Handler, Meanor and Kole. The opinion of the court was delivered by Meanor, J.A.D.
This case brings to us for resolution issues concerning the application of the contingent fee schedule of R. 1:21-7(c) to a tort settlement or judgment against which there is a workmen's compensation lien. The trial court's opinion is reported. McMullen v. Maryland Cas. Co., 123 N.J. Super. 248 (Law Div. 1973). We delayed our decision in this matter to await American Trial Lawyers Ass'n, etc. v. New Jersey Supreme Court, 126 N.J. Super. 577 (App. Div. 1974). It was there determined that R. 1:21-7 was valid and applicable to tort settlements and judgments occurring after its effective date of January 31, 1972, despite contrary provisions of preexisting retainers. That decision has now ripened the questions presented here.
Plaintiff's husband, Charles McMullen, was killed in the course of his employment with Beach Concrete Co. on June 11, 1969. Beach, and consequently decedent, were at the time working under a subcontract with Conforti & Eisele, Inc. A wrongful death action was brought against Conforti & Eisele, Inc., N.J.S.A. 2A:31-1 et seq., by the widow as administratrix ad pros. seeking money damages arising out
of the death for the benefit of herself and her children. Following the effective date of R. 1:21-7 the case was settled for $250,000.
Maryland Casualty Company apparently was both the liability and workmen's compensation carrier for Beach Concrete Co. It made workmen's compensation payments on account of McMullen's death and, we have been told, took over the Conforti & Eisele, Inc. tort defense because of an indemnity agreement between Beach and Conforti.
N.J.S.A. 34:15-40 imposes a lien in favor of an employer or his workmen's compensation carrier against the proceeds of a third-party recovery obtained by an injured workman or arising out of his death. The three leading cases construing this statute are: Teller v. Major Sales, Inc., 64 N.J. 143 (1974); Caputo v. Best Foods, 17 N.J. 259 (1955), and Dante v. Gotelli, 17 N.J. 254 (1955). These cases all involved tort recoveries obtained before R. 1:21-7 became effective, and, in light of the gloss they have placed upon the statute, the following is clear:
1. The lien is exercisable to the fullest extent possible, whether the third-party recovery be less than, equal to or greater than the lienor's compensation exposure.
2. The lienor must pay the successful plaintiff's attorney in the third-party action a fee not to exceed one-third of the amount of the lien and must contribute toward litigation expenses an amount not to exceed $200.
3. Where the fee arrangement between plaintiff and his attorney is for a fee (whether contingent or on a fee for service basis) which equals a percentage of less than one-third of the recovery, the carrier would pay only that lesser percentage of its lien as fee.
4. Where the third-party recovery equals or exceeds the total compensation exposure, the amount of the lien on which the fee is calculated is the total compensation exposure of the lienor on account of the injury or death and not merely the amount of workmen's compensation paid to the date of third party recovery.