OPINION OF THE COURT
Hargett, J.This case raises a novel issue as to the proper standards to be applied in apportioning attorneys’ fees, pursuant to subdivision 1 of section 29 of the Workers’ Compensation Law, upon a third-party recovery by an injured employee. Stripped to its essentials, the question is whether the compensation insurance carrier should ordinarily contribute only in proportion to its actual benefit derived from the recovery (i.e., the satisfaction of its lien) or whether attorneys’ fees should be assessed against it not only for the "collection” of its lien but also upon the theory that the employee’s portion of the recovery inures *230to its benefit by diminishing or extinguishing its liability for future payments to the employee.
In 1973 William Castleberry (hereinafter plaintiff) was injured in the course of his employment. From November of that year until the settlement of his third-party tort action in October, 1978, his employer’s compensation carrier, Utica Mutual Insurance Company, made payments to him totaling more than $20,000. Plaintiff neither obtained the consent of Utica Mutual to his $75,000 settlement, nor sought a compromise order pursuant to subdivision 5 of section 29 of the Workers’ Compensation Law.
Instead of proceeding by either of those two "conventional” routes, plaintiff went to Special Term with his fait accompli of a settlement,1 and sought instead to have Utica Mutual’s entire lien extinguished on the theory that the full amount of the settlement inured to the carrier’s benefit and that, therefore, all the attorneys’ fees should be apportioned against Utica. Special Term agreed and apportioned 100% of the attorneys’ fees against the carrier. The reasonable attorneys’ fees were found to be $25,000. Nevertheless, notwithstanding its apportionment, Special Term limited Utica’s contribution to the amount of its lien—$20,402. In effect, the carrier’s lien was compromised in toto under the guise of an apportionment of attorneys’ fees.
Such a result is repugnant to both the scheme of the Workers’ Compensation Law as a whole, and the legislative purpose of the equitable apportionment of attorneys’ fees found in subdivision 1 of section 29. Indeed, the result reached by Special Term and indorsed by the minority view of this court fails to appreciate the "inviolability of the lien given to a workmen’s compensation carrier against any recovery by a *231compensation claimant in a third-party action” (see Matter of Granger v Urda, 44 NY2d 91, 96). The statutory and constitutional significance of that lien was thoroughly discussed by the Court of Appeals in Matter of Granger v Urda (supra, pp 96-98):
"In essence, subdivision 1 of section 29 of the Workmen’s Compensation Law provides that if the claimant elects to pursue his common-law remedies against a third-party tortfeasor for damages on account of an injury for which workmen’s compensation benefits were paid, the compensation carrier shall have a lien on the proceeds of any recovery by the claimant to the extent of compensation and medical expenses awarded. While the payments of a compensation carrier are not normally advances to a claimant for which repayment is contemplated, where a third-party tort-feasor is involved, different considerations are evident. In such an instance, section 29 provides that compensation and medical payments may be recouped by the compensation carrier 'whenever a recovery is obtained in tort for the same injury that was a predicate for the payment of compensation benefits’ (Matter of Petterson v Daystrom Corp., 17 NY2d 32, 39; see, also, Matter of Ryan v General Elec. Co., 26 NY2d 6, 9; Calhoun v West End Brewing Co., 269 App Div 398, 400).
"Since its establishment in the early part of this century, workmen’s compensation has been envisioned by the Legislature as a system whereby employees sustaining accidental injuries arising out of and in the course of their employment might be compensated for their injuries regardless of fault (see Workmen’s Compensation Law, § 2, subd 7; § 10). It was also recognized, however, that although funded primarily by means of employer contributions, measures had to be taken which would ensure that the cost of providing this protection to injured employees did not escalate to the point of economic impracticality (see 1 Larson, Workmen’s Compensation Law, § 2.70, pp 13-14). That this cost factor is of manifest concern to the Legislature is evinced by section 18 of article I of the Constitution of the State which provides that compensation payments 'shall be held to be a proper charge in the cost of operating the business of the employer.’ Moreover, in realizing that a workable system of compensation could not totally redress an injured employee’s injuries and remain a financially viable institution at the same time, a decision was reached whereby a limitation was placed on the amount of *232benefits recoverable by a compensation claimant (see Workmen’s Compensation Law, §§ 12, 15, subd 2).
