Attorney Fees: Common Fund

MONTANA SUPREME COURT DECISIONS
Schmill v. Liberty Northwest Ins. Corp. [12/22/09] 2009 MT 430 The claimant had standing to bring an in rem action to enforce the common fund attorney fees lien.   By filing an attorney fees lien against the common fund, the claimant’s attorney initiated the common fund action.  The common fund includes benefits payable from all insurers who previously apportioned occupational disease benefits.  The attorney fees lien attaches to the entire common fund.
Ruhd v. Liberty Northwest Insurance Corporation v. Fisch, Frost, Rausch, 2004 MT 236. Attorneys who created common fund via litigation in Rausch v. State Compensation Insurance Fund, 2002 MT 203, were entitled to attorneys fees from all permanently totally disabled workers’ compensation beneficiaries in Montana who benefitted from the decision, not just those insured by defendant in Rausch (Montana State Fund). Attorney who brought separate action against different insurer (Liberty Northwest) on same legal argument made in Rausch was entitled to fees earned in his client’s case, but not from all those claimants insured by Liberty, because the work of the Rausch attorneys established the liability of all insurers to all “common fund” claimants. Workers’ Compensation Court must supervise enforcement of the common fund pursuant to Rausch, and all court-approved agreements stemming from it, from all insurers involved.
Rausch et al. v. State Compensation Insurance Fund [9/5/02] 2002 MT 203 Attorneys litigating issue of whether permanently, totally disabled claimants are entitled to impairment award, when that award is payable, and how that award should be characterized are entitled to attorneys fees under the common fund doctrine. To be awarded attorneys fees under that doctrine, the party must satisfy three elements. First, a party (or multiple parties in the case of a consolidated case) must create, reserve, increase, or preserve a common fund. The party is typically referred to as the active beneficiary. Second, the active beneficiary must incur legal fees in establishing the common fund. Third, the common fund must benefit ascertainable, non-participating beneficiaries.
Rausch et al. v. State Compensation Insurance Fund [9/5/02] 2002 MT 203 Attorneys litigating issue of whether permanently, totally disabled claimants are entitled to impairment award, when that award is payable, and how that award should be characterized are entitled to attorneys fees under the common fund doctrine. To be awarded attorneys fees under that doctrine, the party must satisfy three elements. First, a party (or multiple parties in the case of a consolidated case) must create, reserve, increase, or preserve a common fund. The party is typically referred to as the active beneficiary. Second, the active beneficiary must incur legal fees in establishing the common fund. Third, the common fund must benefit ascertainable, non-participating beneficiaries.
 
MONTANA WORKERS' COMPENSATION COURT DECISIONS
Schmill v. Liberty Northwest Ins. Corp. [07/01/10] 2010 MTWCC 22 Under the common fund doctrine, Schmill’s attorney is entitled to reasonable attorney fees from the common fund beneficiaries.  Schmill’s counsel advised the Court that the predominant practice is to take attorney fees after the SSDI offset.  This provides a good measure of what is reasonable.  The contingent fee for Schmill common fund benefits shall be based on the net amount of the common fund benefit after the SSDI offset is taken.
Flynn & Miller v. Liberty Northwest Ins. Corp. [07/01/10] 2010 MTWCC 21Common Fund Insurers contend that Petitioners’ counsel’s attorney fees should be limited to the actual amount incurred by the litigants in Flynn – in this case $326.  The Court previously rejected this fee calculation argument in Rausch v. Montana State Fund and again rejects the argument here.
Rausch v. Montana State Fund [12/11/07] 2007 MTWCC 54 The Rausch common fund attorneys (CFA) were granted common fund attorneys’ fees by the Montana Supreme Court in Rausch v. State Compensation Ins. Fund, 2002 MT 203, 311 Mont. 210, 54 P.3d 25. Where the CFA argued that because of the long lapse of time between the initial filing of the petition and the final disposition of the case, they were entitled to interim attorneys’ fees and Respondents argued that the CFA were not entitled interim fees because (1) attorneys’ fees could not be calculated until final resolution of the case and (2) appropriate attorneys’ fees could not be determined until the retroactive application issue is finally resolved, the Court finds the CFA’s argument to be well taken.
