Opinion
TOBRINER, J.
Under the workers’ compensation statutes1 a worker may not sue his employer for a work-related injury, but he may recover a judgment from a negligent third party for such an injury. (§ 3852.) From this judgment an employer who has paid his employee compensation benefits may recoup the amount thus expended. (§ 3856.) We must now construe that portion of section 38562 which requires the trial court [165]*165before reimbursing the employer in such a case as this to determine and order payment of “a reasonable attorney’s fee,”3 a fee based “upon the services rendered by the employee’s attorney in effecting recoveiy both for the benefit of the employee and the employer.” We face here the question whether this statute incorporates the principle that an active litigant (here the worker) may require the passive beneficiary of his efforts (here the employer) to contribute toward the payment for the services of litigant’s attorney which produced the recovery.
[166]*166As we shall show in more detail, our conclusion that the employer should bear his share of such fees rests upon the equitable principle of apportionment long applied by the courts and upon the Legislature’s incorporation of such principle into section 3856. The facts of this case serve to illustrate the reasons for the legislative enactment.
Plaintiff sustained serious injuries in the course of his work on a project for the construction of a dam; he consequently received workers’ compensation benefits of $13,942. Plaintiff sued the state, which owned the construction site, alleging its negligence as the proximate cause of his injuries. (§ 3852; Rest. 2d Torts, § 416.) On the first day of trial the insurance carrier which had paid the workers’ compensation benefits filed a lien pursuant to section 3856 against any judgment that might result. The carrier did not otherwise participate in the litigation on behalf of the plaintiff.
After a jury trial plaintiff received a verdict and judgment for $91,314.99; the trial court denied defendant’s motion for a new trial and for judgment notwithstanding the verdict. Defendant’s liability insurer (which by chance had also written the employer’s workers’ compensation policy)4 sent plaintiff a draft for $80,231.06, an amount reached by deducting from the judgment and statutory interest the full amount of the workers’ compensation benefits paid to plaintiff. Urging that his attorney had performed all the work leading to the recovery, plaintiff •then moved for an order apportioning his attorney’s fee between himself and his employer.5 Denial of that motion led to this appeal.
1. The relevant statutes are based upon principles of apportionment long applied by our courts.
A brief sketch of the policy of employers’ subrogation to workers’ recoveries in third party negligence actions and of the legislation [167]*167implementing that policy will illuminate the problem in the instant case and the Legislature’s resolution of it.
From the earliest workers’ compensation statutes, the Legislature has afforded employers an opportunity to shift the financial burdens which they incur under those statutes to third parties whose negligence has caused the injuries in question. To this end the Legislature has enacted a series of subrogation statutes which give the employer the right to recover damages (measured by his outlay of workers’ compensation benefits) against third parties who are strangers to the employment relation.6 Thus an employer whose worker has been injured in the course of his employment by the^negligence of a. third party may recover from that party the amount paid to the worker in workers’ compensation benefits. (§§ 3852; 3854.) Moreover, if the worker exercises his own right to sue the negligent third party, an employer stands entitled to claim from any actual recovery the repayment of the amount of the workers’ compensation benefits already paid. (§ 3856.) The question we must decide is whether this statute as now framed affects the courts’ historical equity practice of apportioning attorneys’ fees among those who are the beneficiaries of funds created by the activities of similarly situated litigants. (Dawson, Lawyers and Involuntary Clients: Attorney Fees from Funds (1974) 87 Harv.L.Rev. 1597.)
Although American courts, in contrast to those of England, have never awarded counsels’ fees as a routine component of costs,7 at least one exception to this rule has become as well established as the rule itself: that one who expends attorneys’ fees in winning a suit which creates a fund from which others derive benefits, may require those passive beneficiaries to bear a fair share of the litigation costs.8 Articulating the policies underlying this rule and its exception, a prominent scholar of the problems of unjust enrichment has noted that [168]*168the denial of an attorney’s fee to a prevailing litigant “is a partial denial of justice.” (Dawson, Lawyers and Involuntary Clients: Attorney Fees from Funds (1974) 87 Harv.L.Rev. 1597.)
