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September 2014

Economic Analysis of Injured Worker Attorney Compensation in Oregon. September 2014. Premise: Incentives matter. Injured worker attorney c ompensation not aligned with required effort.

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September 2014

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  1. Economic Analysis of Injured Worker Attorney Compensation in Oregon September 2014

  2. Premise: Incentives matter

  3. Injured worker attorney compensation not aligned with required effort • Fees that are scaled with award amount do not necessarily correlate with effort required for adequate representation • Statute prohibits award of injured worker attorney fees for important actions that typically require an attorney: • Partially successful defense of insurer’s challenge to a permanent disability award • Successful recovery of injured worker’s costs after prevailing on a case • Successful request for reclassification from non-disabling to disabling • Successful defense of insurer’s appeal of attorney fees and penalties • Preparation and counsel for injured worker statement before claim acceptance

  4. Inflation has eroded the value of capped fees by 24 percent since 2000

  5. The gap between defense and injured worker attorney fees has increased since 2000 • In 2013, defense fees exceed injured worker attorney fees by 62% ($13.1 million gap) • In real terms, the gap has grown by $3.6 million since 2000 • Defense bar is twice the size of the injured worker attorney bar (186 vs. 95 attorneys)

  6. System caseload has fallen 30 percent while… • The share of outcomes favorable to claimants has fallen by 3 percentage points (7%) • Share of claimants without representation in opinion and order hearing cases increased by 3 percentage points (49%) • Lag time for Board cases have increased by 62% and fallen 4% for hearing cases

  7. Summary of findings • Injured worker attorney compensation not aligned with required effort: • Fees scaled with award amount do not necessarily correlate with effort required for adequate representation • Statute prohibits attorney fees for important actions • Inflation erodes the value of capped fees (by 24 percent since 2000) • Worker’s compensation defense bar is twice the size of the injured worker attorney bar: (186 vs. 95) • Since 2000, the gap between defense fees and injured worker attorney fees has grown, and defense fees now exceed injured worker attorney fees by 62% ($13.1 million) • System caseload has fallen by 30% while: • The share of outcomes favorable to claimants has fallen by 3 percentage points (7%) • Share of claimants without representation in opinion and order hearing cases closed through opinion and order increased by 3 percentage points (49%) • Lag time from request to order for Board cases increased by 62% and fell by 4% for hearing cases

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