Unopposed Excess Fees Still Require Irwin Review; 2024 Workers’ Comp Fee Cap Applies Prospectively Only

Unopposed Excess Fees Still Require Irwin Review; 2024 Workers’ Comp Fee Cap Applies Prospectively Only

Introduction

In James Jurgensen, Relator v. Dave Perkins Contracting, Inc., and TBG Claims Services, 22 N.W.3d 568 (Minn. 2025), the Minnesota Supreme Court addressed four interrelated questions in the workers’ compensation attorney-fee arena:

  • Whether the 2024 legislative increase to the presumptive cap on attorney fees in Minn. Stat. § 176.081 applies retroactively.
  • Whether an unopposed request for “excess” attorney fees must be automatically approved.
  • Whether the statutory fee cap violates the Contracts Clause of the Minnesota Constitution.
  • Whether the Workers’ Compensation Court of Appeals (WCCA) erred in affirming the denial of excess fees under the seven-factor standard set out in Irwin v. Surdyk’s Liquor, 599 N.W.2d 132 (Minn. 1999).

The case arises from an admitted July 29, 2021 work injury. The employee, James Jurgensen, retained attorney Joshua E. Borken under a contingent fee agreement tied to Minn. Stat. § 176.081 (2014/2022), which sets a presumptive cap of 20% of the first $130,000 in compensation (i.e., $26,000). The parties later settled for $150,000. Counsel sought $30,000 (20% of the settlement), comprised of $26,000 within the statutory cap and $4,000 in “excess” fees. The compensation judge approved $26,000, escrowed the $4,000 pending a hearing, and ultimately denied the excess request after applying Irwin. The WCCA affirmed. On further review, the Attorney General intervened to defend the statute’s constitutionality; the employer and insurer took no position against the fee request.

Summary of the Opinion

The Supreme Court affirmed the WCCA on all issues:

  • The 2024 amendment to § 176.081 increasing the presumptive cap to 20% of the first $275,000 (i.e., $55,000) applies only to dates of injury on or after October 1, 2024; it is not retroactive.
  • Unopposed requests for excess fees are not automatically approved. Even when undisputed, a compensation judge must determine the amount of fees “owing” under § 176.081 and consider Irwin when fees exceed the cap.
  • The statutory cap does not violate the Minnesota Constitution’s Contracts Clause because it predated the fee agreement; existing statutes are read into contracts at formation.
  • The WCCA did not err in affirming the denial of excess fees; the compensation judge applied Irwin and did not abuse discretion. The Court recommends the “better practice” of specifying the dollar amount at issue and addressing each Irwin factor individually, though it is not strictly required.

Analysis

Precedents and Authorities Cited and Their Influence

  • Irwin v. Surdyk’s Liquor, 599 N.W.2d 132 (Minn. 1999) — Held § 176.081 unconstitutional only to the extent it impinged on the judiciary’s inherent authority over attorney fees. Irwin established a seven-factor reasonableness test for “excess” fee requests and confirmed independent judicial review of such fees. This case reaffirms the judiciary’s gatekeeping role and the continued vitality of Irwin alongside the statutory “presumptive cap.”
  • Mack v. City of Minneapolis, 333 N.W.2d 744 (Minn. 1983) — Confirmed that courts have discretion to review the reasonableness of fees notwithstanding a stipulated settlement. The Court relied on Mack to reject automatic approval of an unopposed excess fee, emphasizing that private stipulations cannot sidestep statutory and judicial oversight.
  • Retroactivity canons:
    • Minn. Stat. § 645.31, subd. 1 — New statutory provisions are effective only from their effective date.
    • Minn. Stat. § 645.21 — Presumption against retroactivity absent clear legislative intent.
    • Leahy v. St. Mary’s Hospital, 339 N.W.2d 265 (Minn. 1983) and Kahn v. State, Univ. of Minn., 327 N.W.2d 21 (Minn. 1982) — Workers’ compensation law in effect on the date of injury governs, unless the Legislature expresses a contrary intent.
    • In re Individual 35W Bridge Litigation, 806 N.W.2d 811 (Minn. 2011) — Clear retroactive language is required (e.g., use of “retroactive”).
    • Marose v. Maislin Transportation, 413 N.W.2d 507 (Minn. 1987) — Example of a statute with explicit retroactive application to all cases pending on a date, regardless of injury date; contrasted by the forward-looking effective date used here.
  • Contracts Clause framework:
    • Minn. Const. art. I, § 11
    • Jennissen v. City of Bloomington, 938 N.W.2d 808 (Minn. 2020) — Three-part test for impairment of contracts.
    • Gretsch v. Vantium Capital, Inc., 846 N.W.2d 424 (Minn. 2014) — No impairment when a statute predates a contract; existing statutes are incorporated by implication at formation.
    • Western States Utilities Co. v. City of Waseca, 65 N.W.2d 255 (Minn. 1954) — Contracts are made in submission to existing legislation.
    • Gluba ex rel. Gluba v. Bitzan & Ohren Masonry, 735 N.W.2d 713 (Minn. 2007) and Clark v. City of Saint Paul, 934 N.W.2d 334 (Minn. 2019) — Statutes are presumed constitutional; a challenger bears a heavy burden.
  • Standards of review and fee-calculation guidance:
    • Braatz v. Parsons Electric Co., 850 N.W.2d 706 (Minn. 2014) — Legal analysis reviewed de novo; fee awards reviewed for abuse of discretion, considering all relevant circumstances under Irwin.
    • Green v. BMW of North America, LLC, 826 N.W.2d 530 (Minn. 2013) — It is an abuse of discretion to refuse to consider the amount at issue; fees must remain proportionate.
    • Lagasse v. Horton, 982 N.W.2d 189 (Minn. 2022) — Deference to affirmed WCCA findings unless manifestly contrary to the evidence.
    • In re Reissuance of an NPDES/SDS Permit to U.S. Steel Corp., 954 N.W.2d 572 (Minn. 2021) — Administrative rules are construed like statutes; text and context control.