While American courts have entertained serious doubts as to the wisdom of adopting the English rule in its entirety, “it seems clear that no policy is undermined by allowing recovery [of attorneys’ fees] where the claim for reimbursement can be deflected toward a stranger—where a litigant, suing on a cause of action of his own, has succeeded and it then appears that his success has ensured gains of nonparty strangers. He will be denied recovery from his opponent of his out-of-pocket loss in counsel fees, even though it was his opponent’s resistance that caused this loss, mainly because of the deterrent effect on litigation generally if all of its real costs were regularly shifted to losers. But such reasoning is entirely irrelevant to a claim against a complete outsider, to recapture some part of the windfall to him.” (Dawson, supra, pp, 1600-1601.)
California courts have long applied this principle of apportionment.9 In Estate of Stauffer (1959) 53 Cal.2d 124 [346 P.2d 748], one of the many cases exemplifying its use, we summarized some of the considerations behind the principle: “The bases of the equitable rule which permits surcharging a common fund with the expenses of its protection or recovery, including counsel fees, appear to be these: fairness to the successful litigant, who might otherwise receive no benefits because his recovery might be consumed by the expenses; correlative prevention of an unfair advantage to the others who are entitled to share in the fund and who should bear their share of the burden of its recovery; encouragement of the attorney for ;the successful litigant, who will be more willing to undertake and diligently prosecute proper litigation for the protection or recovery of the fund if he is assured that he will be promptly and directly compensated should his efforts be successful.” (53 Cal.2d at p. 132.)
The instant case therefore might well constitute an appropriate situation for the application of the rule of apportionment, even without reference to the statute. An active litigant has, by bringing and winning this lawsuit, created a fund upon which a nonparticipant in the litigation can draw in order to relieve himself of a legal obligation he would otherwise bear;10 the passive beneficiary thus necessarily benefits from [169]*169plaintiff’s efforts in bringing suit. The employer has contributed neither time, effort, nor money to the now-successful action; he thus seeks to enjoy the benefits of the suit without contributing to its costs. Furthermore, we point out below that the Legislature has clearly referred to this general equitable precept in the statute before us.
2. The Legislature incorporated into section 3856 the principle of apportionment of attorney’s fees.
All parties agree that the predecessor to the present statute required the courts to apportion attorney’s fees between the worker (the active litigant) and the employer (the passive beneficiaiy of his action). This predecessor statute read, in relevant part: “where the employer has failed to join in said action [against the negligent third party] and to be represented therein by his own attorney, or where the employer has not made arrangements with the employee’s attorney to represent him in said action, the court shall fix a reasonable attorney’s fee, which shall be fixed as a share of the amount actually received by the employer, to be paid to the employee’s attorney on account of the service rendered by him in effecting recovery for the benefit of the employer, which said fee shall be deducted from any amounts due to the employer.” (Stats. 1949, ch. 120, § 2, pp. 355-356; italics added.)
The statute left unclear, however, the priority rights as between the worker’s attorney and the employer in case the recovery should not suffice both to compensate the attorney and to recompense the employer for his workers’ compensation outlay. To remedy this obscurity the Legislature enacted the current statute, which, with an evident eye to the problem of conflicting priorities, specifies that “the court shall first order paid from any judgment” the attorney’s fee. The statute then goes on to repeat, in substantially similar terms, the language emphasized in the 1949 statute: the court is to order the payment of “n reasonable attorney’s fee which shall be based solely upon the services rendered by the employee’s attorney in effecting recovery both for the benefit of the employee and the employer. ” (§ 3856, subd. (b); italics added.)
