If you've suffered a work-related injury or illness, and you’re considering hiring a workers' compensation attorney, it's important for you to understand the costs involved. Lawyers generally handle workers' comp cases, like most personal injury cases, on what’s called a “contingency fee” basis. That means if you win your case, your attorney receives a percentage of your workers' comp benefits or settlement. If you lose, there's no fee.
By eliminating the need for substantial up-front payments, contingency fee arrangements allow all injured workers, even those with limited financial resources, the chance to receive quality legal representation. They also provide a strong incentive for attorneys to obtain maximum benefits for their clients.
State laws or regulations tightly control attorneys' fees in workers' comp cases. Many states place some sort of cap on the amount an attorney can charge and require approval of the fees by the workers' comp judge or appeals board.
The laws and regulations dealing with attorneys’ fees vary from state to state. Generally, the judge must approve the fee before the lawyer gets paid, taking into account how complicated the case was, the time and work involved, the amount of benefits awarded, and the final result. Many states set a cap on the percentage and/or total amounts that attorneys can charge. Typically, the maximum percentages range from about 10 to 20%, depending on the complexity of the case. But some states have higher limits or none at all. In general, a case that is settled prior to an administrative hearing will warrant a lower percentage fee than one that requires a hearing or even a trial in circuit court.
In a national survey, injured employees reported that their lawyers received an average of 15% out of their workers' comp settlements or awards. The same survey showed that injured workers who had hired attorneys received 30% more in compensation than those who had pursued their claims without legal help.
Many states prohibit lawyers from charging fees for obtaining routine benefits, such as medical bills or lost wages that the employer or insurer hasn’t disputed. Also, states may allow attorneys to ask the judge to order the other side to pay additional fees in certain situations, such as when the employer or insurer has engaged in egregious misconduct, caused unnecessary delays, or refused to pay benefits that have already been awarded. The percentage caps in state laws don’t apply to these fees (often called sanctions or penalties), because they don’t come out of your compensation.
At your initial consultation, your attorney should provide you with a clear explanation of the fees you’ll be charged. In states that set a cap on attorneys’ fees in workers’ comp cases, lawyers generally charge that amount. Still, you’re free to ask an attorney to handle your case for less than the maximum allowable amount; it never hurts to try. But be sure to negotiate the fees before you sign the representation and fee agreements.
In addition to attorneys’ fees, workers’ comp cases involve other out-of-pocket costs. Some of these common expenses include:
These costs are not covered by the standard fee agreement. Most law firms will pay these expenses as they come up, but you'll probably have to reimburse the firm for the costs if you win your case. Some lawyers charge for expenses even if you lose your case.
Before you sign an agreement with your lawyer about expenses, make sure you understand what the agreement covers, whether the attorney will front the costs, and when you have to pay them back. You should also try to get an estimate of the typical bill for expenses in a case like yours.
The workers’ comp system is very complicated, and insurance companies do everything they can to lower their costs by denying or reducing benefits. They love it when injured employees try to represent themselves. If you're thinking about filing a workers' comp claim or you've had a claim denied, contact an experienced attorney for a free consultation. Having an attorney on your side will make it much more likely that you’ll get the benefits you deserve. And even after attorneys’ fees are deducted from your award or settlement, you’ll probably end up with more compensation than if you tried to navigate the system on your own.