Legal Reasoning

1) The 2024 fee-cap amendment is not retroactive

The Legislature amended § 176.081 in 2024 to raise the presumptive fee cap from $26,000 to $55,000 (20% of the first $275,000 in compensation), expressly stating that the amendment “is effective for dates of injury on or after October 1, 2024.” Applying Minn. Stat. §§ 645.31, subd. 1, and 645.21, the Court held the amendment may not reach earlier injuries. The injury here occurred in 2021. No textual evidence indicated a retroactive intent; indeed, the express prospective effective date foreclosed it. The Court contrasted the amendment’s wording with Marose, where the Legislature unmistakably mandated retroactivity (“all cases pending on [date] regardless of the date of injury”). Thus, the pre-amendment $26,000 cap controlled.

2) No automatic approval of unopposed requests for excess fees

Counsel argued that Minn. R. 1415.3200, subp. 8, required a “summary decision” without substantive review when no party objects to a fee request. The Court rejected this reading. Even when unopposed, the rule requires the judge to issue a summary decision “regarding the amount of attorney fees owing under” § 176.081 and related law. Because § 176.081 imposes a presumptive cap and Irwin reserves judicial review for reasonableness, the judge’s duty is not ministerial. Mack underscores that stipulations cannot supplant judicial scrutiny. In short, an absence of party objection does not equate to automatic approval when fees exceed the statutory cap.

3) No Contracts Clause violation

The Court disposed of the constitutional challenge at the first step of Jennissen’s impairment test. The fee-cap framework long predates the 2021 fee agreement between counsel and the employee; as Gretsch and Western States Utilities explain, existing statutes are read into contracts upon formation. Because § 176.081 was already in effect, there was no retroactive impairment. Consequently, the Court did not need to address whether any impairment served a significant public purpose or was reasonably tailored.

4) Irwin applied; no abuse of discretion in denying excess fees

The compensation judge considered the Irwin factors and concluded that $26,000 adequately compensated counsel for time, risk, and complexity, particularly because the matter settled before pleadings, involved average complexity, required limited proof, and entailed no depositions or experts. The WCCA affirmed. On review, the Supreme Court emphasized:

  • All relevant circumstances should be considered under Irwin, consistent with Braatz.
  • While the Court encouraged judges to specify the dollar amount at issue and to address each of the seven factors separately, the judge’s consolidation of two factors and omission of a specific dollar figure did not, on this record, amount to an abuse of discretion.
  • The Court distinguished Green, where the district court refused to consider the amount at issue—an error not present here, since the judge did consider the categories of benefits and the overall context (even without stating a dollar figure under the “amount involved” factor).