The Legislature thus incorporated into its statute the equitable doctrine described above; it required a passive beneficiary of a recovery [170]*170to contribute to the expenses of litigation in creating that fund in proportion to his benefit therefrom. Using much of the same language as the 1949 statute, the Legislature then refined and extended its intention that the employer contribute his reasonable share toward the attorney’s fee of the worker whose efforts benefit the employer. In the present statute the Legislature continues its mandate to the courts to apportion reasonable attorneys’ fees on the basis of benefit to the respective parties, while assuring the worker that he can obtain an attorney by guaranteeing that attorney priority in the event that the judgment recovered should not suffice both to recompense him and to satisfy the employer’s claim.
The statute as now framed commands the court to establish a “reasonable attorney’s fee” taking into account “the services rendered both for the benefit of the employee and the employer.” Such language, far from forbidding the application of the equitable principle of reasonable apportionment, requires it. (Cf. Witt v. Jackson (1961) 57 Cal.2d 57, 72 [17 Cal.Rptr. 369, 366 P.2d 641].) Both the directive to assess a reasonable fee and the mandate to consider the benefit to both active and passive beneficiaries of the recovery call for apportionment. Moreover, this consideration of the language of the statute finds support in the general canons of construction applicable to workers’ compensation legislation.
The Legislature set forth the governing principle of statutory construction in section 3202; which instructs the courts to construe the entire Workers’ Compensation Act “with the purpose of extending their benefits for the protection of persons injured in the course of their employment.” This clause requires the courts to view the legislation from the standpoint of the injured worker, with the objective of securing for him the maximum benefits to which he is entitled.
Thus, in a case in which the worker might well stand entitled to contribution toward his attorney’s fee absent any statutory provision, this court cannot interpret a statute which on its face calls for the weighing of benefits and burdens, as barring apportionment of fees. Such an interpretation would violate the legislative intent that we liberally construe workers’ compensation statutes to the worker’s benefit.
Indeed, to construe the statute as forbidding apportionment of fees would raise questions of conflict with the policy announced in section 3751, which makes it a misdemeanor for an employer to require from a worker any contribution “either directly or indirectly” to cover the cost [171]*171of compensation benefits. One of the costs of compensation benefits is the cost of recovering judgments against third parties whose negligence necessitated the payment of those compensation benefits. To construe section 3856 as a legislative demand that the courts assist in precisely such an enforced contribution is therefore to negate the legislative intent underlying section 3751.
By incorporating into the words of the statute the precepts of equity requiring a passive beneficiary to recompense his actively litigating benefactor, the Legislature has directed our courts to apportion fees in relation to benefits; that the Legislature fully intended this result is a conclusion which emerges from the history of the statute in question.
3. The history. of the statutes confirms the intent of the Legislature to require the apportionment of attorneys’ fees.
Until 1947 neither the Legislature nor the courts had considered the question of the apportionment of fees between the worker and his employer who share in a fund created by a suit against a third party; when the issue did arise, however, the Legislature manifested its clear intention that courts should apportion fees in such cases.
Construing the 1939 version of the statute in question, we faced for the first time in Dodds v. Stellar (1947) 30 Cal.2d 496 [183 P.2d 658], the question of the application of equitable principles to the provisions' for attorneys’ fees. In that case this court considered a request to apportion attorneys’ fees between the active litigant and the passive beneficiary of the action. Writing over the dissent of Justices Carter and Schauer, we ruled that the concept of apportionment had no place in the worker’s compensation statute. The Legislature, however, promptly indicated otherwise at its next session, specifically requiring the apportionment of attorneys’ fees in cases which went to judgment. (Stats. 1949, ch. 120, § 2, pp. 355-356.)
Moreover, the court in Dodds in effect instructed the Legislature to draft a statute like the present one if it wished to provide for equitable apportionment. Dodds held that the statute as then written expressed the legislative intent not to apportion because it required the trial court first to satisfy the employer’s claims and only thereafter to take care of the worker arid his attorney: “In view of these express provisions . . . emphasizing that . . . the statutory recoupment right in favor of the employer or its insurance carrier first consideration, there is no basis [172]*172for . . . apportioning litigation expenses between the parties benefiting from the recovery.” (Dodds v. Stellar, supra, 30 Cal.2d 496, 505; (italics added.) Following the suggestions implicit in the passage just quoted, the Legislature, in providing first for the worker’s attorney’s fee, has written the statute precisely in the manner the Dodds court indicated would express a legislative intent to enact apportionment; we must give effect to this clear expression of the legislative will. Moreover, events subsequent to Dodds make clear the steadfastness of the Legislature’s intent to apportion.
