Legal Fees and Costs

Law books and gavel

The cost of hiring a lawyer for an Illinois workers’ compensation case is entirely set by law. In most cases, attorneys’ fees will be equal to 20% of what the attorney recovers in permanent disability benefits.

Also, costs and expenses will be deducted from any award or settlement for things like expert opinions, depositions, transcripts, and filing fees, which are not even necessary in every case.

Most lawyers will meet with potential clients for free and they cannot charge anything unless they win their case. 820 ILCS 305/16a(I) (“All attorneys’ fees for representation of an employee or his dependents shall be only recoverable from compensation actually paid to such employee or dependents.”) Illinois General Assembly | IWCC PDF.

The Illinois Workers’ Compensation Commission oversees all workers’ compensation claims and the collection of attorneys’ fees. Every case that is filed by an attorney with the Commission must include the “Attorney Representation Agreement” form, which can be found on the Commission’s website. IWCC PDF820 ILCS 305/16a(C) Illinois General Assembly | IWCC PDF.

Attorneys’ fees for workers’ compensation cases are controlled by section 16a of the Illinois Workers’ Compensation Act. 820 ILCS 305/16a Illinois General Assembly | IWCC PDF.

Section 16a begins with a declaration of legislative intent:

In the establishment or approval of attorney’s fees in relation to claims brought under this Act, the Commission shall be guided by the provisions of this Section and by the legislative intent, hereby declared, to encourage settlement and prompt administrative handling of such claims and thereby reduce expenses to claimants for compensation under this Act.

820 ILCS 305/16a(A) Illinois General Assembly | IWCC PDF.

20% Maximum Fee

Next, it provides that attorneys cannot charge a fee greater than 20% unless the attorneys petition the Commission:

With respect to any and all proceedings in connection with any initial or original claim under this Act, no claim of any attorney for services rendered in connection with the securing of compensation for an employee or his dependents, whether secured by agreement, order, award or a judgment in any court shall exceed 20% of the amount of compensation recovered and paid, unless further fees shall be allowed to the attorney upon a hearing by the Commission fixing fees, and subject to the other provisions of this Section.

820 ILCS 305/16a(B) Illinois General Assembly | IWCC PDF.

Most, if not all, Illinois workers’ compensation attorneys charge the maximum fee percentage of 20%. It is unlikely for an attorney to invoke the above provision and request a hearing with the Commission to receive greater than a 20% fee.

Total Maximum Fee

However, this section of the Act provides another limitation on attorneys’ fees that is relevant in bigger cases:

in death cases, total disability cases and partial disability cases, the amount of an attorney’s fees shall not exceed 20% of the sum which would be due under this Act for 364 weeks of permanent total disability based upon the employee’s average gross weekly wage prior to the date of the accident and subject to the maximum weekly benefits provided in this Act unless further fees shall be allowed to the attorney upon a hearing by the Commission fixing fees.

820 ILCS 305/16a(B) Illinois General Assembly | IWCC PDF.

Under this provision, lawyers must always check to make sure their claimed fees are not greater than this maximum limit.

For example, consider a claimant with an average weekly wage of $800 who agrees to a permanent partial disability (PPD) settlement of 75% loss of use of his arm. As the arm is an scheduled injury, his PPD benefit is equal to 253 weeks × 75% × $900/week × 60% =$102,465. And the lawyer’s fee is 20% of this amount, which equals $20,493.

This must now be compared with the maximum fee limit. Unlike the PPD rate of 60% of average weekly wage, the permanent total disability (PTD) rate is 66-2/3% of average weekly wage, so the calculation is: 364 weeks × 66-2/3% × $900/week = $218,400. And so the lawyer’s maximum fee is 20% of this amount, which equals $43,680.

In this hypothetical, the Commission would allow the fee of $20,493 because it is not greater than the maximum of $43,680 allowed under section 16a based on this claimant’s average weekly wage.

Because section 16a provides that the maximum weekly PTD rate rules apply, the Commission’s benefit rates page on its website should also be consulted. We can see that for accidents occurring between January 15, 2017 and July 14, 2017, the maximum PTD rate is $1,435.17/week, so we know that the maximum fee rules will always apply for cases with awards or settlements above $522,401.88 (364 weeks × $1,435.17/week).

This maximum fee provision, however, also provides a major exception: “unless further fees shall be allowed to the attorney upon a hearing by the Commission fixing fees.” 820 ILCS 305/16a(B) Illinois General Assembly | IWCC PDF.

