Does ''Discharged Lawyer'' Entitled to Attorney Fees After the ''Second Lawyer'' Obtained a Successful Result ?
In Pitt v. Workmen's Compensation Appeal Board (McEachin), 161 Pa. Commw. 60, 636 A.2d 235 (Pa. Cmwlth. 1993), this Court applied Section 442 of the Workers' Compensation Act to determine whether the referee and the Board could resolve an issue involving payment of claimant's former and current counsel when Claimant had fired his first counsel and hired his second counsel before a fee petition was approved.
At the time the case was decided, the arbiters of first resort were still referred to as referees, not judges, and were not required to be attorneys.
In McEachin, claimant signed a 20% fee agreement with first counsel for counsel's services regarding a claim petition.
First counsel represented claimant for 18 months before claimant discharged him.
First counsel had not submitted the fee agreement to the referee for approval before claimant discharged him.
Claimant then retained second counsel, who obtained a successful result for claimant on a claim petition. the referee approved the counsel fee agreement with claimant's second counsel.
Consequently, first counsel filed, with the Board, both a nunc pro tunc appeal of the WCJ's decision, as well as a petition for approval of his counsel fees.
The Board affirmed the referee's decision. First counsel appealed to this Court.
This Court denied first counsel's appeal, quashing both of his petitions.
The Court held that first counsel did not have standing because he lacked a direct interest in the subject matter being litigated - the resolution of the underlying workers' compensation claim.
Additionally, we held that the Act failed to give a claimant's former attorney statutory leave to file a petition for approval of counsel fees.
In so doing, we reasoned that:
The only case in controversy that was before the referee to resolve was Claimant's claim petition for compensation under Section 301(c) of the Act.
That statutory cause of action carried with it a statutory requirement that the referee approve "all counsel fees, agreed upon by claimant and his attorneys for services performed in matters before any referee or the board ... providing the counsel fees do not exceed twenty per centum of the amount awarded."
That independent cause of action is distinct from any claim which a discharged lawyer might assert against his former client, or that client's subsequent counsel, over his discharge and replacement.
First counsel, before this Court, is not representing a party to the worker's compensation claim and litigation, but himself, litigating in his own interest a cause of action which is either a common law claim for breach of contract, or a claim on principles of quantum meruit, or an equitable claim for damages under a theory of unjust enrichment. McEachin, 636 A.2d at 236-37.
Further, the Court held that neither the referee, nor the Board, was vested with the authority to adjudicate a fee dispute issue, nor did they have the expertise in this area of the law, which we likened to a breach of contract or a quantum meruit claim.
The Court reasoned that:
If Claimant's defense here is that his first attorney ... breached his duty of professional representation, it places the referee and Board in an area completely foreign to their expertise.
Moreover, it is possible that Claimant himself might be obligated to the discharged attorney on grounds totally different from, and perhaps even in conflict with, First counsel's representation of him before the worker's compensation adjudicative tribunals.
A client always has the right to discharge a lawyer at any time, with or without cause, but if the reason for the discharge is because counsel would not pursue an imprudent or repugnant objective, or refuses to engage in reprehensible conduct, there could be liability for counsel fees apart from the ordinary considerations in a worker's compensation case. McEachin, 636 A.2d at 237.