Most attorneys who handle long-term disability (LTD) cases work under a contingency fee arrangement, meaning they collect a fee only if you win your case. A typical contingency fee for an LTD attorney might be 25% to 40% of the proceeds of your case. Because few disability claimants can afford to hire an attorney on an hourly or flat-fee basis, a contingency fee agreement allows disabled individuals to receive quality representation while enabling attorneys to work without charging money up-front.
If you win your LTD case and receive a lump-sum settlement from the insurance company, your attorney will collect a portion of that settlement according to the terms of your contingency fee agreement. In some cases, however, the LTD insurer will agree (or be ordered) to pay you disability benefits on a monthly basis. In those situations, most attorneys will charge a percentage of your past-due benefits. This amount could be substantial, particularly if your case has taken many months to resolve.
Be wary of attorneys who insist on collecting a portion of your future benefits as well. If you receive disability benefits for ten or even twenty years, your attorney could end up collecting a truly staggering fee.
Most employer-provided group disability plans are governed by a federal law known as ERISA, the Employee Retirement Income Security Act. If you sue your insurer in federal court, ERISA law grants federal judges the discretion to order your insurer to pay your legal fees, which often happens if the insurer has engaged in misconduct or acted in bad faith. If your LTD plan is not covered by ERISA, as with most individual plans, you'll be responsible for your own attorney's fees.
It may be possible to negotiate your attorney's fee, especially if your LTD case is a strong one. In general, disability cases that contain a good supporting opinion from a treating physician and objective evidence of your impairments, such as x-rays, MRIs, or lab testing, are thought to be strong cases. Even if your case might be more challenging, it never hurts to try to negotiate the fee, perhaps from 40% of monies awarded down to 25%. If your prospective attorney insists on terms you don't agree with, such as a percentage of your past and future benefits, contact another disability lawyer.
It's essential that you perform any negotiations prior to signing the representation and fee agreements with your attorney. Don't wait until after your case has concluded to try to bargain a lower fee.
At the conclusion of your LTD case, you'll likely be required to reimburse your attorney for the costs of your case, including the cost of medical records, depositions, postage, filing fees, and travel expenses. Before hiring your attorney, make sure you're clear on what costs are covered by the expense agreement and whether you'll be charged for these costs even if your case is unsuccessful. When you're eventually billed for the expenses, your attorney should include an itemized list of charges. Be on the lookout for bogus costs such as "overhead" that are not directly related to your case.
An unavoidable result of the contingency fee arrangement is that attorneys aren't compensated for work performed on losing cases. Because taking cases on contingency is more risky for attorneys, legal fees in contingency fee cases tend to be higher than fees in hourly or flat-fee cases.
Still, most state bar associations prevent attorneys from charging fees that are clearly excessive, even in contingency fee cases. The amount of compensation received by your attorney must bear a reasonable relationship to the amount of work the attorney performed. If you believe you've been charged an excessive fee, first contact your attorney to see if you can arrive at a compromise. If nothing else, your attorney should be able to provide you with an accounting of the hours spent on your case. If your lawyer fails to address your concerns, consider filing a complaint with your state bar association.
Experienced LTD attorneys understand how to develop the vocational and medical evidence necessary to put your case in the best light possible. They'll also comply with all necessary deadlines, negotiate with the insurer on your behalf, and if necessary, file a lawsuit against your insurer. Insurance companies greatly prefer working with unrepresented claimants, because their claims are much easier to deny without adequate justification. This fact alone should convince you to hire an attorney. (For a more detailed explanation of how an LTD attorney can help, read Should I Hire a Long-Term Disability Attorney?)