"Viewed in this light, the intent behind the enactment of section 29 of the Workmen’s Compensation Law (L 1937, ch 684, as amd) is obvious. Where a compensation claimant is injured due to the fault of one not a fellow employee, the Legislature has provided a means whereby the claimant may recover damages to compensate him for the full extent of his injuries, a remedy not otherwise available within the compensation system, by permitting him to prosecute a third-party action against the party actually responsible for those injuries (see Koutrakos v Long Is. Coll. Hosp., 47 AD2d 500, 505, affd 39 NY2d 1026). At the same time, the statute cushions the inñationary impact of the cost of compensation insurance and avoids double recovery by the claimant for the same predicate injury by permitting the compensation carrier to recoup its compensation and medical payments from the third-party tortfeasor by means of its section 29 lien on the claimant’s recovery in the third-party action (see Matter of Curtin v City of New York, 287 NY 338, 340; Becker v Huss Co., 43 NY2d 527)” (emphasis supplied).
Given the historical importance of the compensation lien (Matter of Granger v Urda, supra; see Grello v Daszykowski, 58 AD2d 412, 420, concurring opn by Shapiro, J., revd on other grounds 44 NY2d 894), it is nothing short of incredible to believe that the Legislature could have intended its emasculation by enacting chapter 190 of the Laws of 1975. That amendment to subdivision 1 of section 29 provides that where an employee secures a recovery from a third party, the court shall, upon application of the employee, "equitably apportion” the reasonable and necessary expenditures, including attorneys’ fees, incurred in effecting such recovery, between the employee and the "lienor”. The form of this amendment— which provides for an equitable apportionment of expenses, rather than a formula as such—was based largely upon the recommendation of the Law Revision Commission. The purposes of the amendment, and an understanding as to what was contemplated thereby, can best be gleaned from that recommendation, the full text of which follows:
"When an employee is injured in the course of his employment he is commonly entitled to receive an award under the Workmen’s Compensation Law even though the injury was caused by the negligence of a third party, that is, someone
*233other than his employer or a fellow employee. In such cases the amount of the compensation award, which of course is paid by the employer or his insurance carrier, may be less than can be obtained by an action in the courts against the negligent third party. Such an action can be maintained initially by the injured employee or, pursuant to statutory subrogation, by the person (the employer or his insurance carrier) who paid the employee’s compensation award.
"Section 29 of the Workmen’s Compensation Law first declares that the employee need not elect whether to take compensation or sue the third party in the courts but may pursue both remedies. Moreover, should the employee not bring action within the prescribed time, the right to sue is given to the carrier. The carrier is motivated to sue both by the promise of reimbursement and by the possibility of a windfall recovery, hereinafter discussed.
"Under § 29 the employee may sue the third party within six months after he is awarded compensation. Within 30 days after suit is begun he must notify the Compensation Board, his employer and the latter’s insurance carrier. The carrier (including a self-insuring employer or the State Insurance Fund where appropriate) is given a lien on the proceeds of any recovery in the lawsuit to recompense it for the compensation it has been and will be paying to the employee under the award and for certain related expenses. If the employee does not sue, and six months have elapsed, and the carrier has given the employee 30 days written notice, the right to sue becomes that of the carrier. The carrier then may sue for all damages obtainable, and if its recovery in the courts exceeds the amount of its lien for past and future compensation payments and related expenses, it may keep one-third of such .excess in addition to the amount of its lien, turning over the remaining 'excess’ to the injured employee. Thus the carrier has a lien for its own outlay, whoever brings the action, and if the carrier brings the action and secures a recovery, it receives its lien and, in addition, a windfall of one-third of the excess. The obvious purpose of this windfall is to give the carrier an inducement to sue whenever the employee has failed to do so.
"Attorneys’ fees, however, are a prior lien. Thus, attorneys’ fees are first deducted from the third-party recovery; then the carrier’s lien is satisfied; and, finally, the excess (or two-thirds *234of it, depending on the initiator of the action) goes to the injured employee.
"Two results of this procedure call for a change in New York law. First, the carrier receives its lien without contributing to the cost of securing the recovery. Employees, encouraged to sue by the structure of the act, obtain a recovery from which the carrier benefits and yet the carrier need not share in the costs. When the carrier sues, its attorneys’ fees are paid in full and then it receives the amount of its lien. The employee receives the excess, if any, only after the lien of the carrier’s attorneys’ fees has been discharged. Thus, the carrier’s attorneys’ fees reduce the employee’s excess recovery. Yet, when the employee sues, he normally bears the entire burden of attorneys’ fees. Second, when the excess is modest or nonexistent, the employee, who has gone to the trouble and expended the time required to make the lawsuit a success, ñnds that after his own lawyer’s and the carrier’s liens have been paid off, there is little or no net recovery left for him. It was his lawyer’s efforts that brought about the recovery out of which the carrier’s subrogation lien is being paid in full, and yet the carrier is not making any contribution toward the legal expenses.