Five years after Dodds litigants asked us to apply the doctrine of apportionment to the analogous situation of out-of-court settlements. In R. E. Spriggs, Inc. v. Industrial Acc. Com. (1954) 42 Cal.2d 785 [269 P.2d 876], this court held that the Legislature’s provision for apportionment in cases in which judgment was pronounced did not warrant the application of that principle to cases settled before judgment. Once more the Legislature promptly enacted legislation to the contrary; it expressed its preference for the views of Justice Carter, who again in dissent had urged the application of the traditional equitable doctrines to cases in which settlements had been reached. (Stats. 1957, ch. 615, § 1, p. 1825.)
In 1959 the Legislature recodified the statutes and provided for the priority of attorneys’ fees in cases in which the recovery did not satisfy both the claim for a reasonable attorney’s fee and the recoupment of an employer’s workers’ compensation payments; the present litigation arises from this recodification. Defendant argues that because the new statute compressed and reworded the former enactment, which had clearly provided for apportionment, we should assume that the Legislature meant to obliterate the procedure that it had twice invoked in the previous decade. A reading both of the legislative history and of the words of the statute, however, points to the contrary.
First, as we have shown above, the Legislature used significant portions of the former statute verbatim, thus inviting reference to the former interpretation. Second, as we have shown, in rewriting the statute the Legislature carefully-observed the. ruling in Dodds: that by placing the attorney’s fee first in the claims against the worker’s recovery it could effect equitable apportionment of fees. (See Dodds v. Stellar, supra, 30 Cal.2d 496, 504-505.) Third, other purposes, unrelated to the ápportionment of fees, explain the other changes that the Legislature did make. The 1959 legislation evidently had two such goals. It sought primarily to effect an equitable adjustment in the amount with which the [173]*173employer would be credited against future benefit awards.11 As we have explained, it secondarily intended to increase the incentive for attorneys to press workers’ cases by assuring them that the employer’s recoupment woúld not deny them recompense for their efforts in litigating the case. Thus we find both an entirely consistent alternative explanation for the legislative changes and an indication in the retained wording that the courts were still to apply the principle of apportionment.
This interpretation obtains additional support from the circumstance that leading legislative commentators writing contemporaneously with the passage of the legislation gave no hint that the Legislature repealed the mandate to apportion attorneys’ fees. Both the annual, summary of legislation prepared by the Committee on Continuing Education of the Bar,12 and Witkin’s Summary of California Law13 treated the amendments as essentially technical, a conclusion entirely in accord with the routine and un con tested passage of the bills by the Legislature.14 Such contemporaneous construction of course may shed important light on legislative intent. (First Nat. Bank v. Kinslow (1937) 8 Cal.2d 339, 346 [65 P.2d 796].)
Turning to the arguments of defendant, we shall show they do not suffice to establish that apportionment of attorneys’ fees conflicts with equitable principles or with their legislative incorporation in section 3856.
4. Neither the contention that apportionment of attorneys’ fees constitutes “double recovery” nor the argument based upon legislative inaction establishes that the Legislature did not intend to require such apportionment.
We shall first answer the contention of the employer and his amicus that apportionment of attorneys’ fees constitutes “double recovery” for the employee. The employer apparently argues that such apportionment conflicts with the policy against recovery from multiple sources for the [174]*174same damages,15 citing for that proposition a federal case construing a different statute.16 While the exact meaning which the employer assigns to the term “double recovery” does not emerge from the briefs, the two possible constructions of this argument cannot stand because they either dissolve into fiction or ignore a central aspect of the situation—the contingency of recovery.
