Are Attorney's Fees of 40 from a Settlement Reasonable ?

In O'Neil v. Henry's Riverside Market, 388 Pa. Super. 634, 566 A.2d 307 (Pa. Super. 1988), a minor sustained personal injuries on the premises of Henry's Riverside Market. The minor's counsel negotiated a settlement in the amount of $ 9,000 and petitioned for leave to settle the minor's claim. In the petition, the minor's counsel proposed $ 706.00 of the settlement was to be paid to the Department of Public Welfare less attorney's fees of 40% or $ 282.40. DPW appealed, and this Court addressed whether 1409 should be interpreted to require DPW be debited its pro rata share of attorney's fees from its portion of the settlement. In doing so, the Court analyzed the provisions of 1409(b)(7)(i) and (ii) stating: . . . we would observe that 62 P.S. 1409(b)(7)(i) allows for the payment of reasonable attorney's fees prior to allowing as a first lien against the amount of such original judgment or award, the amount of the appellant's expenditures for the benefit of the beneficiary under the medical assistance program. As made mention by the attorney for the minor in his brief at page 11, "The Legislature, when referring to 'such judgment or award' could only have meant the original judgment or award, unaffected by any offset for costs or attorney's fees." Section 1409(b)(7)(ii) provides: If the action or claim is prosecuted both by the beneficiary and the department, the court or agency shall first order paid from any judgment or award, the reasonable litigation expenses incurred in preparation and prosecution of such action or claim, together with reasonable attorney's fees based solely on the services rendered for the benefit of the beneficiary. After payment of such expenses and attorney's fees, the court or agency shall apply out of the balance of such judgment or award an amount of benefits paid on behalf of the beneficiary under the medical assistance program.