Claims systems typically do not capture accurate data on attorney representation. Using Milliman Nodal’s proprietary natural language processing (NLP) algorithm, we identified claims with references to plaintiff attorney representation in the adjuster notes. We found that 36% of lost time claims have attorney involvement.
Impact of attorneys
Claims with attorney representation take 2.1 times longer to close and cost 2.3 times more than claims without an attorney. Indemnity costs are heavily impacted by attorney involvement and are 3.5 times higher than claims without an attorney. Given the impact of attorney involvement, it’s critical to identify these claims to control cost and manage cycle times.
Timing of attorneys
Taking a deeper dive into the data, attorneys are known on only 8% of claims within the first two days after the first report of injury (FROI). In fact, 70% of attorneys emerge more than a month after FROI—often due to disputes about compensability, medical care, and/or permanence. Given how late attorneys emerge in the life cycle of a claim, there is ample opportunity to use predictive models to identify high-risk claims and deploy the appropriate strategy to avoid attorney involvement.
Attorney representation by state
The likelihood of attorney involvement varies significantly by the state. The lowest states include Michigan, Wisconsin, and Indiana while the states with highest levels of attorney involvement are New Jersey, Georgia, and Florida. Differences in state systems often drive these differences. Wisconsin, for example, resolves disputes administratively without need for attorney representation. In New Jersey, on the other hand, partial permanent disability (PPD) determinations often involve opposing medical experts.