Benefit restrictions and capped contingency fees have made workers' compensation practice uneconomic in a growing number of states, and when the lawyers go, the disputes go with them.
North Dakota now has two lawyers who will take a case for an injured worker. Both are in their late sixties; one has already cut back to part-time, and the other expects to retire within a few years. When they close their files, roughly 800,000 people will have no private bar available to an injured worker seeking to challenge a denial. That is not a shortage. That is the end of a practice area inside a jurisdiction, and it happened without a single statute declaring that workers may not be represented.
The North Dakota picture is extreme, but the forces that produced it are national. Claim volume is falling, benefit eligibility has been narrowed, fee recovery is capped as a percentage or a dollar figure, and the work required per case keeps growing. Those four trends together describe an economic model that no longer supports a contingency practice, and the profession is responding the way any profession responds to a business that does not pay.
The Arithmetic of a Contingency Practice
Claimants' counsel are paid out of a recovery, and only when there is one. The size of the fee therefore tracks two variables the lawyer does not control: the number of compensable disputes and the value of the benefits at stake. Both have been moving in the same direction for a decade.
NCCI reported that lost-time claim frequency declined by 2 percent in 2025, a more moderate decline than the long-term average, and that the cumulative decline since 2015 approaches 40 percent. Over the same period, the line has been consistently profitable. The 2025 calendar year combined ratio was 91, the twelfth consecutive year below 100, on net written premium of roughly $41.6 billion. Severity rose about 4 percent for both medical and indemnity.
Read that as a practice-management problem rather than an underwriting result. There are far fewer cases to be had. The cases that remain are more medically complex, which means more treating-physician records, more independent medical examinations, more utilization review, more litigation over causation, and, in the serious files, Medicare secondary payer compliance and third-party lien resolution. Hours per file are up. Files per year are down. Fee recovery is capped. There is no arrangement of those three facts that yields a viable small firm, and claimants' work is almost entirely done by small firms.
The asymmetry is structural. Defense counsel bill hourly and are paid whether the carrier wins or loses. Claimants' counsel advance costs, carry the file for years, and recover nothing if the claim fails. That asymmetry is tolerable when the case base is large enough to spread risk. It becomes intolerable as the base narrows, and it is the narrowing, not any single benefit cut, that is closing practices.
Fee Caps and The Constitutional Floor
Several jurisdictions have now confronted the consequences of setting the fee too low to buy representation.
Florida reached the constitutional question first. In Castellanos v. Next Door Co., 192 So. 3d 431 (Fla. 2016), a successful claimant's attorney was awarded $164.54 for 107.2 hours of work, about $1.53 an hour, because the statutory schedule left the judge no authority to consider whether the fee was reasonable. The Florida Supreme Court held that the mandatory schedule created an irrebuttable presumption of reasonableness and violated due process under the state and federal constitutions. NCCI subsequently estimated the prospective first-year cost of restoring reasonable fees at about 15 percent of Florida system costs, which is a useful number to keep in mind, because it prices the entire access-to-counsel problem and prices it well below the margins the line has been running.
New Mexico reached the same problem legislatively and judicially in the same year. House Bill 66, signed March 21, 2025 and effective June 20, 2025, raised the cap on claimant attorney fees from $22,500 to $30,000, with scheduled increases to $32,000 in 2027 and $34,000 in 2029, and increased the discovery costs an employer must advance. The stated purpose was explicit, that workers could not find counsel, particularly outside the metropolitan areas. Weeks later, in Pena v. State, the New Mexico Supreme Court held that the statutory cap could not be enforced in state court appellate proceedings, while leaving it in place at the administrative level, and in a companion decision the Court construed the cap to permit a separate award for each accidental injury flowing from a primary workplace accident.
New Jersey made its own adjustment in 2024. P.L. 2024, c. 55 amended N.J.S.A. 34:15-64 to raise the contingency cap from 20 percent to 25 percent, effective immediately and applicable to pending claims. It was the first change to that figure since 1927. New Jersey practitioners should resist the temptation to treat that as a solution. A percentage cap applied to a shrinking award base, in a system where the judge retains discretion to award less on a reasonableness review, does not insulate the practice from the same arithmetic that emptied North Dakota. It slows it.
Withdrawal Reads as Satisfaction
The most consequential effect of a disappearing bar is on the data the system uses to evaluate itself.
In North Dakota, hearing requests by injured workers and employers fell to 108 in 2025, down from 304 ten years earlier. The agency attributes the decline to statutory clarity about entitlement. Workers' advocates attribute it to the absence of anyone to file the appeal. Both explanations produce the same number, and the metric cannot distinguish between them.
This is the measurement problem at the center of the issue. Agencies count disputes filed, hearings held, reversal rates, and satisfaction among claimants who remain in the system. None of those instruments detects the worker who was denied, could not find counsel, and stopped. A system that has priced representation out of existence will generate falling dispute volume, high initial approval rates, and strong satisfaction scores, which is indistinguishable on paper from a system that is working. Reported claim frequency has the same defect nationally. It measures claims filed, not injuries sustained, and filing behavior responds to whether the worker believes the claim will go anywhere.
When The Win Is Repealed
There is a further disincentive that fee schedules do not capture, and it may matter more than the fee itself.
