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98 N.J.L.J. 17
January 9, 1975
ADVISORY COMMITTEE ON PROFESSIONAL ETHICS
Appointed by the New Jersey Supreme Court
Fee for Personal Injury
Protection in No Fault Insurance
The inquirer has asked whether a fee may properly be charged
a client for legal services rendered in the collection of personal
injury protection ("PIP") benefits under the no fault provisions of
an automobile liability insurance policy where the attorney was
originally engaged by the client under a contingent fee retainer
agreement, made pursuant to R. 1:21-7, to handle a tort claim
arising out of the accident which gave rise to the PIP claim.
As further explained by the inquirer,
During the course of handling the tort
claim, issues arise between the insurance
carrier covering the clients' claims for PIP
Benefits under No Fault coverage; through
legal services of the attorney, payment and
collection is effected of items that were in
issue between clients and insurance company.
The specific questions asked by the inquirer are whether
"counsel [is,] entitled to a fee for the collection of PIP Benefits
in controversy; if so, on what basis are the charges to be made?"
In support of the contention that he is entitled to charge a
separate additional fee for the collection of the PIP benefits, the
The matter in controversy with the No
Fault carrier arises under a contractual
obligation between clients and the insurance
company and is not a tort claim within R.
The inquiry proposes no particular basis for fixing the fee
for PIP services should one be properly chargeable.
The PIP benefits referred to by the inquirer are provided by
the New Jersey Automobile Reparation Reform Act, N.J.S.A. 39:6A-1,
et seq. The section most pertinent to this inquiry is N.J.S.A.
39:6A 1, which reads as follows:
Every automobile liability insurance policy insuring
an automobile as defined in this act against loss
resulting from liability imposed by law for bodily
injury, death and property damage sustained by any person
arising out of ownership, operation, maintenance or use
of an automobile shall provide additional coverage, as
defined herein below, under provisions approved by the
Commissioner of Insurance, for the payment of benefits
without regard to negligence, liability or fault of any
kind, to the named insured and members of his family
residing in his household who sustained bodily injury as
a result of an accident involving an automobile, to other
persons sustaining bodily injury while occupying the
automobile of the named insured or while using such
automobile with the permission of the named insured and
to pedestrians, sustaining bodily injury caused by the
named insured's automobile or struck by an object
propelled by or from such automobile. "Additional
coverage" means and includes:
a. Medical expense benefits. Payment of all
reasonable medical expenses incurred as a result of
personal injury sustained in an automobile accident. In
the event of death, payment shall be made to the estate
of the decedent.
b. Income continuation benefits. The payment of the
loss of income of an income producer as a result of
bodily injury disability, subject to a maximum weekly
payment of $100.00 per week. Such sums shall be payable
during the life of the injured person and shall be
subject to an amount or limit of $5,200.00, on account of
injury to any one person, in any one accident.
c. Essential services benefits. Payment of essential
services benefits to an injured person shall be made in
reimbursement of necessary and reasonable expenses
incurred for such substitute essential services
ordinarily performed by the injured person for himself,
his family and members of the family residing in the
household, subject to an amount or limit of $12.00 per
day. Such benefits shall be payable during the life of
the injured person and shall be subject to an amount or
limit of $4,380.00 on account of injury to any one person
in any one accident.
d. Survivor benefits. In the event of the death of
an income producer as a result of injuries sustained in
an accident entitling such person to benefits under
section 4 of this act [this section], the maximum amount
of benefits which could have been paid to the income
producer, but for his death, under section 4 b. shall be
paid to the surviving spouse, or in the event there is no
surviving spouse, then to the surviving children and in
the event there are no surviving spouse or surviving
children, then to the estate of the income producer.
In the event of the death of one performing
essential services as a result of injuries sustained in
an accident entitling such person to benefits under
section 4 c. of this act, the maximum amount of benefits
which could have been paid such person, under section 4
c., shall be paid to the person incurring the expense of
providing such essential services.
e. Funeral expenses benefits. All reasonable funeral
burial and cremation expenses, subject to a maximum
benefit of $1,000.00, on account of the death to any one
person in any one accident shall be payable to decedent's
Optional additional PIP coverage is provided by N.J.S.A.
As stated by the inquirer, there can be no doubt that the PIP
claim might involve substantial sums or that the collection thereof
might involve considerable time and effort by counsel. See N.J.S.A.
39:6A-13.1, supra, 39:6A-5, 39:6A-6, 39:6A-10, 39:6A-13, 39:6A-13.1
and 39-6A-19, which govern the amount collectible and partially
prescribe the practice and procedure for its recovery.
The only Disciplinary Rule which might be deemed relevant to
this inquiry is DR 2-106, "Fees for Legal Services," which provides
that "[a] lawyer should charge no more than a reasonable fee,"
states the conditions under which a fee will be regarded as
"excessive," lists certain "Factors to be considered as guides in
determining the reasonableness of a fee" and concludes by providing
that "[a] lawyer shall be disciplined if he shall enter into an
agreement for, charge, or collect a fee so excessive as to evidence
an intent to overreach his client."
The only other rule of the Supreme Court which might be
considered pertinent is R. 1:21-7, cited by the inquirer. Paragraph
In any matter where a client's claim for damages is
based upon the alleged tortuous 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: "...[Here follows a series of
percentage limits based on a graduated scale.]"
As the inquirer has said, it would appear that the PIP claim
is not based upon the "alleged tortuous conduct of another," R.
1:21-7(c), supra, but upon the contractual no fault provisions of
an insurance policy, N.J.S.A. 39:6A-4, supra. However, this is a
matter of substantive law which does not involve an ethical
The only possible ethical question would then be as to the
reasons of the fee charged under DR 2-106. From the facts
presented, we must assume that any fee charged for the PIP
services, taken alone or in conjunction with the contingent fee
under the retainer agreement, would be reasonable and would be
fixed by due application of the guides laid down in DR 2-106(A).
Certainly, we would not be justified in theorizing that the
inquirer would charge "more than a reasonable fee," DR 2-106(A), or
"enter into an agreement for, charge, or collect a fee so excessive
as to evidence an intent to overreach [the] client," DR 2- 106(D).
Accordingly, the Committee declines to answer this inquiry
upon the ground that, as now presented, it involves no question
respecting proper conduct for a member of the legal profession
cognizable by the Committee. R.1:19-2.
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