In 1998 Oregon workers’ compensation insurance carriers and self-insured employers (together referred to as “insurers”) paid almost $24.1 million for attorney salaries, attorney fees, and other costs of legal services incurred in accordance with Chapter 656, Oregon Revised Statutes. These costs are primarily to defend the insurer against claims or compensation benefits believed to be unwarranted, but may also include costs to represent the insurer in responsibility disputes (where the outcome may not directly affect the worker) and for services provided outside of litigation (such as negotiating a claim disposition agreement). These costs are distinguished from fees paid to attorneys representing injured workers.

Table 1 summarizes these costs. The bottom row of the table depicts the breakdown of costs by category: 61.8 percent of all costs were for retained counsel, compared to 60.5 percent in 1997.

The graph depicts total defense legal costs for the past nine years, the only period for which data are available. Total costs in 1998 were $0.24 million less than in 1997. This cost decrease was due to the reduction in in-house costs, since costs for retained counsel increased by about 1 percent from 1997 to 1998.

For each insurer classification, information on share of costs, numbers of litigated claims, in-house attorney staff, in-house costs as a percentage of all costs, and 1997-1998 cost changes are given in Table 2.

Private insurers’ share of total costs (column 1) increased over 1997 by 3.6 percentage points, while the SAIF and self-insured employer shares decreased by 2.3 and 1.3 percentage points, respectively. The number of claims (column 2) approximates the numbers of claims with litigation during the year. The total number of such claims has fallen every year since 1990. The numbers of in-house attorney staff (full-time equivalent, or FTE) are given in column 3, and the percentages of all costs that are composed of in-house costs are given in column 4. SAIF use of in-house staff has always been greater than for the other insurer classifications. For 1998, 95.4 percent of SAIF’s legal costs were in-house costs, compared to 96.0 percent in 1997. Finally, column 5 gives the 1997-1998 changes. Costs paid by private insurers increased over 1997, while SAIF and self-insured employers paid less than in 1997.

A total of $19.6 million – 81.3 percent of all defense costs – was paid to attorneys (attorney salaries plus retained counsel), up from 80.2 percent in 1997. (We assume for this purpose that billings for retained counsel are all attorney fees, but other costs to the law firm may be included, as well.)

This report is based on data submitted by insurers as required by ORS 656.388(5). Surveys were sent to almost 400 such companies that had claims in litigation during the year. Over 96.6 percent of the companies responded to the survey; responding companies were responsible for 99.1 percent of the litigated claims.

More information is available from the Department of Consumer & Business Services, Research & Analysis Section.

If you have questions about the information contained in this document please contact by e-mail or phone: Russ Reed, Research Analyst, Research & Analysis Section, Information Management Division (503) 947-7343.

This document was originally published in November 1999.
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