In Reile v. WSI, 2025 ND 6, the North Dakota Supreme Court held that the agency exceeded its statutory authority when it promulgated N.D. Admin. Code section 92-01-02-02.5, the regulation requiring a compensable mental or psychological condition to be the physiological product of the physical injury. The claimant, a delivery driver rendered quadriplegic by a fall, had been denied coverage for psychotherapy on that basis. The Court invalidated the rule and reversed. It was an unqualified win at the state's highest court, obtained through an administrative hearing, a district court appeal, and a Supreme Court appeal.
The 2025 legislative session then amended N.D.C.C. section 65-01-02 through Senate Bill 2109, and the amendment to the mental-injury paragraph was made applicable to all claims regardless of date of injury. The precedent was superseded within months of its issuance, retroactively.
Consider what that does to the expected value of appellate work. Contingency practice in this field is subsidized by the occasional case that establishes a rule and makes the next twenty files easier to resolve. If a favorable construction can be reversed by amendment before the mandate is cold, and reversed as to claims already pending, then the precedential return on a three-year appeal is close to zero, and the only recoverable value is the fee on the individual file, which is capped. Rational practitioners stop taking appeals. Then they stop taking cases. Then they retire and no one replaces them. North Dakota is simply further along that sequence than everyone else.
What Would Actually Change The Supply
The remedies are not mysterious, and most of them are inexpensive relative to the surpluses these systems are carrying.
Index the fee. A cap fixed in nominal dollars, or a percentage applied to benefit schedules that lag wages, erodes every year without a vote. Tie caps and fee-eligible amounts to the state average weekly wage, as benefit rates already are.
Shift fees on contested medical and temporary disability motions, computed hourly and paid by the carrier, not out of the worker's award. This is the single highest-yield change available. It attaches counsel fees to precisely the conduct that generates unnecessary litigation, and it does not reduce the injured worker's recovery. New Jersey's motion practice under N.J.S.A. 34:15-28.1 and 34:15-28.2 is a workable model, and its limits are worth studying before other states copy it.
Restrict retroactive application of benefit restrictions to pending claims, both as a matter of fairness and to preserve the incentive to litigate unsettled questions.
Fund the pipeline. Law school clinics, fellowship support, and loan repayment for practitioners in underserved counties are how other access-to-justice deserts have been addressed. A specialty that offers capped fees, deferred payment, and a shrinking docket will not attract new admittees on its own.
Measure the right thing. Any agency claiming its system works because disputes are down should be required to report representation rates among denied claimants and the disposition of denials that are never appealed. Until those numbers exist, satisfaction data and hearing counts should carry very little weight in legislative debate.
The Bargain Requires Two Parties
The grand bargain traded the right to sue for a system that was supposed to be prompt, certain, and simple enough that a worker could use it. Simplicity was the consideration for surrendering the tort remedy. It has not survived contact with modern medical causation disputes, utilization review, apportionment, and the procedural architecture that has grown around the schedules.
A worker cannot navigate that alone, and the system was never designed on the assumption that the worker would have to. When the private bar exits, the exclusive remedy remains exclusive while ceasing to be a remedy, and the employee is left with an administrative process, no counsel, and no cause of action. That is not a reform outcome. It is a failure of consideration, and every state that treats declining hearing volume as evidence of success is measuring its own blind spot.
Sources
1. Reile v. WSI, 2025 ND 6 (N.D. Jan. 9, 2025) (invalidating N.D. Admin. Code § 92-01-02-02.5).
2. Castellanos v. Next Door Co., 192 So. 3d 431 (Fla. 2016) (mandatory attorney fee schedule violates due process).
3. P.L. 2024, c. 55 (S2822), amending N.J.S.A. 34:15-64 (contingency fee cap raised from 20 percent to 25 percent).
4. N.M. Stat. § 52-1-54, as amended by H.B. 66 (2025) (attorney fee cap raised to $30,000, with scheduled increases).
5. Supreme Court of New Mexico, Pena v. State (July 3, 2025) (statutory fee cap unenforceable in state court appeals).
6. S.B. 2109, 69th Legislative Assembly of North Dakota (2025) (amending N.D.C.C. § 65-01-02; mental injury amendment applicable to all claims regardless of date of injury).
7. NCCI, 2026 State of the Line Guide (2025 lost-time claim frequency, severity, and combined ratio).
8. NCCI, Florida Rate Impact of the Castellanos Decision (estimated +15.0 percent first-year system cost impact).
9. New Mexico incentivizes attorneys, doctors to take on workplace injury cases Source New Mexico (Apr. 3, 2025).
10. Workers Seeking Compensation for Injuries Face New Challenge: Fewer Lawyers The Wall Street Journal (Aug. 2, 2026) (North Dakota attorney counts, hearing request volume, and benefit payment figures).
About the Author
Jon L. Gelman of Wayne, NJ, is the author of NJ Workers’ Compensation Law (West-Thomson-Reuters) and co-author of the national treatise Modern Workers’ Compensation Law (West-Thomson-Reuters).
Blog: Workers' Compensation | LinkedIn: JonGelman | Substack: jongelman.substack.com | Blue Sky: jongelman@bsky.social
© 2026 Jon L Gelman. All rights reserved. | Attorney Advertising | Prior results do not guarantee a similar outcome.
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