to a forfeiture of double the amount retained. The question was whether a lawyer may ethically seek to recover unreimbursed costs directly from a worker's compensation claimant-client outside the worker's compensation proceeding.

The committee answered yes, on two assumptions: that the unreimbursed costs were reasonable and necessary to adequate representation and were not expenditures ordinarily viewed by courts as components of attorney's fees (citing its earlier Formal Opinion E-84-6); and that recovery of the specific costs is not otherwise proscribed by law consistent with judicial authority regulating the practice of law (citing State ex rel. Reynolds v. Dinger). Further assuming the specific costs would not ordinarily be deemed an element of attorney's fees in litigation, the committee concluded that the standards of professional conduct continue to require that the client remain ultimately liable for payment of such costs and expenses under SCR 20:1.8(e), unless it had been agreed that reimbursement would be contingent on a recovery, comparing the former Code provision SCR 20.26(2) with the new SCR 20:1.8(e).

Currency note

This opinion was issued in 1987, before Wisconsin's July 1, 2007 adoption of the revised Rules of Professional Conduct for Attorneys (the state's Ethics 2000 update), and it analyzes the transition from the former Code to the 1988 Rules. The financial-assistance rule SCR 20:1.8(e) and the cited worker's compensation statute may since have been amended or renumbered. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance.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 bill a worker's comp client directly for costs the award did not cover?

A: Per the opinion, yes, if the costs were reasonable and necessary, were not items courts treat as attorney's fees, and recovery is not otherwise barred by law.

Q: Does the client stay responsible for litigation costs?

A: The committee concluded that under SCR 20:1.8(e) the client remains ultimately liable for such costs unless the lawyer and client agreed that reimbursement would be contingent on a recovery.

Background and rules framework

The opinion interpreted SCR 20:1.8(e) / Model Rule 1.8 (advancing litigation costs and the client's ultimate liability), comparing it to the former Code provision SCR 20.26(2), in the context of worker's compensation fee-and-cost rules under Wis. Stat. section 102.26.

Citations and references

Rules of Professional Conduct:

• Wis. SCR 20:1.8(e) / Model Rule 1.8 (advancing costs; client liability)
• Wis. SCR 20.26(2) (former Code of Professional Responsibility)

Statutes:

• Wis. Stat. section 102.26 (worker's compensation attorney's fees and costs)

Cases:

• State ex rel. Reynolds v. Dinger, 14 Wis. 2d 193, 109 N.W.2d 685 (1961)

Other opinions cited:

• Wisconsin Formal Op. E-84-6

See also

• WI Ethics Op. E-87-11: Lawyer Guaranteeing Liens
• WI Ethics Op. E-96-1: Attorneys Posting Bail
• WI Ethics Op. E-95-4: Self-Help to Collect a Fee

Source

• Landing page: https://www.wisbar.org/formembers/ethics/pages/formal-opinions.aspx
• Original PDF: https://www.wisbar.org/formembers/ethics/Ethics%20Opinions/E-87-10.pdf