On August 22, 2024, Acting New Jersey Governor Nicholas Scutari signed into law S2822/A3986, a bill that increases the potential counsel fees for petitioner’s attorneys in workers’ compensation cases from 20% to 25% of the overall award.

Before this bill was enacted, workers’ compensation judges had the discretion to award petitioner’s attorney fees of up to 20% of the total workers’ compensation award. In practice, the maximum 20% has been awarded across the board. With the new law in place, judges will retain their discretion, but it is anticipated that the majority will continue to award the maximum allowable fee, now set at 25%. As such, workers’ compensation practitioners should prepare for petitioner’s attorney fees to rise to this new maximum.

Impact on Settlements and Motions

The amendment to N.J.S.A. 34:15-64 now states that “[t]he official conducting any hearing under this chapter may allow to the party in whose favor judgment is entered, costs of witness fees and a reasonable attorney fee, not exceeding 25 percent of the judgment.” Of note, this is the first time the fee has been altered since it was initially established in 1927.

In addition to impacting settlements, attorney fees on Motions for Temporary Disability and Medical Benefits will also be affected. Traditionally, judges had the discretion to award an attorney fee of up to 20% on all benefits obtained through a successful motion. Moving forward, fees of up to 25% can now be awarded.

Arguments for Increased Representation Quality

Proponents argue that the increase will lead to higher quality representation for petitioners by more equitably compensating their attorneys, which could also encourage more attorneys to take on workers’ compensation cases. However, it is important to note that the 5% increase will have financial implications not only for practitioners, insurance carriers, and employers, but also for petitioners themselves.

Financial Implications for Petitioners and Respondents

Petitioners will bear part of the increased cost from their Order Approving Settlement workers’ compensation awards and will be fully responsible for the increase from their Section 20 awards. Previously, in cases resolved on an Order Approving Settlement basis, respondents were responsible for 60% of the total 20% attorney fee, while petitioners covered the remaining 40%. It is expected that this apportionment will remain unchanged, meaning petitioners will still be responsible for a portion of the increased fee, directly reducing their workers’ compensation award.

For cases resolved on a Section 20 basis before the increase, petitioners were already responsible for the entire 20% attorney fee from their award. Under the new law, petitioners will now be required to pay the entire 25% fee, which will be deducted directly from their award.

The amendment took effect immediately on August 22, 2024, and all claims settled after this date are now subject to the increased 25% fee.

A New Era in Workers' Compensation

In short, the 5% fee increase will have financial repercussions for all parties involved, including petitioners, attorneys, insurance carriers, and employers, marking a significant shift in the workers’ compensation landscape. To manage these changes effectively and ensure you are fully informed, contact Chartwell’s workers’ compensation team for ongoing updates and insights into the latest legal developments.