New Jersey’s Increased Cap on Workers’ Comp Attorneys’ Fees

Benefits All New Jerseyans
This past August, Acting Governor Nicholas Scutari (who was serving in that position while Governor Phil Murphy was at the Democratic National Convention) signed into law S2822/A3986, which increases the contingency fee cap for attorneys in workers’ compensation cases from 20 percent to 25 percent. Scutari, the New Jersey Senate President who himself is a personal injury and workers’ compensation attorney, said the increase would “ensure fair compensation for attorneys and provide workers with the accessible, quality legal representation they deserve.”
S2822/A3986, which amended N.J.R.S. 34:15-64 and increased the fee cap for the first time since it was established in 1927, was not without controversy. The New Jersey Business and Industry Association opposed the increase, claiming the state’s workers’ compensation claimants’ attorneys have seen their fees increase proportionally over the past decade because the State Average Weekly Wage rose over 28 percent during that period. The New Jersey State League of Municipalities also opposed the increase, citing the “worrisome trend of ever-increasing insurance costs.”
(I will put aside for the moment statistics like those from the National Academy of Social Insurance’s most recent annual report showing that (i) across the U.S., employers saw a 5.6% decrease in total workers’ compensation costs from 2017 to 2021, (ii) workers’ compensation benefits paid to New Jersey employees dropped 2.6 percent over that time, and (iii) the amount of total benefits employers paid to New Jersey employees per $100 of covered wages decreased from $0.97 in 2017 to $0.80 in 2021.)
Contrary to what opponents of the fee increase would lead you to believe, all New Jerseyans and the employers and insurers that do business in the Garden State stand to benefit from the increased cap.
Injured workers will benefit from the fee cap increase
With a higher fee cap, you can expect more attorneys to take on injured workers’ cases and established workers’ compensation attorneys to continue representing injured workers.
With the former group, they may view workers’ compensation as a more attractive practice area than in the past and may expand or shift their practices to represent injured workers. With the latter group, a higher fee cap should mean higher profit margins, which could keep seasoned workers’ compensation attorneys from deciding to explore other practice areas that might have been more profitable than a workers’ compensation practice with a 20 percent fee cap. Those increased margins could also motivate them to expand their firms to take on more injured workers. For both groups, these increased margins could motivate them to invest more in their clients’ cases than they might have with a 20 percent fee cap.
If more New Jersey attorneys practice workers’ compensation law, and established workers’ compensation attorneys in the state continue to represent injured workers and perhaps expand their practices, injured workers and their families will benefit.
First, with more attorneys in the market, more injured workers will have legal representation, which will help them get the medical care and lost wage benefits they need. Presumably, fewer injured workers will mount a losing “do it yourself” effort to secure that care and those benefits.
Second, with more injured workers getting the medical care they need, they will hopefully return to work faster and with the ability to resume performing the same tasks they did before they were injured. This will hopefully minimize how long their inability to bring home a paycheck negatively affects them and their families.
Third, in that same vein, if injured workers are more likely to secure lost wage benefits because more of them have legal representation, they and their families may avoid relying on unemployment, welfare, food banks, and other social safety nets while they’re injured.
Finally, with more attorneys representing injured workers, physicians who had not been treating injured workers for fear of not getting paid for their services will likely decide to do so. They may be confident that injured workers represented by counsel are more likely to secure payment for medical care they have received, which minimizes the risk those physicians face of their bills going unpaid. As a result, injured workers might have more—and more convenient—options for treatment.
Employers will likely benefit from the fee cap increase
They might not admit it, but employers are likely to benefit from the increased fee cap too.
As I noted above, with more injured workers represented by counsel, they will hopefully return to work faster after securing the medical care they need. This could lead to less worker turnover, as an employer need not find a long-term or permanent replacement for an injured worker who is likely to return to work soon, and can likely fill any gaps through their current workforce.
With less worker turnover, employers can avoid the likely dip in worker productivity that often accompanies a new worker getting acclimated to the job. They can also likely avoid the costs of finding new workers, training them, and hiring ones whose negativity or ineptitude destroys their colleagues’ productivity and/or the work environment.
Insurers will likely benefit from the fee cap increase
Equally unwilling to admit it, insurers are also likely to benefit from the increased fee cap.
With more injured workers represented by counsel, their workers’ compensation claims will presumably be resolved quicker and more efficiently. While insurers may be unhappy with how the claims are resolved, that they are being resolved means less uncertainty regarding insurers’ liabilities for those claims.
Additionally, with more workers’ compensation attorneys filing more claims on behalf of injured workers, insurers (and their insureds) will hopefully identify and eliminate hazardous conditions more quickly and easily. If they investigate those conditions and eliminate them, they’ll save themselves time (i.e., dealing with workers’ compensation matters) and money (i.e., legal fees and workers’ compensation benefits) down the road.
New Jersey taxpayers will benefit from the fee cap increase
Even everyday New Jerseyans benefit from the fee cap increase.
With more injured workers presumably back on their feet and working because of the increase, fewer New Jerseyans’ federal or state tax dollars will go toward funding social safety net payments that injured workers might have needed to make ends meet and feed their families with while they were not working.
In addition, with employers presumably facing decreased labor costs because of injured workers healing and getting back to work quickly, employers will have one less cost to pass onto New Jerseyans in the form of higher prices for those employers’ products and services.
A rising fee cap lifts all boats
The concerns voiced by opponents of the new workers’ compensation attorneys’ fee cap in New Jersey are understandable given their view of the world. But if the increased cap leads to what many in the New Jersey workers’ compensation claimants’ bar believe will happen—more injured workers will be represented by counsel while pursuing their workers’ compensation claims—workers’ compensation claimants’ attorneys won’t be the only ones to benefit from the new cap.
Workers, employers, insurers, and even New Jersey’s taxpayers all stand to benefit too.
Michael Ralph Lombardi is an attorney at Lombardi & Lombardi, P.A., a leading New Jersey personal injury, workers’ compensation, and employment law firm effectively representing the legal needs of its clients since 1975. He can be reached at michaelr@LombardiandLombardi.com.
Reprinted with permission from the October 9, 2024, edition of the New Jersey Law Journal © 2024 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or reprints@alm.com.