On appeal from the Superior Court of New Jersey, Law Division, Union County, UNN-L- 4753-99.
Before Judges King, Wefing and Fuentes
The opinion of the court was delivered by: King, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: December 11, 2002
This case presents the problem of how to deal with the "dual contingency" fee aspect of a malpractice claim against an attorney who has mishandled a personal injury action. Here, defendants Wayne Greenstone and Greenstone & Greenstone (defendant or Greenstone), original counsel for plaintiff, Angela DiStefano, did not timely pursue plaintiff's claim and the statute of limitations barred her personal injury action. The plaintiff's malpractice claim against defendants was partially settled for $90,000 representing compensatory damages and interest, leaving for adjudication the disposition of the contingent fee aspect of her damages for legal malpractice. We now follow the expression of our Supreme Court in Saffer v. Willoughby, 143 N.J. 256 (1996), as we understand it, and rule that plaintiff is entitled to recover the entire $90,000 without reduction for the original one-third contingent fee, or $30,000, and is also entitled to recover as consequential damages in the malpractice case against Greenstone her agreed upon fee with her present attorney, now pursuing this action, also one-third of the total recovery or $30,000. Although this process leads to a duplicate recovery, we glean this result from the principles expressed by the Supreme Court in Saffer and follow its lead.
In addition to arguing against a duplicate recovery of the dual contingent fee, defendant contends that one of plaintiff's expert's fee was unreasonable. We agree on this point and reduce the expert's fee award accordingly.
On the cross-appeal, plaintiff's present attorneys claim that the attorneys' fee should be calculated on the "lodestar" method, essentially at an hourly rate, or $48,250 (193 hours x $250 per hour), rather than the $30,000 contingency fee. We disagree and adhere to the standard one-third contingent fee compensation contemplated by the plaintiff's retainer agreement with both her original and present attorney.
On September 13, 1991 during a visit to Italy, plaintiff Angela DiStefano was injured in an automobile accident while she was a passenger in a vehicle struck by a truck. She sustained injuries requiring several weeks of hospitalization in Italy and surgery to her arm when she returned to the United States. The truck driver's liability was not seriously disputed.
Plaintiff retained defendant Greenstone to pursue a claim for damages on February 4, 1993. The retainer agreement provided that defendant would receive a contingency fee of 33 1/3% of the "first $250,000 net recovery." See R. 1:21-7. During his initial consultation, defendant allegedly represented that he "had significant experience with international personal injury claims" and he was able to make contacts with Italian attorneys to act as liaison representing plaintiff's interests. Defendant did attempt to secure representation in Italy by attorney Renato Schifani through the New York law offices of Sandro Paterno. Because defendant failed to sustain contact with the Italian attorney and to pursue plaintiff's claim to finality, the claim eventually became time-barred in Italy. Plaintiff then retained the law offices of Bivona and Cohen (predecessor firm for plaintiff in this action), also on a standard 33 1/3% contingency basis. That firm filed this complaint against Greenstone for legal malpractice, seeking compensatory damages, attorney's fees and costs.
During the pendency of this action, plaintiff submitted reports by two Italian legal experts: (1) a report by Elena Berlucchi concerning liability under Italian law, in which she concluded that defendant failed "to undertake the steps . . . necessary to ensure a recovery of damages," and (2) a report by Domenico Cantavenera, in which he concluded that plaintiff suffered a 55% disability according to the Italian system of compensation for personal injury, a claim worth about $266,304. The Italian tortfeasor's representative submitted a report by an Italian physician, Dr. Massimo Forgeschi who concluded that under the Italian compensation scheme plaintiff suffered a disability ranging between 15% and 20%, a claim worth about $51,000.
On May 25, 2001, based upon the liability opinion in the expert's reports, plaintiff filed a motion for partial summary judgment with respect to liability only. On June 12, 2001 Judge Pisansky granted plaintiff's motion. He also ruled that Italian law applied to the issue of damages and New Jersey law applied to the legal malpractice claim. At a R. 4:21A arbitration the personal injury claim was valued at $225,000. On June 15, 2001 the parties agreed to a conditional release in which defendant agreed to pay damages of a minimum of $60,000 and a maximum of $90,000 "subject to the Court's determination of counsel fees due and owing from defendant Greenstone." The parties seemingly agreed on a damage amount of $90,000 for the value of the entire claim, under Italian law, representing about 25% disability under the Italian automobile compensation system. Thus, the ultimate settlement sum depended on the disposition of the legal dispute over how to treat the attorneys' fee issue arising from in the malpractice context.
Plaintiff filed a motion on August 3, 2001 originally seeking $60,840.50 in legal fees and $23,531.33 for costs in addition to the $90,000 personal injury settlement sum. Judge Pisansky awarded plaintiff $30,000 in counsel fees in addition to the $90,000 settlement and $18,189.24 in costs. The judge explained that the $30,000 attorneys' fee award was appropriate because the original retainer agreement called for a fee of one- third of the full recovery. The judge also reduced the amount requested in additional fees for experts and costs to $18,189.24, reflecting what he concluded was a reasonable amount after deducting "usual and customary law office overhead expenses," pursuant to the original retainer agreement. This allowed for the reasonable costs and the fees of plaintiff's experts.
Defendant now argues that an award of $30,000 for counsel fees, in addition to the $90,000 settlement amount agreed upon between the parties, was beyond the amount necessary to make the plaintiff whole as required under our case law. Defendant asserts that plaintiff should subtract her current attorney's fee from the $90,000 settlement sum as would have occurred had defendant pursued her case to resolution and secured a ...