Tag Archives: LC 5710

OTOC + Recon = Sanctions

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Welcome back from the weekend, dear readers! 

Who is in the mood for a brief discussion on 5710 fees?  Your humble blogger anticipates a resounding “we are” emanating from all his beloved readers in unison.

Labor Code section 5710 allows for the payment of an applicant’s representative at deposition of the applicant.  Often enough, disputes arise as to what time is compensable related to the deposition as well as what the rate should be.  For example, how much time is reasonable to prepare an applicant for deposition?  An hour? What if an interpreter is necessary?  What about the applicant attorney’s time preparing to prepare the deponent?

 Then there’s the deposition itself – if applicant’s counsel and defense counsel discuss settlement for 30 minutes off the record, is that time included?  How about after the deposition – should the AA be compensated for time spent going over the transcript with the applicant for the errata sheet?

The typical procedure after a deposition is to have AA send a demand for 5710 fees to defense counsel.  Defendants will typically pay the bill in full, with or without an objection, or reduce the bill by a reasonable amount.  To my wonderful colleagues representing injured workers all across the state, although I agree that every moment of your precious time really is priceless, all y’all need to get real with how much an hour of a workers’ comp attorney’s time is really worth.  Spoiler alert: whatever you think it is, I assure you, it’s less.

The regulations provide the procedure for resolving these disputes, found in 8 CCR 10547, which provides the form and content necessary for said petition.  Of interest, although there is some provision for hearing representatives attending deposition, section 10547 does not seem to provide for hearing representatives, but instead requires, in subsection (f), “the name of the attorney who attended the deposition along with the attorney’s State Bar number.”  

Anywho, a recent panel decision, one of the last of 2024, touched on the issue of 5710 fees.  In the case of Amezcua v. Milgard Windows Manufacturing, AA wanted to set the issue of $115 in disputed 5710 fees for trial.  When the WCJ took the matter off calendar, AA filed a petition for reconsideration.  The WCAB cited its En Banc decision of Ledezma v. Kareem Cart Commissary and Mfg. for the holding that a petition for reconsideration is NOT appropriate for an Order Taking Off Calendar.  Not only was the petition for reconsideration denied, the petition was treated as one for removal and denied as well, as there was no evidence that deferring the issue until the trial in the case-in-chief would not cause substantial prejudice or irreparable harm to applicant (or applicant’s counsel). 

The WCAB emphasized that seeking reconsideration from an order taking off calendar is sanctionable.  The opinion then gave notice of intent a monetary sanction on applicant’s counsel absent written objection and good cause for the contrary. 

So, what can we take away from this?  The WCAB’s position has now been made abundantly clear that seeking reconsideration of an order taking the matter off calendar is sanctionable, and, perhaps, seeking attorney fees for responding to such a petition should be an option to explore.  Of course, removal appears to be a non-sanctionable way to appeal so long as the nature of the irreparable harm can be reasonably articulated in the petition.

What’s more, especially if your humble blogger has any say in this matter, the amount paid in 5710 fees needs to be revisited and brought down to reality – that is, it should be brought into line with what the market actually pays for attorney time and experience.    

On Unearned 5710 Fees

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Happy Wednesday dear readers!

Here we are again, working hard on getting those claims denied and those files closed.  So, let’s talk Labor Code section 5710 fees for a minute. 

Applicant attorneys will demand the defense pay their time under LC 5710 for preparing applicants for depositions and sitting in on the deposition as well.  Sometimes we get crazy demands for things like reviewing the notice of deposition or preparing to prepare the applicant for the deposition and so on and so forth.

But 5710 fees are due for a deposition, what happens when applicant’s counsel demands 5710 fees for a deposition that didn’t happen, or hasn’t happened yet?

Early settlement of a claim is often desirable, so imagine a scenario where applicant’s counsel threatens, or impliedly threatens, to hold up settlement unless there is a payment of 5710 fees.  After all, if there is a settlement without a deposition, applicant’s counsel will be out those fees, no?

Well, your humble blogger was forwarded an Order Suspending Action, issued by a judge in Sacramento, which provides an excellent analysis of this practice of applicant’s demand 5710 fees without a deposition, and, equally inappropriate, defendants paying 5710 fees without a deposition.

Per the OSA, “[w]hat appears to be entirely inappropriate is that defendant proposes to pay applicant’s attorney an additional $800 for negotiating the settlement of this matter.  This appears to be an unearned attorney’s fee.”  The WCJ also cites the Rules of Professional Conduct prohibiting an attorney from developing an interest adverse to his or her client.

How does this all pan out?  Well, if defendant offers $X for a C&R, and the applicant attorney would recommend $X for a C&R, that should be the end of the transaction.  But if applicant’s counsel refuses to communicate or recommend the C&R unless the attorney is PAID to do so, such as with a promise of unearned 5710 fees, then the applicant attorney has an unavoidable conflict because the AA’s interests (of getting 5710 fees) might conflict with the applicant’s interest (of a reasonable C&R).

The WCJ’s OSA was not particularly fond of either AA or the DA in this case, for coming to this arrangement.  The same thing could happen on the defense side too, of course – what happens if a disreputable defense attorney declines a settlement demand that is within his authority in order to bill more hours?  Such an unethical breach of duty to one’s client is completely unacceptable, whether it happens on the defense side or the applicant side.

Ultimately, the WCJ provided additional instruction to the parties, and gave a stern warning that “[p]aying an attorney an unearned fee as inducement to settle a workers’ compensation case is a fraud.  I would further note to defense counsel that where there is extrinsic fraud, i.e. fraud upon the court, the Appeals Board may alter or rescind an award at any time.”

So, what do we do when applicant’s counsel offers a C&R demand contingent on paying unearned 5710 fees?  This might be very tempting, especially as $800 in 5710 fees is a lot cheaper than $2,000 in QME fees and a lot faster too.  Don’t you do it!

Such a suggestion, as pointed out by the WCJ in the OSA, is not ethical, and could be the basis for sanctions.  The attorneys so engaged could be reported to the State Bar for ethical violations.  Such demands should be confirmed in writing, and, potentially, should be referred to the state bar and brought to the attention of the WCAB.

Be on the look out for these instances, and don’t fall into the trap of playing along!

Till next time, dear readers…