Stavenjord v. State Fund [9/16/04] 2004 MTWCC 62A Common fund fees are global, i.e., they apply to all benefits paid as a result of the precedent in the case irrespective of the insurers involved. Accordingly, the common fund fees in this case shall be global.
Stavenjord v. State Fund [8/27/04] 2004 MTWCC 62 A common fund is created where all of the following three factors are satisfied: (1) The decision in the case-in-chief must “create, reserve, increase, or preserve a common fund;” (2) the party bringing the action incurred legal fees in establishing the common fund; and (3) ascertainable, non-participating beneficiaries are benefitted.
Stavenjord v. State Fund [8/27/04] 2004 MTWCC 62 For the common fund to apply, it is not enough that the claimant establishes a general principal of law applicable to other claimants; she must show that the litigation entitles similarly situated, identifiable claimants to specific monetary benefits.
Stavenjord v. State Fund [8/27/04] 2004 MTWCC 62 A common fund is created where the precedent established in the case-in-chief entitles individual, identifiable claimants to additional benefits and the additional benefits can be calculated pursuant statutorily mandated formulas.
Stavenjord v. State Fund [8/27/04] 2004 MTWCC 62 A common fund was created by Stavenjord v. State Compensation Ins. Fund, 2001 MTWCC 25, aff’d, 2003 MT 67, 314 Mont. 466, 67 P.3d 229, but only with respect to those claimants reaching maximum medical improvement after June 3, 1999 and who are entitled to additional benefits on account of the Stavenjord decision. Since claimant incurred legal fees in establishing that entitlement, her attorney is entitled to common fund attorney fees.
Stavenjord v. State Fund [8/27/04] 2004 MTWCC 62 The common fund doctrine extends only to those claimants who are insured by the respondent in this case.
Buckley v. Montana State Fund [7/21/04] 2004 MTWCC 56 Where an attorney's approved fee agreement provides for a 25% contingent fee and the average amount of benefits secured for other nonparticipating claimants is small relatively speaking (here $4,000), assessment of a 25% fee against the benefits obtained for the other nonparticipating claimants is reasonable.
Buckley v. Montana State Fund [7/21/04] 2004 MTWCC 56 Where there is no evidence upon which the Court could conclude that the insurer acted unreasonably, and where the claimant establishes not only his own right to additional benefits but also the right of other similarly situated, identifiable claimants to additional benefits, the claimant's attorney is entitled to attorney fees out of the additional benefits which are paid as a result of his efforts.
Mathews v. Liberty NW [7/8/04] 2004 MTWCC 55 To determine attorney fees under the common fund doctrine, a court must first identify the individuals entitled to further benefits and the amounts of the benefits due.
Mathews v. Liberty NW [7/8/04] 2004 MTWCC 55 In order to award common fund attorney fees, the Court must first find that a common fund exists.
Mathews v. Liberty NW [7/8/04] 2004 MTWCC 55 For a common fund to exist, the judicial decision allegedly giving rise to a common fund must do more than establish a favorable precedent that other litigants can take advantage of. It must also establish the right of readily identifiable persons to specific benefits or damages.
Mathews v. Liberty NW [7/8/04] 2004 MTWCC 55 No common fund was created by the decision in Mathews v. Liberty Northwest Ins. Corp., 2003 MT 116, 315 Mont. 441, 6 P.3d 865 [Correct citation 68 P.3d 865 (05/31/05).], since that decision does not entitle any readily identifiable claimants to workers' compensation benefits. At most, it established a precedent which will enable some claimants to pursue individual claims for benefits.
Schmill v. Liberty Northwest Ins. Co. and State Fund [6/4/04] 2004 MTWCC 47 Where a party through active litigation creates, reserves, or increases a fund, others sharing in the fund must bear a portion of the litigation costs, including reasonable attorney fees.
Schmill v. Liberty Northwest Ins. Co. and State Fund [6/4/04] 2004 MTWCC 47 In determining whether the common fund doctrine applies, a court must determine whether in fact a common fund has been created or preserved as a result of the petitioner's efforts.
Schmill v. Liberty Northwest Ins. Co. and State Fund [6/4/04] 2004 MTWCC 47 Where the litigation pursued by the petitioner results in a decision establishing not only her entitlement to benefits but the entitlement of other claimants to similar benefits, the other claimants can be identified, and the additional benefits due those claimants are mathematically certain, a common fund exists and the petitioner is entitled to common fund fees from the benefitted claimants.
