Payment of Interest on Attorney Fees in California

Payment of Interest on Attorney Fees in California

The California Second Appellate District has opened the door for applicant’s attorneys to receive statutory interest on fee awards for depositions and other WCAB attorney fee awards.  In the matter of Koszdin v. State Compensation Insurance Fund, filed July 6, 2010, the Court of Appeal determined that applicant attorneys have the right to pursue statutory interest under Labor Code §5800, when an award specifically provides for the payment of that interest to the attorney.

The Court of Appeal specifically declined to award the requested interest in the class-action lawsuit brought by applicant attorneys in this instance, as the fee awards presented did not specifically provide for the payment of such interest to the attorneys.  This does not mean that the interest was not owed, as interest on awards is mandatory.  However, the distinguishing feature in this case is the claim that the interest is payable to the attorney rather than to the injured worker as compensation. Finally, the Superior Court, and the Courts of Appeal, are limited by Labor Code §5806 to enforcing the precise terms of WCAB awards. 

Therefore, there is no interest payable to an attorney unless the WCAB order in question specifically provides that interest is payable to the attorney. 

  • What this means for you 

Depositions – Your attorneys should attempt to seek agreement on attorney’s fees, on the record, at the time of the deposition based on their knowledge and experience of hourly fee awards for the jurisdiction in which the deposition is being held.  The agreement should include a recitation that the amount includes statutory interest. 

WCAB Minute Orders and Settlements - EAMS C&R and Stipulated Award forms already include language which specifies the payments which issue within 30 days include statutory interest.  However, minute orders do not contain such a provision.  It is important that outside counsel protect your interests by including a similar provision that interest is included whenever attorneys are to receive attorney fees.  

  • Practice Tip 

It is common for many applicant attorney firms to prepare proposed orders for deposition attorney’s fees together with mileage to their client following a deposition.  We reasonably anticipate that these petitions for attorney’s fees will now include a provision for statutory interest payable to the attorney.  Your outside counsel owes you a duty to object to such petitions where they arise.

© Copyright 2010 Goldman, Magdalin & Krikes LLP. All rights reserved. Reprinted with permission.