This may actually be used by lawyers in bigger cases that involve significant work for the lawyer, such as depositions, trials, and appeals, or that simply take years to administer and settle.

Typically, the lawyer will simply ask their client if they are willing to waive the maximum limit and allow the lawyer to collect the full 20% of what they recovered based on the amount of work they had to do. If so, the client can sign an affidavit that the lawyer then presents to the Commission when asking for the settlement contract to be approved, rather than going through the process of a formal hearing as set forth in the Act.

Prohibited and Limited Fees

Section 16A also provides that no fees are allowed for:

For medical expenses, an attorney may win for the claimant a monetary award or settlement to cover medical treatment that was disputed by the employer. In such case, the attorney may claim a 20% fee on this amount.

TTD benefits are frequently disputed throughout the lifetime of even accepted claims. When an attorney recovers “back TTD” through their efforts, they may claim a 20% fee. When TTD benefits are being received regularly, the attorney may not claim a fee.

820 ILCS 305/16a(D)-(E) Illinois General Assembly | IWCC PDF.

Nominal Fees

Section 16A also provides for nominal fees “in the following cases in which there is no dispute between the parties as to the liability of the respondent to pay compensation in a timely manner or in the proper amount and there is no dispute that the accident has resulted in:

(1) the death of the employee; or

(2) a statutory permanent disability; or

(3) the amputation of a finger, toe, or member; or

(4) the removal of a testicle; or

(5) the enucleation of or 100% loss of vision of an eye;

the legal fees, if any, for services rendered are to be fixed by the Illinois Workers’ Compensation Commission at a nominal amount, not exceeding $100.”

820 ILCS 305/16a(F) Illinois General Assembly | IWCC PDF.

Additionally, “in the following cases in which there is no dispute between the parties as to the liability of the respondent to pay compensation and there is no dispute that the accident has resulted in:

(1) a fracture of one or more vertebrae; or

(2) a skull fracture; or

(3) a fracture of one or more spinous or transverse processes; or

(4) a fracture of one or more facial bones; or

(5) the removal of a kidney, spleen or lung;

the legal fees, if any, for services rendered are to be fixed by the Illinois Workers’ Compensation Commission at a nominal amount, not exceeding $100, provided that the employee is awarded the minimum amount for the above injuries as specified in Section 8(d)2.”

820 ILCS 305/16a(G) Illinois General Assembly | IWCC PDF.

Most cases are in contested in some way so these nominal fees are not likely to be applicable in most cases where an attorney is hired.

Attorneys’ Fees and Prior Written Settlement Offers

If an injured worker has a written settlement offer prior to hiring an attorney, that attorney will only be entitled to a fee up to 20% of the amount received in excess of that written offer.

For example, if the injured worker received a settlement offer of $10,000 and then hired an attorney, if that attorney then settled the case for $15,000, the attorney would only be able to collect the 20% fee on the $5,000 difference.

Also, if the attorney is unable to negotiate a higher settlement or for some reason the settlement decreases, the attorney will not be allowed any fee at all. 820 ILCS 305/16a(H) (“With regard to any claim where the amount to be paid for compensation does not exceed the written offer made to the claimant or claimants by the employer or his agent prior to representation by an attorney, no fees shall be paid to any such attorney.”) Illinois General Assembly | IWCC PDF.

Fee Disputes

Section 16a also includes provisions that allow the Commission to resolve any fee disputes with a client or former attorney (you can always fire an attorney but they can claim a share of the final fees and costs awarded):

Any and all disputes regarding attorneys’ fees, whether such disputes relate to which one or more attorneys represents the claimant or claimants or is entitled to the attorneys’ fees, or a division of attorneys’ fees where the claimant or claimants are or have been represented by more than one attorney, or any other disputes concerning attorneys’ fees or contracts for attorneys’ fees, shall be heard and determined by the Commission after reasonable notice to all interested parties and attorneys.

After reasonable notice and hearing before the Commission, any attorney found to be in violation of any provision of this Section shall be required to make restitution of any excess fees charged plus interest at a reasonable rate as 51 determined by the Commission.

820 ILCS 305/16a(J)-(K) Illinois General Assembly | IWCC PDF.

Further reading:

Alvarado v. Industrial Commission, 216 Ill. 2d 547 (2005) (Commission has authority to hold a collateral hearing on a prior attorney’s claimed fees after a settlement has become final) Google Scholar | Illinois Courts.

This article does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.