W.C. No. 4-167-696Industrial Claim Appeals Office.
December 4, 1998
ORDER OF REMAND
The claimant’s former attorney, John Hoyman (Hoyman or Hoyman firm) seeks review of a final order of Administrative Law Judge Gandy (ALJ), which ordered Hoyman to pay the claimant $14, 630, plus interest, in previously collected attorney fees. Hoyman argues that the ALJ erroneously applied the doctrine of quatum meruit by basing the award of attorney fees on an hourly rate rather than a contingency rate. We set the order aside and remand for entry of a new order.
The claimant allegedly sustained four industrial injuries between May 12, 1990 and January 25, 1993. The claimant retained Hoyman’s firm to represent him with respect to each of these injuries. In September 1993, the claimant entered into a contingent fee agreement to pay Hoyman twenty-five percent “of any and all benefits received hereafter” with respect to the November 1990 injury. On January 12, 1994, the claimant entered into similar contingent fee agreements with respect to the other three injuries.
The claims for the four injuries were consolidated in March 1994. In January 1996, the claimant, represented by an attorney from Hoyman’s firm, attended a settlement conference and reached a tentative agreement to settle the consolidated claims for $195, 000. A dispute arose between the claimant and the Hoyman firm concerning whether or not $50, 000 of the settlement proceeds represented payment for future medical expenses, and if so, whether Hoyman was entitled to recover attorney fees on this amount.
Because of this dispute, the claimant and Hoyman agreed to place $10, 000 in escrow (representing twenty percent of $50,000). Otherwise, the parties agreed to distribute the settlement proceeds with Hoyman receiving $29, 000 (twenty percent of $145,000) and the claimant receiving the balance.
The dispute concerning the $10,000 held in escrow was resolved adversely to Hoyman. The claimant then sought a hearing arguing that the four contingent fee agreements were invalid and Hoyman should be restricted to recovering attorney fees (on the $145,000) under the theory of quatum meruit.
The ALJ found that Hoyman admitted the contingent fee agreements were “deficient in several respects for not complying with the Rules Governing Contingent Fees issued by the Colorado Supreme Court.” Consequently, the ALJ then concluded that quatum meruit is the “most equitable manner in which to determine compensation” for Hoyman. Applying this doctrine, the ALJ rejected an award based on the contingent fee agreements and calculated Hoyman’s fee by multiplying the “number of hours actually performed” (95.8) by the “stipulated hourly rate of $150.00 per hour.” This resulted in an order requiring Hoyman to pay the claimant $14,630, plus interest.
On review, Hoyman contends the ALJ should have based the award of attorney fees on the contingent fee agreements rather than the number of hours worked times the stipulated hourly rate. Hoyman argues that even if the contingent fee agreements are not enforceable as a matter of contract, the doctrine of quatum meruit
allows a reasonable award based on the contingent fee agreements. Further, Hoyman argues that the evidence in this case demonstrates that an award based on the contingent fee agreements is the most equitable result. We conclude that the ALJ’s findings of fact are insufficient to support appellate review, and therefore, we remand the matter for entry of a new order.
Hoyman correctly argues that the doctrine of quatum meruit
does not prohibit recovery of attorney fees based on contingent fees merely because the underlying contract is not legally valid. Rather, in such circumstances, it is necessary to determine a reasonable value for the services performed, and the “contingency fee contract is determinative only to the extent that it sets the maximum amount permitted.” Beeson v. Industrial Claim Appeals Office, 942 P.2d 1314 (Colo.App. 1997).
In determining the reasonable value of the attorney’s services, an ALJ may consider a number of factors. Losavio v. McDivitt, 865 P.2d 934 (Colo.App. 1993), the court enumerated the relevant factors as follows:
(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
(3) the fee customarily charged in a locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and
(8) whether the fee is fixed or contingent.
The weight to be given these various factors depends on the circumstances of each case. Ultimately, the reasonableness of the fee is a question of fact for determination by the ALJ. Beeson v. Industrial Claim Appeals Office, supra.
However, in resolving the issue of a reasonable fee, the ALJ must enter findings of fact sufficient to demonstrate an understanding of the law and consideration of the relevant evidence. See Womack v. Industrial Commission, 168 Colo. 364, 451 P.2d 761 (1969). If the ALJ’s findings of fact are not sufficient to support appellate review, the matter must be remanded for additional findings. Section 8-43-301(8), C.R.S. 1998.
Here, Hoyman presented evidence concerning a number of the factors relevant to determining a reasonable fee for the services performed. Hoyman presented evidence that contingent fee agreements existed, the length of the relationship between the claimant and Hoyman, Hoyman’s experience in workers’ compensation, and evidence concerning the amount of the settlement and the complexity of the issues involved. However, the ALJ made no findings whatsoever concerning the credibility of this evidence, nor did he indicate what role, if any, the evidence may have played in determining a reasonable fee. Instead, the ALJ’s findings and conclusions suggest that the award of fees was based solely on the amount of time spent by the Hoyman firm, and the hourly rate of $150.
Under these circumstances, the ALJ made insufficient findings of fact, and the matter must be remanded for entry of new findings of fact and conclusions of law concerning a reasonable attorney fee for the services performed by the Hoyman firm. In reaching this result, we should not be understood as expressing any opinion concerning the weight and credibility the evidence, or the amount of the fee to be awarded. We merely hold that the ALJ’s existing findings are insufficient to demonstrate consideration of the relevant factors. In light of this result, we need not consider Hoyman’s arguments concerning the amount of the fee awarded.
IT IS THEREFORE ORDERED that the ALJ’s order dated April 10, 1998, is set aside, and the matter is remanded for entry of a new order consistent with the views expressed herein.
INDUSTRIAL CLAIM APPEALS PANEL
____________________________________ David Cain
____________________________________ Dona Halsey
Copies of this decision were mailed December 4, 1998
to the following parties:
Perry Alderin, PO Box 102, Severance, CO 80546
Brad R. Irwin, Esq., 501 S. Cherry Street, Suite 500, Denver, CO 80246 (For Claimant)
Bob Ring, Esq., 1115 Eleventh Avenue, Greeley, CO 80631 (For Hoyman)
BY: ____________