Workers' Compensation Legal Spend: Why Claim Complexity Matters

Workers' compensation remains one of the stronger-performing P&C lines, with industry results continuing to show underwriting strength. But strong line-level performance can obscure a different issue inside individual claim files: some claims still take longer to resolve, involve greater medical complexity, or require attorney involvement.

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A Strong Line Can Still Contain High-Friction Claims

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NCCI reported continued workers' compensation underwriting strength, including an 86% combined ratio in 2024 and continued declines in lost-time claim frequency.¹ Lower frequency, however, does not necessarily mean simpler claims. As overall injury rates decline, many remaining claims require closer oversight of medical direction, return-to-work strategy, reserves, settlement posture, and legal activity.²

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Travelers Key Findings on Workers' Compensation Claim Complexity

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Travelers' 2026 Injury Impact Report analyzed more than 1.2 million workers' compensation claims from 2021 through 2025. The findings highlight several claim characteristics that can require more active claim management even when overall injury frequency is declining.³

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Attorney Involvement Changes the Cost and Duration Profile

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Workers' compensation was designed to resolve workplace injury claims without traditional civil litigation, but disputes remain common. Attorney involvement is one of the clearest indicators that a file may require closer oversight.

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WCRI's 2024 study examined the impact of attorney representation on workers' compensation payments across 31 states. Because attorneys are more likely to be involved in serious, disputed, or higher-cost claims, the study used methods designed to account for those differences.⁴ Industry reporting on WCRI's findings highlighted three consistent effects associated with attorney involvement: higher overall payments, longer lost-time duration, and higher expense payments.⁵ Reported impacts associated with attorney involvement included:

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• +$7,700 to +$12,400 in additional payments per claim
• +284% increase in lost-time duration
• +200% increase in expense payments

Legal Spend Is Often a Symptom of Claim Friction

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Legal spend often signals broader claim friction: unresolved compensability questions, unclear medical direction, delayed return-to-work planning, reserve uncertainty, or an unsettled settlement posture. The key question is not simply whether counsel's bill is high, but whether counsel activity is tied to a documented claim strategy and moving the file toward resolution. For example:

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• If an independent medical examination is requested, the file should identify the issue it is expected to resolve.
• If a deposition is scheduled, the file should explain how it affects compensability, disability status, or settlement value.
• If reserves increase, the file should connect the change to medical, indemnity, or legal developments.

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How Alan Gray Can Help

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Alan Gray helps clients evaluate whether workers' compensation legal spend is supported by the claim file, tied to strategy, and proportionate to the decisions being made. That review can help determine whether counsel activity is advancing compensability, medical, reserve, settlement, or closure decisions or whether recurring file patterns are contributing to unnecessary cost, delay, or inconsistent outcomes.

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Citations

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1. National Council on Compensation Insurance. 2025 State of the Line Guide. NCCI, 13 May 2025. National Council on Compensation Insurance. "NCCI Announces Healthy Workers Compensation System at AIS 2026." NCCI, 12 May 2026.
2. Travelers. "Travelers Injury Impact Report Highlights Longer Recovery Times Amid Declining Injury Rates." Travelers Investor Relations, 4 May 2026.
3. Travelers. The Travelers Injury Impact Report. Travelers, 2026.
4. Workers Compensation Research Institute. Impact of Attorney Representation on Workers' Compensation Payments. WCRI, 25 Sept. 2024.
5. Workers Compensation Research Institute. "What Made the Biggest Impacts in Workers' Comp Claims Management in 2025?" WCRI.

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