California Labor Code Section 3860 - Attorney's Fees

Section 3860, subdivision (c), provides in part: "Where settlement is effected, with or without suit, solely through the efforts of the employee's attorney, then prior to the reimbursement of the employer, . . . there shall be deducted from the amount of the settlement the reasonable expenses incurred in effecting such settlement, including . . . a reasonable attorney's fee to be paid to the employee's attorney, for his services in securing and effecting settlement for the benefit of both the employer and the employee." Section 3860, subdivision (e), provides in part: "Where both the employer and the employee are represented . . . by separate attorneys in effecting a settlement, with or without suit, prior to reimbursement of the employer, . . . there shall be deducted from the amount of the settlement the reasonable expenses incurred by both the employer and the employee or on behalf of either, . . . together with reasonable attorneys' fees to be paid to the respective attorneys for the employer and the employee, based upon the respective services rendered in securing and effecting settlement for the benefit of the party represented." The statute is based on the common fund doctrine. One who expends attorney's fees in winning a suit that creates a common fund from which others derive a benefit is entitled to contribution for litigation costs. (See Quinn v. State of California (1975) 15 Cal. 3d 162, 169-170 [124 Cal. Rptr. 1, 539 P.2d 761].) "The correct standard does not ask whether counsel 'minimally participated' in the case but rather whether counsel 'actively participated' in the creation of the settlement fund." (Steinberg v. Allstate Ins. Co. (1990) 226 Cal. App. 3d 216, 222-223 [277 Cal. Rptr. 32].)