Structuring Attorney Fees in Workers Compensation Cases: A Comprehensive Guide

By: Ringler
Scott Hoover (shoover@ringlerassociates.com – (407) 478-6622)
Jeffrey Klugerman (jklugerman@ringlerassociates.com – (954) 349-2033)
William Mathews III (wmathews@ringlerassociates.com – (727) 822-3346)

Workers Compensation cases involve complex legal and financial considerations, especially when it comes to determining attorney fees. Attorneys who represent clients in such cases play a crucial role in seeking compensation for their clients’ injuries and losses. In scenarios like the hypothetical situation we will explore, where a construction worker sustains a severe injury due to a falling piece of equipment, structuring attorney fees becomes an essential aspect of the legal process.

Case Scenario: A Construction Worker’s Tragic Injury
Imagine a construction worker named Alex who is employed at a bustling construction site. In a tragic turn of events, a piece of equipment comes loose from a crane’s hook and strikes Alex in the head, causing severe injury and permanent disabilities. Recognizing the gravity of the situation, Alex decides to seek legal recourse to secure compensation for his medical expenses, ongoing care, lost wages, and the pain and suffering he has endured.

In this scenario, Alex’s attorney takes up his case, aiming to ensure that justice is served, and that Alex receives the compensation he rightfully deserves. The attorney’s role is not only to navigate the legal complexities of Florida’s Workers Compensation law but also to determine an appropriate fee structure for their services.

Understanding Attorney Fees in Workers Compensation Cases
Attorneys representing clients in Workers Compensation cases typically work on a contingency fee basis, and/or can be awarded fees based upon their hourly work, and benefits obtained for the injured worker. This means that they only receive payment if the case is successful, and the client is awarded compensation. The fee is usually a percentage of the awarded amount and is designed to ensure that individuals have access to legal representation, regardless of their financial circumstances.

Contingency fees offer several advantages to clients. They allow access to legal services without requiring upfront payments, making justice accessible to a wider range of individuals. Additionally, attorneys have an increased incentive to secure the best possible outcome for their clients, as their own compensation is directly tied to the client’s success.

Structured Settlements: An Alternative Approach
In the case of Alex, his attorney successfully negotiates a settlement that replaces his lost future income and covers his ongoing health needs. In many cases, a structured settlement is a common way to resolve Workers Compensation claims. It involves the defendant (or their insurance company) making periodic payments to the injured party over an agreed-upon period, rather than providing just a singular lump sum payment. This approach is particularly advantageous for cases involving severe injuries, as it ensures that the injured party has a stable source of income to cover ongoing medical expenses and other financial needs.

Attorney Fees in Structured Settlements
In line with the contingency fee arrangement in the context of a final washout of the claim in most cases, the attorney’s compensation is determined as a percentage of the total settlement amount. This amount awarded to the attorney for services rendered can be placed into a structured settlement annuity allowing the attorney to receive periodic payments in the future as attorney fees. This method of structuring attorney fees is widely implemented across the nation and, specifically, in the state of Florida. In simple terms, in every WC settlement situation a portion of the attorney’s fees can be received in the form of deferred structured settlement periodic payments, similar to the arrangement made for the injured client. This is an option whether the injured worker includes a structured settlement within their settlement or not. If an attorney has the need to strengthen his or her retirement plan, deferring a portion of their attorney fee on select cases during the course of each year could lead to a very strong retirement income later in life. The attorney fees, which are deferred at the time of settlement, would not be included in their gross income during that tax year. It is an excellent way for the attorney to do tax planning at the end of each fiscal year.

Advantages of Structuring Attorney Fees
1.Alignment of Interests: Structuring attorney fees in line with the client’s structured settlement creates a sense of shared long-term interest. Both the attorney and the client benefit from a steady stream of payments over time.
2.Financial Planning: Just as structured settlements provide financial stability for injured parties, structured attorney fees offer a predictable income stream for legal practitioners. This can aid in financial planning and stability.
3.Delayed Taxation: By opting for structured fees, attorneys can potentially reduce their tax liability. Payments received over time are often subject to different tax treatment compared to a lump sum fee.
4.Enhanced Client Relationships: Choosing a fee structure that mirrors the client’s payment arrangement demonstrates a commitment to the client’s best interests. It fosters trust and a stronger attorney-client relationship.

Structuring attorney fees in Workers Compensation cases, especially those involving structured settlements, is a strategic decision that requires careful consideration. The hypothetical scenario of Alex, the construction worker, highlights the importance of aligning attorney fees with the client’s best interests. By choosing this approach, attorneys can demonstrate their commitment to the long-term well-being of their clients and create a partnership built on trust and shared goals. As the legal landscape continues to evolve, structuring attorney fees in Workers Compensation cases remains a valuable option for legal professionals seeking innovative ways to serve their clients effectively.