"The Commission believes that the present law is unfair to the employee and should be amended to provide for some apportionment of his legal expenses. That others are of the same opinion may be inferred from the growing popularity of apportionment statutes. Among the states which apportion legal fees in third-party actions are Delaware, Illinois, Indiana, Kansas, Maine, Maryland, Massachusetts, Michigan, New Jersey, Pennsylvania, Virginia and Washington. In certain other states, such as Arkansas, Oregon and Wisconsin, the problem is met, not by apportioning the legal expenses, but by guaranteeing the employee a percentage of the recovery after deduction of all legal expenses. Missouri and Florida provide for both the apportionment of fees and an equitable division of the insurer’s lien.
"Methods of apportionment vary from state to state. The trend, however, seems to be away from rigid statutory formulas and in favor of a simple provision for equitable apportionment by the court which has the third-party action before it. Apart from any consideration of trends, the Commission prefers the latter approach, since it is more practical and ñexible” (Recommendation of Law Rev Comm to Legislature, Me-*235Kinney’s 1974 Session Laws of NY, pp 1904-1906; emphasis supplied).
Simply stated, the 1975 amendment was intended to accomplish two things. First, it was intended to assess the compensation carrier for the benefit derived by it from the collection of its lien. Second, it was intended to avoid the evil of having the attorney’s lien and the compensation lien swallow up most of a small recovery. The Law Revision Commission’s reference to the approach taken in Arkansas, Oregon and Wisconsin, where the employee is guaranteed a percentage of the recovery after deduction of all legal expenses, would appear to relate to the latter problem, and the said reference offers a clue as to why the commission favored a general provision for equitable apportionment.
Were the sole concern one of levying a "collection” charge on the compensation carrier, it would have been appropriate to establish a statutory formula whereby that percentage which the attorneys’ fees bore to the total recovery would be applied to, and would reduce, the lien of the compensation carrier. But because of the second concern, over small recoveries where little or nothing might be left over for the injured employee, it appears that the Law Revision Commission wanted to permit courts the flexibility of placing a floor under which the ultimate recovery of the employee would not be reduced. In situations such as these, the lien of the compensation carrier would necessarily have to be compromised to an even greater extent than would be possible under a statutory formula.
But there is nothing in the commission’s recommendation, nor in the legislative history, to suggest, as the minority opinion does, that the lien should be wiped out—at least to the extent of the full amount of the attorneys’ fees—in every case where the employee’s recovery is less than "the sum of the lien plus the estimated liability of the carrier extinguished by the recovery”. It is pure sophistry to suggest that the compensation carrier should pay attorneys’ fees for the "collection” of a lien that it will never realize and for the discharge of future contingent liabilities which may never materialize.2 Yet that is exactly what Special Term has done.
*236It is true, as the minority view contends, that plaintiff would not be required to pay attorneys’ fees had he simply opted to collect compensation checks and foregone a third-party action. But in that case, the compensation carrier would have been subrogated to his rights against the third-party tort-feasor (see Workers’ Compensation Law, § 29, subd 2). The carrier would have had the opportunity to recover all sums expended or reasonably expected to be expended in discharge of its duty to the injured employee. In the event an amount in excess of such expenditures (plus a reasonable amount for recovery of said expenditures) were recovered, the carrier would pay two thirds of such excess to the injured employee.3
It is clear that whether the injured employee elects to bring a third-party action or not, the statute contemplates at least the opportunity for recovery, by the compensation carrier, of sums actually expended. Where the employee elects to bring a third-party action, the carrier has a lien on any recovery. Where the employee opts not to bring a third-party action, the carrier has a right of subrogation. At bar, however, the carrier has, as a result of the apportionment made by Special Term, been deprived of its statutory right to a lien on the more than $20,000 already paid to plaintiff. The plaintiff will effectively receive the "double satisfaction” which the lien provided for in section 29 is intended to prevent (see Becker v Huss Co., 43 NY2d 527, 538), since the $75,000 settlement presumably encompasses "special” damages already sustained and paid for to the extent of $20,402 by the compensation carrier.
