On appeal from the Superior Court of New Jersey, Law Division, Middlesex County.
King, O'Brien and Simpson. The opinion of the court was delivered by King, P.J.A.D.
[210 NJSuper Page 398] case presents a choice-of-law question in the context of contingent attorneys' fees in a personal injury action. The question is whether New York or New Jersey law controls the amount of the attorney's fee. The Law Division judge applied the law of the forum, New Jersey. Appellant Jack N. Frost, who was the personal injury claimant's attorney and who effected a settlement of $260,000 for the plaintiff, claims that
New York law should apply. We conclude that this State had a sufficient governmental interest in the transaction to apply its own law in the circumstance.
This is what happened. On June 10, 1962, when plaintiff was four years old, he was admitted to St. Joseph's Intercommunity Hospital in Buffalo, New York. He was given a penicillin injection "which impaired [his] ability to walk" and created a problem with his leg which required several operations.
Defendant has been a member of the New Jersey bar since 1971; he is not admitted to the New York bar. On August 15, 1977 plaintiff, a New Jersey resident, and defendant signed a contingency fee agreement in contemplation of a claim to be made against the Buffalo hospital, the doctor who ordered the injection, and the nurse who gave it. This form agreement provided that "the attorney shall be paid a fee, contingent in whole or in part, to be computed as follows: one-third of any amount recovered after the payment of all fees except as limited by Rule 1:21-7c." (See Appendix A). Defendant then told plaintiff that if the case was settled before a lawsuit was filed or if suit was filed in New Jersey, the New Jersey contingency fee rule would apply. Defendant indicated that he would determine whether the suit could be filed in New Jersey or had to be filed in New York.
In 1977 New Jersey Court Rule 1:21-7(c) provided
In any matter where a client's claim for damages is based upon the alleged tortious conduct of another, including products liability claims, and the client is not a subrogee, an attorney shall not contract for, charge, or collect a contingent fee in excess of the following limits:
(1) 50% on the first $1000 recovered;
(2) 40% on the next $2000 recovered;
(3) 33 1/3% on the next $47,000 recovered;
(4) 25% on the next $50,000 recovered;
(5) 20% on the next $150,000 recovered;
(6) 10% on any amount recovered over $250,000; and
(7) where the amount recovered is for the benefit of an infant or incompetent and the matter is settled without trial the foregoing limits shall apply, except that the fee on any amount recovered up to $50,000 shall not exceed 25%.
R. 1:21-7(d) also stated that the fee to be calculated would be computed on the net recovery after the attorney was paid for expenses incurred "in connection with the institution and prosecution of the claim."
At the time of the filing of this lawsuit, New York's contingent fee statute, N.Y.Jud.Law § 474-a (McKinney 1983), provided that
2. Notwithstanding any inconsistent judicial rule, a contingent fee in a medical malpractice action shall not exceed the amount of compensation provided for in either of the following schedules:
50 percent of the first $1,000 of the sum recovered;
40 percent of the next $2,000 of the sum recovered;
30 percent of the next $22,000 of the sum recovered; 25 percent of any amount over $25,000 ...