How Much Will My Workers Comp Claim Cost Me?
Workers are usually represented by attorneys who are paid on the basis of a contingent percentage fee. The worker is not ordinarily required to pay any fee or monies when he or she hires the attorney. Instead the attorney agrees to accept as his or her fee a percentage of the amount the attorney recovers for the worker. If there is no recovery, the attorney does not receive any fee.
Ordinarily the attorney will pay the costs of preparing the case for trial. This often involves a considerable amount of money to pay doctors for reports and examinations and to pay court reporters. If there is a recovery of money for the worker, this amount is deducted first to reimburse the attorney for the monies he or she has paid out. Then the attorney charges a percentage fee on the remaining amount of money that is recovered. The attorney is allowed to base the fee on all workers’ compensation benefits that have been recovered for the worker up to the time the case is concluded. The attorney is not permitted to charge a fee on benefits that are paid in the future.
For example, if a worker has three months of benefits owing at the time he goes to see the attorney, the attorney files a petition, takes medical testimony, attends a mediation or a pretrial, and eventually takes part in a trial, one year might go by between the time the case is filed and the time of trial. At this point there would be 15 months of benefits payable. If the worker is completely successful, the magistrate would order the payment of those 15 months of past due benefits plus benefits indefinitely in the future. The attorney would base his or her fee on the 15 months of past due benefits.
If there was an appeal to the Appellate Commission, this might take another year. During the time of the appeal the worker would receive 70 percent of the benefits ordered by the magistrate. If the worker wins, at the time the case is concluded the attorney is entitled to charge a fee based on all of the benefits owing up to that date. This includes the 70 percent benefits that the worker received while the case was on appeal.
If the worker wins the case as the result of a trial and/or an appeal, or if benefits are paid as the result of a voluntary payment, the attorney is entitled to charge a maximum fee of 30 percent of the benefits received. The maximum attorney fee, however, cannot be based upon a rate of benefits that is higher than two-thirds of the state average weekly wage. This means that if the worker is receiving the maximum benefit which would be 90 percent of the state average weekly wage, the attorney must calculate his or her fee as if the worker was only receiving an amount equal to two-thirds of the state average weekly wage.
If the case is resolved through a redemption settlement, the amount paid in a lump sum is usually higher. This is because a redemption settlement usually involves some payment for the future. Accordingly, lawyers are limited to smaller fees in those cases. If the case is settled before a trial is completed, the fee is limited to 15 percent of the amount of the settlement if it is for less than $25,000. If the settlement is for more than $25,000, the maximum fee is 15 percent of the first $25,000 and 10 percent of the amount over that. If a trial has been held and completed and the case is later settled through a redemption, the attorney is entitled to a fee of 20 percent.
In redemption, the magistrate will examine a statement of the fees provided by the attorney. In any case, the director of the Bureau of Workers’ Disability Compensation has the authority to review any disputes concerning attorney fees.
Source: Michigan Department of Consumer & Industry Services, and Bureau of Workers’ & Unemployment Compensation. An Overview of Workers’ Compensation in Michigan. Lansing: 2002.