As an employer, you may not have needed a defense attorney before. Now that you have an injured employee with a workers’ compensation case that is not going to be resolved with your insurance adjuster, there are some things you need to learn about the way workers’ comp is handled in the legal system. The legal practitioner may be called an attorney, lawyer or counsel; however, they mean the same thing.
Billable Hours
An important concept to understand is the term “billable hours.” This is the way that most defense attorneys are paid. Usually, that means that each fraction of an hour an attorney spends on your case is itemized for payment. An hour of time is billed as 1.0 hours, a half hour as .5 hours, fifteen minutes as .3, and five minutes and under as .1. So each time your defense attorney reads an email from you, talks to you on the phone, or looks over a document, they will bill you for it. Even if they talk to you for less than one minute you will be billed for .1 hours.
Therefore, you should make sure that your calls and emails to the attorney are concise, relevant and combined to cut down costs. In addition, beware that the concept of billable hours may be a motive for an attorney to over work a file and to prolong litigation.
Make sure to carefully read over the itemized bills you receive from the attorneys to make sure that there are not duplicated items or unreasonable amounts of time spent on a task. Also make sure that each listed item in the bill has a sufficient description so you can tell what the attorney actually did. For example, if the attorney is charging you for a phone call, the itemization should say who the phone call was with and a brief description of what the call was about.
There are several other ways to control litigation costs.
Negotiating Settlements
You usually do not need to pay an attorney to negotiate early on in the worker’s compensation process. This is the insurance adjuster’s job, although participation in the process may vary somewhat by venue. The adjusters will know the case better than an attorney stepping in because the adjuster will be the one who did the up-front investigation and has had contact with the players. When an attorney becomes involved, you will pay the attorney the costs of reviewing the entire case that the insurance adjuster already knows.
Your insurance adjusters should be trained negotiators with experience negotiating cases. Some have even negotiated more cases than attorneys because of their case loads and experience. Adjusters have motivation to settle, and they know the cases better. Do not let the adjuster hand the case over to an attorney merely because of their own heavy workload or other reasons unrelated to the case itself.
Even if a lawsuit is filed, request that the adjuster continues to do the investigation and negotiation, rather than paying an attorney to do it.
Settlement Is Better Sooner than Later
The sooner the better if a case is to settle. The value of a case increases with age. Some arbitrators have the erroneous perception that the longer an injured worker is treated, is off work or has to wait for settlement, the more serious the claim. In addition, the longer the case continues, the more legal fees and costs are incurred. Hold the adjuster accountable for litigation management and cost containment. Make the adjuster stay active on the case, even when being handled by an attorney. To do this, you should periodically call the adjuster for case status updates.
Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher. www.reduceyourworkerscomp.com. Contact: mstack@reduceyourworkerscomp.com.
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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.