On the one hand, the employer apparently suggests that if one makes any reduction in the employer’s recoupment of previously paid benefits, the claimant receives to that extent overlapping awards—one from the tort claim and the other from workers’ compensation. Yet this argument ignores the central fact of this case: the claimant owes legal fees, the very fees to be apportioned. Thus in the present case the judgment for some $90,000 was subject to claims not only for reimbursement of compensation benefits of some $13,000 but also to the legal "fees which plaintiff urges that his employer share. The employer seems to conjure up a situation in which an attorney’s fee exists exclusively for the purpose of apportionment but does not affect the worker’s recovery. This aspect of the problem of “double recovery” thus dissolves upon examination into a fiction.
. The alternative reading of the “double recovery” argument appears to rest on the assertion that the contribution toward attorneys’ fees serves to increase the total workers’ compensation benefits received by the worker. This contention proceeds, however, from a basic misconception.
To be sure, our interpretation will increase the plaintiff’s present tort recovery and decrease the employer’s recoupment of past benefits, but to characterize this result as an increase in compensation benefits is to ignore reality. The fact that the employer must pay some portion of his recoupment to the worker as a share of the attorney’s fee does not make this payment additional workers’ compensation: the employer’s payment does not fulfill his obligation under the compensation statute; it recompenses the attorney for his services.
[175]*175The employer’s second contention, that legislative inaction in face of court decisions allegedly invalidating apportionment of attorneys’ fees demonstrates legislative approval of these rulings fails on two counts. First, we note that this court has never passed on the question of apportionment under the current statute; the Legislature might reasonably conclude that it should await our definitive interpretation of the statute. Second, we need only mention the general principle of statutory construction that legislative inaction is indeed a slim reed upon which to lean. (E.g., United States v. Price (1960) 361 U.S. 304, 310-311 [4 L.Ed.2d 334, 338-340, 80 S.Ct. 326].)
If, then neither “double recovery” nor legislative inaction presents obstacles to our resolution of the present dispute, we must proceed to frame instructions for the trial court on remand.
5. The trial court on remand should apportion attorney’s fees on equitable principles.
On remand (as upon proper motion after judgment in future cases), the court should proceed first to calculate a reasonable attorney’s fee, a fee which reflects the total services rendered to both beneficiaries of the recovery. Having fixed that fee,17 the court must then make a reasonable apportionment of it between the parties benefitted by the recovery.18 Such an apportionment will, of course, often involve only a relatively simple proportional calculation, but such simplicity will not be the invariable rule. The court should consider, for instance, whether the worker’s attorney’s efforts in disproving a defense under the rule announced in Witt v. Jackson (1961) 57 Cal.2d 57 [17 Cal.Rptr. 369, 366 P.2d 641], have accounted for a disproportionate amount of the litigation. Other factors may suggest themselves to the sound discretion [176]*176of the courts, acting always under the guidance of the traditional equitable principles whose application we have examined above.19
From the foregoing it appears that Fuchs v. Western Oil Fields Supply (1972) 25 Cal.App.3d 728 [102 Cal.Rptr. 74], and Moreno v. Venturini (1969) 1 Cal.App.3d 286 [81 Cal.Rptr. 551], which reached constructions of an analogous statute contrary to that here announced, are disapproved.20
In conclusion, we point out that the employer asks us to abnegate the application of the equitable principle of apportionment which this court has recognized for many years; he asks us to assume that the Legislature has forbidden us to apply this principle in spite of the Legislature’s clear expressions to the contrary. He asks us to construe a statute so as to require the injured worker to pay the lawyer’s entire charge for a recovery, part of which will benefit only the employer. Yet if the employer receives his fair share of the recovery, he must bear his fair share of the cost of the recovery.
The order of the trial court is reversed and the cause is remanded for a hearing on the setting and allocation of attorneys’ fees in a manner consistent with the principles announced in this opinion.
[177]*177Wright, C. J., Mosk, J., Sullivan, J., and Burke, J.,
Retired Associate Justice of the Supreme Court sitting under assignment by the Chairman of the Judicial Council.