Schmill v. Liberty Northwest Ins. Co. and State Fund [6/4/04] 2004 MTWCC 47 The common fund doctrine extends only to claimants who are insured by the insurer which is the respondent in the case which establishes the precedent giving rise to the common fund.
Schmill v. Liberty Northwest Ins. Co. and State Fund [6/4/04] 2004 MTWCC 47 It is not enough that the petitioner in a workers' compensation case establishes a general principal of law applicable to other claimants, she must show that the litigation entitles similarly situated, identifiable claimants to specific monetary benefits.
Flynn, Robert v. Montana State Fund [2/26/04] 2004 MTWCC 17 Where the Workers' Compensation Court has previously held that the common fund doctrine applies only to benefits owed to claimants insured by the respondent in the particular case, Ruhd v. Liberty Northwest Ins. Corp., 2003 MTWCC 38, the Court will authorize all insurers affected by similar global claims for common fund fees in other cases to withhold the amounts of the attorney fees claimed, at least until such time as the Supreme Court finally determines the scope of the common fund doctrine. However, the withheld amounts should not be remitted to petitioner's attorney. Disposition of the withheld amounts will be determined after the Supreme Court's decision on appeal.
Rausch, Fisch, Frost v. Montana State Fund [7/11/03] 2003 MTWCC 48 Attorneys who establish a precedent are not entitled to common fund fees from all claimants, only from claimants of the respondent insurer. Ruhd v. Liberty Northwest Ins. Corp., 2003 MTWCC 38. Therefore, they are not entitled to subpoena information from the Department of Labor and Industry which identifies all benefitted claimants.
Schmill v. Liberty Northwest Ins. Corp. [4/25/03] 2003 MTWCC 34 Where counsel for petitioner has established a legal precedent entitling other claimants to additional workers' compensation benefits, and has given notice of her intent to seek common fund attorney fees with respect to those benefits whether paid by the respondent insurer in this case or by other Plan I and II insurers, all potentially affected insurers are authorized by the Court to withhold the claimed attorney fees pending further proceedings with respect to the claimed attorney fees.
Stavenjord v. Montana State Fund [4/24/03] 2003 MTWCC 30 Where counsel for petitioner has established a legal precedent entitling other claimants to additional workers' compensation benefits, and has given notice of his intent to seek common fund attorney fees with respect to those benefits whether paid by the respondent insurer in this case or by other Plan I and II insurers, all potentially affected insurers are authorized by the Court to withhold the claimed attorney fees pending further proceedings with respect to the claimed attorney fees.
Broeker v. State Fund [5/3/02] 2002 MTWCC 25 Where the precedent in a case arguably may establish an entitlement to additional benefits by other similarly situated claimants, a notice of attorney fees lien with regard to similarly situated claimants will not be quashed even though the litigation is in its early stages and a class of beneficiaries or entitlement has not yet been established. The purpose of the lien notice is to preserve the right to attorney fees should other claimants become entitled to additional benefits as a result of the current litigation.

Murer v. Montana State Compen. Ins. Fund [09/25/95] 1995 MTWCC 39A-2 Although the Workers’ Compensation Court denied attorneys’ request for common fund fees on benefits distributed to non-party claimants following decision in Murer et al. v. State Compensation Insurance Fund, 267 Mont. 516 (1994) (Murer II), the insurer was authorized to withhold attorneys fees from distribution to these claimants pending appeal. Otherwise, the insurer risked making full distribution to claimants, then being ordered to pay fees to attorneys without having withheld fee amounts.

Murer v. Montana State Compen. Ins. Fund [03/08/95] 1995 MTWCC 18 On remand from the Supreme Court in Murer v. Montana State Compensation Mutual Ins. Fund, 267 Mont. 516 (1994) (Murer II), attorneys for claimants asserted lien for attorneys fees on all additional benefits paid as a result of the precedent established in Murer II. The fees would be paid out of amounts otherwise payable to unnamed claimants. An attorney representing thirteen claimants affected by Murer II, but not named in that case, was granted leave to intervene in this proceeding.