This is an application under R. 1:21-7(f) for approval of an attorney's fee in excess of the contingent fee provided for in the retainer agreement or allowable pursuant to R. 1:21-7(c). The retainer and rule schedule are identical, except the retainer only provides for 33 1/3% of the first $3,000 recovered while the rule permits up to 50% on the first $1,000 and 40% on the next $2,000. Plaintiff's counsel seeks a fee of $103,691.25 and asserts that $81,293.55 is allowable under R. 1:21-7. I find that $73,495.80 is allowable under the cited rule, but determine pursuant to R. 1:21-7(f) that $87,824.93 is a reasonable fee in light of all the circumstances.
Plaintiff is the administratrix ad prosequendum and general administratrix of the estate of Joseph Merendino, Jr., her husband, who died March 21, 1979 while operating a street sweeper
as an employee of the City of Garfield. The widow, Rose Ann Merendino, was born September 3, 1947 and the only child, Justine, was born February 27, 1969. Workers' compensation death benefits under N.J.S.A. 34:15-13, and based upon decedent's weekly wages of $167.69, are $92.20 for 419 weeks until Justine is 18 and then $84.10 for an additional 31 weeks. The 450 weeks total compensation would be $41,238.90, and since this is less than the settlement of the third-party wrongful death claim (the first $50,000 of which is subject to counsel fees of at least 33 1/3% under the retainer or R. 1:21-7(c)), one-third thereof or $13,746.30 is the employer's obligation under N.J.S.A. 34:15-40 for its pro rata share of the attorney's fee. Owens v. C. & R. Waste Material , 76 N.J. 584 (1978). Worker's compensation paid to date totals $12,736.00, so that Rose Ann Merendino is now entitled to $1,010.30 plus $200 litigation costs. N.J.S.A. 34:15-40(e). Depending upon future contingencies, the widow may be entitled after the 450 weeks to further weekly payments from the employer (or carrier) representing additional pro rata share of the attorney's fee not exceeding 33 1/3% of additional weekly payments otherwise due pursuant to N.J.S.A. 34:15-40(e) and 34:15-13(j). The absolute maximum, of course, would be the $87,824.93 herein allowed as a counsel fee in the third-party action (including the $13,746.30 calculated as above for the first 450 weeks).
The trial judge handling the products liability-wrongful death action approved a proposed "structured" settlement, and allocation between the widow and child pursuant to N.J.S.A. 2A:31-4, as follows:
1. $210,000 cash "up front" to the widow, Rose Ann Merendino, from which attorney's fees and litigation expenses are to be paid.
2. Annual payments to the widow, beginning with $11,928.00 and increasing at 6% a year, compounded annually, for 25 years certain. Appendix A schedules these payments and the cumulative totals. The final payment is $48,295.76 and the cumulative total is $654,424.66.
3. Five annual payments to the daughter, Justine Merendino, beginning in six years when she will be just under 18 years of age, in the amounts of $11,000, $12,000, $13,000, $14,000 and $22,000. The grand total is $72,000.
The annual payments to the widow and child are guaranteed, with appropriate survivorship provisions, and the trial judge had the benefit of a guardian ad litem report essentially concurring in the settlement provisions. For purposes of trial, plaintiff's expert economist had prepared an "Appraisal of Economic Loss" due to the death of Mr. Merendino which, discounted to present value, was asserted to be $343,647. Tenore v. Nu Car Carriers , 67 N.J. 466, 474 (1975). For purposes of settlement, trial court approval thereof, and this application for counsel fees in excess of the amount allowable under R. 1:21-7(c), plaintiff's attorney retained a "mediator and negotiator," one Daniel Bellin, president of Litigation Support Corporation. Bellin's opinion was that the "value of the settlement could be conservatively stated as $472,722," calculated as follows:
Value at 8.5% net rate of return
for Justine Merendino payments 36,738
Value, at same rate, for Rose Ann
Merendino payments 225,984
Litigation Support Corporation apparently was also instrumental in obtaining insurance company funding of the annuities on a basis that makes the proceeds payable to Rose Ann and Justine Merendino without any federal income taxation thereon.*fn1 The cost to defendant of the annuities, however, was less
than Bellin's valuations, so that the actual present cost of the package is:
Cost of Justine Merendino Annuity 29,622
Cost of Rose Ann Merendino Annuity 159,938
Although no trial or appeal was required, and no novel questions of law appear to have been involved, this case resulted in an excellent recovery for the widow and minor child of decedent. The imaginative blending of cash and annuities, on an after-tax basis and capitalizing on the power of compound interest, places the case, for attorney fee purposes, somewhere between the situations in Murphy v. Mooresville Mills , 132 N.J. Super. 197 (App.Div.1975), certif. den. 68 N.J. 156 (1975), and Bolle v. Community Memorial Hospital , 145 N.J. Super. 593 (App.Div.1976), certif. den. 74 N.J. 275 (1977). When an attorney considers the fee permitted by R. 1:21-7(c) to be inadequate, he may seek approval by the assignment judge "of a reasonable fee in light of all the circumstances." R. 1:21-7(f). Pursuant to R. 1:21-7(e) all contingent fees must conform to DR 2-106(A) that include, in pertinent part, as "guides in determining the reasonableness of a fee":
(1) The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal services properly.
(4) The amount involved and the results obtained.
(7) The experience, reputation, and ability of the lawyer or lawyers ...