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Increasing Attorneys Fees in New Jersey.

There may be recession on, but New Jersey's petitioner's attorneys will not be feeling the pinch!  Petitioner's attorneys are moving forward on two fronts to skim more money from the compensation system.

Increasing Fees on Awards.

Attorneys fees in New Jersey are controlled by N.J.S.A. 34:15-64, which states that an attorneys fee must be "reasonable" and can not exceed 20% of the total award.

In practice, the Division issues a memorandum each year that sets a threshold fee. In the past, if a petitioner's attorney wanted to get a bigger fee than the "threshold" he or she was required to present an affidavit of services, detailing exactly what they did to earn that money. In practice, Judges of Compensation nearly always award the maximum fee.

Last year, the "no questions asked" fee threshold was $40,000. For 2012, the "no questions asked" fee jumps to $42,000. Also, under the new practice (effective January 3, 2012), petitioner's attorneys will no longer have to submit an affidavit of services – just make some sort of argument for why they are due an enhanced fee on the record.

New Jersey to reconsider fees on "Voluntary" Compensation.

When an employer knows (with certainty) that an employee has been injured and will suffer some degree of permanent injury (for example, when there has been loss of a limb), a voluntary tender, made at the appropriate time, may be offered to reduce exposure for attorney’s fees when the underlying claim is disposed of.

N.J.S.A.34:15-64 provides (in part):

When, however, at a reasonable time, prior to any hearing compensation has been offered and the amount then due has been tendered in good faith or paid within 26 weeks from the date of the notification to the employer of an accident or an occupational disease or the employee’s final active medical treatment or within 26 weeks after the employee’s return to work whichever is later or within 26 weeks after employer’s notification of the employee’s death, the reasonable allowance for attorney fee shall be based upon only that part of the judgment or award in excess of the amount of compensation, theretofore offered, tendered in good faith or paid.

There is now a pending proposed amendment to Section 64 which would grant an attorney a fee on this voluntarily tendered payment.

In other words – even where the petitioner did not have an attorney at the time a voluntary tender was issued – if he later retained counsel his attorney would be due a fee on any money already paid to him or her.

As recently as 2005 the Appellate Division affirmed the decision of the workers’ compensation judge to deny the employer the benefit of a reduced contribution to the petitioner attorney’s fee award because the employer’s voluntary tender of disability benefits was untimely when it occurred slightly beyond the twenty-six week period allowed by statute.  In reviewing the statutory history of N.J.S.A. 34:15-64 and viewing that statute together with N.J.S.A. 34:15-16, the Appellate Division concluded that when the NJ Legislature amended this statute in 1979 it intended to create a “bright line” timeframe and set a clear and certain deadline an employer must meet to reduce its contribution to an attorney fee award by invoking the “26-week rule.”  In other words – most voluntary payments to injured workers have been shielded the increased costs associated with attorneys fees – and that may change.

The law has not changed yet – but the proposed legislation change will be discussed in committee on December 8th.

Of course, we will continue to monitor this proposed change and keep you updated on any significant developments.

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