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Can You Make Money from Handling Workers’ Comp?

by Carolyn Elefant on December 19, 2004 · 0 comments

in Business Models, Legal Profession Trends, Practice Areas

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This article,
Few Lawyers Take on Workers’ Comp Cases, Patrick Springer, The Forum (12/19/04)  reports on the difficulty that North Dakota workers are having in finding affordable representation for workers comp cases.   According to the article, in 1995, the state amended the works comp system to provide that workers’ attorneys are paid only if they win and limits attorneys’ fees to 20 percent of the award.   The article reports:

The laws have succeeded in achieving two major goals: sharply lowering payments to workers’ lawyers and reducing costly litigation. But workers and their advocates complain it has become much more difficult to hire legal help to obtain benefits, especially in complex cases.

Fees the bureau paid to workers’ lawyers exceeded $1 million in 1995 and 1997, but have dropped steadily since that peak, to $207,976 in 2003.

Workers’ requests for administrative hearings to contest denials or reductions in benefits also have plunged, from more than 980 in 1994 to 170 in fiscal year 2004.

The article has other interesting stats on workers comp as well:

A study by the National Council on Compensation Insurance presented to the North Dakota Legislature in 1995 found that attorney involvement in claims resulted in benefits payments that were significantly higher than those not represented by lawyers.

The average disability claim for workers represented with lawyers was $41,229, compared to an average of $33,501 for those without representation. The average attorney fee was 13 percent of the award.

Another inequity is that the lawyers that the Workers’ Comp Bureau pays to defend its position in court are paid more than attorneys for claimants:

Then [after 1996] the bureau started hiring private insurance defense lawyers, in part to help eliminate the backlog of disputed claims under litigation. Officials and business leaders complained that the bureau was often forced to settle claims, regardless of their merits, because of the spiraling costs of fighting legal challenges.

Unlike fees paid to workers’ lawyers, private lawyers representing the bureau are paid regardless of whether they win or lose, and aren’t subject to any fee caps. They simply bill by the hour.

Also, senior lawyers who represent the bureau are paid $125 an hour, compared to $115 an hour for workers’ lawyers.

Is this a lost cause?  Or is there some business model than an enterprising attorney can develop to find a way to make money off workers’ comp cases while providing a decent level of representation?  And what are the experiences of readers in other states who practive workers’ comp?  Finally, if tort reform succeeds in capping attorneys’ fees and recovery, would potential PI claimants have as much trouble as finding an affordable lawyer as workers’ comp claimants in North Dakota?

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