Should attorneys get paid for work they didn’t do? If so, should that money come out of the pockets of injured workers? Those are the questions policy makers who voted yes on S2145 need to be able to answer.
On April 12, the New Jersey Senate voted to modify our state’s workers compensation system to increase the amount of money attorneys assisting injured workers can get. Unfortunately, this additional compensation will come directly out of the pockets of the victims themselves.
Under existing law, employers and their workers compensation insurance carriers are encouraged to act promptly to settle workers comp complaints. When payments are promptly made, the injured workers get the entire payment, and thanks to the system we have in New Jersey, often do not need to hire an attorney to assist them with their claims.
If a worker does decide to hire an attorney and seek additional compensation, state law limits the fee the attorney can charge his or her client to funds he or she is able to secure above and beyond what was originally offered.
While ensuring attorneys are fairly compensated is an admirable goal, taking money out of the pockets of injured workers is not a good way to accomplish it.
The existing formula fosters good public policy in several ways. It encourages prompt, good faith payments to injured employees. It also ensures that the incentives for litigating claims are aligned with the incremental benefit of the potential litigation. And by discouraging unnecessary litigation, it ensures maximum compensation for employees at a minimum cost to employers.
The proposed legislation, by contrast, would amend existing law to undo all of those beneficial incentives.
By eliminating the window of opportunity for carriers to make payments that go entirely to the injured party, this bill would weaken the carrier’s incentive to make maximum payments as quickly as possible. And it would encourage attorney involvement at an earlier stage of the process without regard to their incremental value. Tying the fees to the signing of an attorney client agreement simply incentivizes such agreements. And basing fees on total compensation means attorneys would be taking a share of money that carriers would have made absent any attorney involvement – diverting that money to attorneys instead of compensating victims.
We understand the desire to ensure that attorneys receive adequate compensation for their efforts – but should not come at the expense of injured workers. This legislation would undo each element of the existing, beneficial, incentive structure, to the detriment of injured employees.