Friday, October 2, 2009

Confessions of a money-grubbing, lazy, greedy capitalist tool – you know, the type of person who dislikes insurance companies

I was shown a post on another blog the other day ranting about how horrible ERISA attorneys are because they charge for their services when their clients really really need their insurance benefits to survive. This other blog post was inaccurate, ignorant, unduly vituperative, and I did not like it.

So I am not gonna link to it.

So there.

But if one person (erroneously) thinks this way then maybe others do too, so it seems appropriate to mention a few things about the world of ERISA claimant’s attorneys, to which I very proudly belong.

First, it is all too often true that, when an ERISA attorney is able to get a denial or termination of benefits reversed, the attorney fee eats into what should have been your benefits. If you think about how the law drastically limits the possible recovery when you do win, that’s pretty much unavoidable if the attorney is working on a contingency. If the law only allows you to recover what the benefits should have been in the first place, and the attorney is getting a percentage of the recovery as his fee, then yes it has to come out of those benefits.

Do we like that? Of course not. The alternatives, however, are for attorneys to work for free (which happens more often than you may suspect but of course does not make for much of a business plan) or for clients to pay by the hour (an arrangement most clients have no interest in nor ability to sustain).

I think of attorneys like me as being much in the mold of John D. MacDonald’s great beach-bum private dick Travis McGee:

McGee's business card reads Salvage Consultant, and most business comes by word of mouth. His clients are usually people who've been deprived of something important and/or valuable (typically by unscrupulous [and sometimes also legal] means) and have no way to regain it lawfully. McGee's usual fee is half the value of the item (if recovered) plus expenses, and those who object to such a seemingly high fee are reminded that getting back half of something is better than nothing at all.

My fellow McGees of ERISAworld and I regain the ill-gotten loot lawfully, if you can use that word to describe a process which brings discredit to the law. And we typically don’t charge as high a rate as Travis did – in fact I’ve never even heard of a contingency fee as high as 50%.

Travis McGee charges what he does because he has to incur some significant risk in working on his clients’ behalf: those people who took the loot in the first place don’t give it up without a fight. My colleagues and I also take on risk, and quite a lot of it, because ERISA doesn’t allow us to recover anything without a fight, never mind making our clients whole. I know for a fact we work very hard, and against some pretty significant odds, all because, to be a bit touchy-feely for a moment, we believe in what we do.

It would be a lot easier to make a hell of a lot better living by just taking cases not subject to ERISA, where we can get a percentage of emotional distress damages, punitive damages, and get in on that lottery that folks like think is so outrageous. But we choose to specialize in a field which drastically and artificially limits the recoveries our clients can get, and therefore necessarily limits our fees too. We do that because we see injustice and we want to do our small part to square accounts.

Like any other contingency fee practice, the cases we are able to win have to pay not only for themselves but for the ones we lose too. When we get an award of attorney fees (which is not guaranteed in any case) our clients share in that along with us, at least in any arrangement I’ve ever heard of. ERISA claimant's law is genuinely a calling, if you ask me, and no lawyer in his right mind goes into this field in order to get rich.

Look, I’d love it if the law were such that my clients could always be made whole for the way their insurance company treated them and there was enough left over to keep the doors open at my little law practice. But the law is stingy, and if we can’t make them pay all they should, on behalf of our clients and ourselves, we go forth and try to make them pay as much as the law allows. As Travis McGee’s boon companion Meyer said of him in Darker Than Amber,

I’ve seen how you take on problems. You get deeply involved. You bleed a little. Indignation makes you take nutty risks. All that splendid ironic detachment goes all to hell when you detect a dragon off in the bushes somewhere.

And by the way Travis saw ERISA coming. As he said, in 1964 mind you, in The Deep Blue Good-By,

And I am very wary of a lot of other things, such as plastic credit cards, payroll deductions, insurance programs, retirement benefits, savings accounts, Green Stamps, time clocks, newspapers, mortgages, sermons, miracle fabrics, deodorants, check lists, time payments, political parties, lending libraries, television, actresses, junior chambers of commerce, pageants, progress, and manifest destiny.... But these things can never form lecture material for blithe Travis McGee. I am also wary of earnestness.

Anyway, that’s me and my colleagues. Salvage Consultants.


  1. I agree with this criticism; we should have loser pays, so that the insured's attorneys fees don't come out of his award. Of course, I'm sure you agree with the corollary: that when you bring a meritless claim, you should pay the insurance company's legal fees.

  2. Under ERISA you have your wish, as the statute provides for the court to award attorney fees to either party, not just the claimant. Now you may be disappointed to realize that in practice it is rare for a claimant to be ordered to pay the insurer's fees, because one of the factors entering into the judge's determination is the ability of the adverse party to pay the fee award. As you might imagine, whereas an insurance company virtually always has the ability to pay an award, a claimant whose disability benefits have been denied, for instance, rarely has that ability. But in any case the law is as you would like it to be; the attorney fee provision is bilateral.