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Pagan v. Hillside Metal Products Inc.

Decided: February 24, 1976.

NELSON PAGAN, PETITIONER-APPELLANT,
v.
HILLSIDE METAL PRODUCTS, INC., RESPONDENT-RESPONDENT



Kolovsky, Bischoff and Botter. The opinion of the court was delivered by Bischoff, J.A.D.

Bischoff

This appeal presents another facet of the interrelationship between the rule regulating "contingent fees" (R. 1:21-7) and the statute prescribing the maximum authorized "attorneys fees" in third-party recoveries under the workmen's compensation statute (N.J.S.A. 34:15-40).

Nelson Pagan suffered serious personal injuries in an accident arising out of and in the course of his employment for respondent Hillside Metal Products. He engaged the law firm of Bendit, Weinstock & Sharbaugh on a one-third contingency fee basis, to institute a civil action to recover damages for the injuries sustained against the tortfeasors alleged to be responsible.

Pretrial discovery incident to the action was voluminous and protracted. The trial commenced and continued for 6 1/2 days before the case was settled for $175,000.

Thereafter petitioner's attorneys applied, pursuant to R. 1:21-7(f), for a fee in excess of that permitted under the graduated scale established by R. 1:21-7(c). Following a hearing the assignment judge found that petitioner's attorneys were entitled to a fee in excess of that provided by R. 1:21-7(c). He computed the fee allowable under the rule, increased it, and "rounded it off" to $45,500, finding that "this is 26% of the full amount of the recovery or settlement, which was $175,000." This was formalized by a judgment dated June 19, 1973.

By a workmen's compensation petition dated March 28, 1973 petitioner sought workmen's compensation benefits against his employer Hillside Metal Products for the same injuries. The petition was not moved for trial until after entry of the judgment setting the fee of petitioner's attorneys in the civil action.

The workmen's compensation claim was submitted on a stipulation of facts and resulted in the entry of a judgment determining petitioner to be 100% totally and permanently disabled and awarding for that disability 450 weeks of compensation

at $66.67 a week, or a total of $30,001.50. The judge of compensation further found that the lien of the compensation carrier for temporary disability, medical treatment and other expenses, was $33,734.01. By stipulation respondent carrier agreed to pay certain fees and expenses of petitioner's counsel incurred in connection with the civil litigation totalling $4,627.28, leaving the balance of the lien of the compensation carrier to be $29,106.73.

The judgment entered in the Workmen's Compensation Division (1) awarded a "counsel fee" to petitioner under N.J.S.A. 34:15-40 of 26% of the amount of the compensation carrier's lien and (2) directed the compensation carrier to commence paying directly to petitioner (a) 26% of the amount that his weekly compensation benefits would have been had there been no third-party recovery and (b) 26% of all sums paid by petitioner for medical care and treatment. Petitioner appeals from that portion of the judgment which awards payments to him as reimbursement of (1) counsel fees and (2) future medical expenses at the rate of 26%, and contends the amount of reimbursement should have been at the rate of 33-1/3%.

Petitioner argues that (1) R. 1:21-7 expressly "exempts from its coverage a situation where the client is a subrogee"; (2) a third-party action is essentially one of subrogation, Dante v. Gotelli, Inc. , 17 N.J. 254, 258 (1955), and (3) accordingly, the 33-1/3% contingency fee arrangement entered into between counsel and petitioner is viable and not controlled by R. 1:21-7.

As a basic premise we note that we are not here called upon to review an award of an attorney's fee. That fee was established in the proceeding before the assignment judge. The fee assessed has been paid and no appeal has been taken from the judgment setting the fee ...


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