WorkSafe pays law firms bonuses to minimise victims' payouts

Date
    December 26, 2013


Victoria's work safety authority is paying lawyers millions of dollars in confidential bonuses to minimise payouts in compensation cases brought by alleged victims of workplace accidents.      

In at least one case, a firm representing the authority received more than $1 million in bonuses over 12 months on top of legal fees.

The bonuses are paid out by WorkSafe Victoria, which receives its funding from fees paid by Victorian businesses. The bonus scheme has provoked debate inside the legal community because of the potential it will encourage firms to cut corners in order to maximise their bonus payouts, or devise other strategies that may not be in the best interest of victims or the scheme.

But defenders of the bonus system say it encourages lawyers to deal with cases more efficiently and prevents rorting of the state's workers' compensation scheme.


Leaked files from law firm Lander & Rogers reveal that it has made about $5 million in WorkSafe bonuses over five years by minimising payouts to alleged Victorian victims of workplace accidents. The biggest yearly bonus payout to the firm was $1.2 million in 2010.

The leaked files also show that the legal firm encourages its lawyers to offer ''entertainment'' to WorkSafe Victoria executives at the tennis, musicals and barristers' functions. A well-placed source said that at least two senior WorkSafe staff had attended events paid for by the Melbourne firm.      

The leaked Lander & Rogers files show one strategy proposed by the firm involves creating closer ties, or becoming ''relationship partners'' with lawyers representing workplace accident victims via ''targeted plaintiff firm strategies''.

Lawyers who support the incentive scheme argue it encourages law firms to deal with cases in a fair and timely fashion.

They say that maintaining professional relationships with plaintiff firms also leads to fairer outcomes by reducing legal hostilities that can lead to unnecessary litigation.

In defending the bonus scheme, a WorkSafe spokesman said that the extra payouts were offered because the fees defence firms get paid for handling WorkSafe cases ''are significantly less than standard commercial rates''. ''Performance incentives are designed to preserve and protect the interests of the scheme and the amount paid in [bonuses in] 2012-13 represents 0.3 per cent of the total benefits paid to injured Victorian workers last year,'' the spokesman said.

Internal Lander & Rogers figures from 2011 show its WorkSafe department made almost $4 million in profit, most of which is later distributed to the firm's partners. The law firm's WorkSafe lawyers also generated bigger profit margins - up to 35 per cent - than lawyers from any other section of Lander & Rogers.

The WorkSafe spokesman also said the bonuses were only awarded if law firms ''meet a range of performance criteria, which includes achieving a timely outcome for injured workers' claims for compensation and reducing the use of the courts''. WorkSafe declined to answer questions on the total in bonuses it paid law firms or how many gifts WorkSafe staff received.      

''WorkSafe adheres to the criteria set out in the gifts, benefits and hospitality policy framework 2012 issued by the Public Sector Standards Commissioner and expects all employees to comply with the policy,'' the spokesman said.

In response to questions about its bonuses and gift-giving policy, a Lander & Rogers spokesman said: ''Like other firms who provide legal services to WorkSafe, Lander & Rogers is eligible to receive performance incentives where it meets certain criteria, which include helping to ensure timely resolution of injured workers' claims.

''We maintain professional working relationships with all plaintiff firms and other stakeholders in the workers compensation scheme and always work in the best interest of WorkSafe.''

The law firm threatened Fairfax Media with legal action if it published details from its leaked files.      

In other developments linked to the management of WorkSafe cases, it is understood that some defence firms have reduced the hiring of private detectives who conduct surveillance on allegedly injured workers. The practice of conducting surveillance on workers has recently drawn the ire of several Victorian judges because it is viewed as expensive and intrusive.

But several lawyers who spoke to Fairfax Media said that surveillance was a critical tool to prevent rorting.

Read more: http://www.smh.com.au/national/worksafe-pays-law-firms-bonuses-to-minimise-victims-payouts-20131225-2zwrt.html#ixzz2oWeWB6zG