Consequences of Not Submitting Lawyer Fee Agreement for Approval (By the Workers Compensation Board)

In Larry Pitt & Assocs. v. Long, 716 A.2d 695 (Pa. Cmwlth. 1998), claimant signed a contingent fee agreement to be represented by counsel, who rendered immediate services for claimant to meet a statute of limitations deadline. Counsel also negotiated a settlement with employer and attended a hearing before the referee. However, two days before claimant was to sign the settlement, he discharged counsel and appeared pro se before the referee. At the time of his discharge, counsel had not yet filed the signed fee agreement. The referee allowed claimant to represent himself and ultimately awarded claimant benefits. The referee did not allow counsel to present argument on his right to counsel fees under the signed fee agreement that was neither filed, nor approved. Counsel contemporaneously filed several different challenges to this decision in several different venues, appealing the referee's decision to the Board, and also filing a civil action for breach of contract and seeking injunctive relief in the Allegheny County Court of Common Pleas. The common pleas court dismissed the action at the preliminary objection stage because, based on the pending appeal before the Board, counsel had not exhausted his administrative remedies. Counsel appealed the common pleas decision to this Court and the Court affirmed. In doing so, we noted that the "question presented is apparently one within an agency's specialization and where the administrative remedy is likely to produce the desired result." Long, 716 A.2d at 700. We concluded that: In the McEachin case, this court, en banc, held that where Pitt was discharged by a workers' compensation claimant in favor of a succeeding attorney, the fee dispute between two attorneys was more properly heard in common pleas court because there was no allegation by Pitt that he had first filed the fee agreement and, therefore, he lacked standing with the WCJ and Board and, further, his appeal was not timely filed. McEachin makes it clear that once the dispute is between a worker's compensation client and two successive attorneys, neither the referee (WCJ) nor the Board have any authority to decide the fee dispute because the issues as between two attorneys could be foreign to the expertise of the WCJ and Board or involve conflicts or other Professional Conduct Rule violations. Although an attempt was made here to distinguish McEachin from this case because there was no successor attorney in the present matter, it is a distinction without a difference that the claimant did not replace Pitt with a succeeding attorney, but proceeded pro se before the WCJ. The true distinction for the purpose of determining the proper forum is whether or not the fee agreement was ever filed with the [Board]. Although it is a common experience for a WCJ and Board to approve a fee when a fee agreement has been filed with the department before the client discharges his counsel, there is no authority in the Workers' Compensation Act (Act) for the Board to establish the fee for an attorney who has not submitted his fee agreement for approval under Sections 442 or 501 of the Act. The WCJ and Board's authority over fees is limited to those fees submitted to it and approved by it, while an attorney-client relationship still exists. If the client discharges his/her attorney before the attorney files the fee agreement with the department, the attorney must seek compensation in a civil action in common pleas court on the basis of quantum meruit and/or unjust enrichment. Such procedure is consistent with McEachin. Long, 716 A.2d at 699.