[Defense Legal

Insurers and self-insured employers paid almost $25.7 million for "attorney salaries and other costs of legal services" for Oregon workers' compensation in calendar year 1994. These costs exclude fees paid to claimants' attorneys and are often called defense costs. They include not only fees paid to defend the insurer against claims or awards believed to be unwarranted, but also fees paid to represent the insurer in responsibility disputes (where there may be no direct impact on the claimant) and for advising or representing the insurer in activities outside of litigation, such as negotiating a Claim Disposition Agreement (CDA).

Table 1 summarizes these costs. The bottom row of this table depicts the cost breakdown by type of cost: almost 63 percent of all costs were for retained counsel, compared to 62 percent in 1993.

[Table 1]

The graph below depicts total defense legal costs for the past five years. Total costs decreased for the second consecutive year to a value less than that reported for 1990, the first year for which data are available. This trend reflects the decreases in the amount of litigation in Oregon workers' compensation over the past few years (hearings requests, hearings orders, and total claimant attorney fees have fallen, also). Each of the four cost categories contributed to the 5.4 percent decrease from the 1993 total; however, the largest decreases were for other in-house costs and for retained counsel, while the largest percentage decreases were for other in-house costs and non-attorney salaries.

[Table 2]

For each insurer classification, information on share of costs, number of cases, attorney in-house staff, in-house costs as a percentage of total costs, and 1993-1994 cost changes are given in Table 2. SAIF's share of all costs remained at 25 percent, while the shares of private insurers and self-insured employers decreased and increased, respectively, by approximately 3 percentage points (column 1). The number of claims (column 2) indicates the number of claims that had litigation during the year. The total number of "claims" has fallen each year since 1990. The number of in-house attorney staff (full-time equivalent, or FTE) and the percentage of all costs that are comprised of salaries to legal staff and other in-house costs are given in columns 3 and 4. SAIF continued to rely more heavily on in-house staff than did private insurers and self-insured employers. Finally, column 5 gives the percentage change in total costs, from 1993 to 1994, for each insurer classification. Only self-insured employers showed a cost increase in 1994.

[Table 3]

A total of $20,636,000 was paid to defense attorneys (attorney salaries and retained counsel), 3.5 percent less than in 1993 and over 80 percent of all defense costs. (We assume for this purpose that billings for retained counsel are all attorney fees, but that is not always the case.) This report is based on data submitted by insurers and self-insured employers as required by ORS 656.388(5). More information is available from the Department of Consumer and Business Services, Research & Analysis Section, phone (503) 378-8254.
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If you have questions about the information contained in this document please contact by e-mail or phone:
Russell Reed, Research Analyst, Research & Analysis Section, Information Management Division (503) 947-7343

This document was originally published in December 1995.
Document URL: http://www.cbs.state.or.us/external/imd/rasums/delegal95. htm

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