Impact and Practical Implications

Prospective-only application of the 2024 cap

The new $55,000 cap applies only to injuries on or after October 1, 2024. For claims stemming from earlier injuries, the pre-amendment $26,000 cap governs. Lawyers should not assume the higher cap will apply to pending cases unless the date-of-injury requirement is met or the Legislature clearly expresses retroactive intent in a future amendment.

Unopposed “excess” fee requests must still pass Irwin

Parties cannot contract around judicial oversight. Even a jointly supported or unopposed request over the presumptive cap must be justified under Irwin. Stipulations and client consent are relevant but not dispositive. The decision underscores that Minn. R. 1415.3200, subp. 8, does not convert the judge’s role to a rubber stamp.

Contracts Clause challenges will be difficult in this context

Where the fee-cap statute precedes the retainer, there is no impairment. Future Contracts Clause challenges to § 176.081 will likely fail for that same reason, particularly given the strong presumption of constitutionality and the heavy burden on challengers. This holding fortifies the Legislature’s authority to regulate fee arrangements prospectively in the public interest, while preserving judicial review of reasonableness.

Guidance to compensation judges: a “better practice” roadmap

The Court offers practical instruction moving forward:

  • Specify the dollar amount at issue when applying Irwin’s “amount involved” factor.
  • Address each Irwin factor separately when feasible, to strengthen the transparency and durability of the fee determination on review.

Practice tips for counsel seeking excess fees

  • Build a robust Irwin record: document time, tasks, complexity, risk, responsibility assumed, and results obtained.
  • Do not rely on the absence of objections. Provide evidence supporting the departure from the cap, especially in cases that settle early or involve limited discovery.
  • Explain proportionality: tie the requested fee to the amount at stake and the quality of the outcome, consistent with Green’s proportionality concern.
  • Clarify how the case’s proof burdens, expert needs, or novel legal issues justified extraordinary effort beyond typical cases.
  • For injuries on or after October 1, 2024, recognize that the higher presumptive cap reduces—but does not eliminate—the need to justify fees that exceed $55,000.

Complex Concepts Simplified

  • Presumptive cap vs. absolute ceiling — Under § 176.081, fees up to the cap (pre-10/1/2024 injuries: $26,000; post-10/1/2024 injuries: $55,000) are presumed reasonable and need no approval. Fees above the cap are possible but must be justified under Irwin’s reasonableness factors and approved by a compensation judge.
  • Irwin factors (plain language):
    • Amount involved — How much money or benefits were at stake.
    • Time and expense — The hours and costs required to prepare and litigate.
    • Responsibility assumed — The degree of risk and responsibility counsel took on (including contingent risk).
    • Experience of counsel — Skill and expertise relevant to the case.
    • Difficulties of the issues — Legal and factual complexity.
    • Nature of the proof — The evidence required (documents, experts, depositions) and its burden.
    • Results obtained — The quality and significance of the outcome for the client.
  • Retroactivity — New laws typically apply going forward, not backward. Unless the Legislature clearly states that a change is retroactive, courts apply the law in effect on the date of injury in workers’ compensation cases.
  • Contracts Clause — The Constitution prohibits laws that retroactively impair existing contracts. But when a statute already exists at the time parties sign a contract, the law is treated as part of the deal, preventing an impairment claim.
  • Summary decision — A streamlined ruling under § 176.305. Even in a summary posture, judges must determine the fee “owing” under § 176.081, which includes applying the cap and, when relevant, conducting an Irwin analysis for excess fees.

Conclusion

Jurgensen clarifies four important points of Minnesota workers’ compensation fee law. First, the 2024 increase to the presumptive cap is strictly prospective: it applies only to injuries on or after October 1, 2024. Second, unopposed requests for excess fees are not automatically approved—Irwin’s reasonableness review remains indispensable. Third, the statutory cap does not violate the Contracts Clause when it pre-exists the retainer agreement, because existing statutes are incorporated into contracts at formation. Fourth, the denial of excess fees here was within the compensation judge’s discretion under Irwin, though the Court encourages judges to specify the dollar amount at issue and to address each factor individually going forward.

Collectively, these holdings preserve the Legislature’s framework for fee regulation, reinforce the judiciary’s independent oversight over attorney compensation in workers’ compensation cases, and provide practical guidance to both bench and bar. For practitioners, the message is clear: excess fees must be earned and explained, not merely stipulated; for judges, careful articulation of the Irwin analysis will best withstand appellate review.

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