There is no merit to the claim made in the minority opinion that an employee’s recovery in a third-party action "takes the place of his compensation award” and would be "diluted” absent the approach taken by Special Term. In any case where a third-party recovery falls short of what the compensation carrier is or will be obligated to pay, the Workers’ *237Compensation Law provides that the carrier make up the deficiency (Workers’ Compensation Law, § 29, subd 4). The statute has been construed to provide for "deficiency” payments over and above an employee’s net recovery—i.e., the total recovery less the expenses reasonably and necessarily incurred in obtaining the said recovery (Matter of Curtin v City of New York, 287 NY 338). In the language of the statute, the compensation carrier must cover "the deficiency, if any, between the amount of the recovery against [the third-party tort-feasor] actually collected, and the compensation” to be provided under the Workers’ Compensation Law (Workers’ Compensation Law, § 29, subd 4; emphasis supplied).
At bar, plaintiff has foreclosed his right to any deficiency payments because of his unilateral action in settling the third-party action without either (1) the consent of the compensation carrier, or (2) a compromise order pursuant to subdivision 5 of section 29 of the Workers’ Compensation Law. It is settled that such unilateral action on the part of claimant relieves the compensation carrier of further liability as a matter of law (see Matter of Kusiak v Commercial Union Assur. Cos., 49 AD2d 122, 124; see, also, Matter of Nachison v Phoenix of Hartford Ins. Co., 30 AD2d 499). But assuming plaintiff had acted within the framework of the law, he would have been deprived of nothing had Special Term apportioned the attorneys’ fees so as to assess the compensation carrier only for the "collection” of its lien. The mathematics of such a result would be as follows:
Total Settlement $ 75,000
Less:
Attorneys’ Fees (set at Vs the
total recovery).................... ($ 25,000)
Compensation Carrier’s Lien after setoff of Vs total lien as carrier’s share of attorneys’ fees
($20,402 - 6,801 = $13,601)....... ( 13,601)
Total Reduction ($ 38,601) ( 38,601)
Amount "actually collected” $ 36,399
(Workers’ Compensation Law,
§ 29, subd 4)
Plaintiff was receiving $80 per week from the compensation carrier. Assuming he had never brought a third-party action, and further assuming that his physical condition remained such that he continued to receive $80 per week for 20 years, *238he would have received a total of $103,602 from the carrier, figured as follows:
Payments already received................................. $ 20,402
Weekly payments ($80 x 1,040 weeks)...................... 83,200
Total $103,602
He would have received precisely the same amount by reason of the operation of the "deficiency” provision contained in subdivision 4 of section 29 of the Workers’ Compensation Law, even though his "share” of the costs of the third-party recovery had been deducted:
Payments already received................................ $ 20,402
Plus:
Amount "actually collected” in the third-party action
(representing the equivalent of 4547%o weeks)4 ....... 36,399
Deficiency payments ($80 X 585 Véo weeks)5 ............... 46,801
Total $103,602
It is apparent that under the statutory scheme an injured employee suffers no dilution of the benefits to which he would otherwise be entitled by proceeding in a third-party action and by paying that proportion of the attorneys’ fees which his "share” of the recovery (i.e., the total settlement less the compensation lien, if any) bears to the total recovery.6 On the other hand, adoption of the approach taken by Special Term, and espoused by the minority, results in the effective destruction of the carrier’s rightful lien and fancifully ignores the possibility of future modifications of compensation awards, occasioned by a change in the employee’s condition (Workers’ Compensation Law, § 22).
Accordingly, the order appealed from should be reversed insofar as it (a) apportions all of the attorneys’ fees against appellant, Utica Mutual Insurance Company, and (b) vacates the appellant’s lien. We hold that appellant’s equitable share of the attorneys’ fees shall be one third of $20,402, or $6,801, *239and that its lien shall be set off by that amount. We express no opinion as to the proper form of apportionment in a case where the excess of a third-party recovery over and above a compensation carrier’s lien plus attorneys’ lien is "modest or non-existent.” (See Recommendation of Law Rev Comm to Legislature, McKinney’s 1974 Session Laws of NY, p 1905.) Suffice it to say that on these facts, it was an abuse of discretion to assess all expenses against appellant.
. Although the minority opinion has termed the settlement contingent, one must assume, in light of the wording of the statute, that a recovery—i.e., a final settlement —had been obtained since no application for an equitable apportionment of attorneys’ fees may be brought until such time as a "recovery” has been obtained. The relevant wording of the statute is as follows: "Should the employee * * * secure a recovery from such other, whether by judgment, settlement or otherwise, such employee * * * may apply * * * to the court in which the third party action was instituted * * * for an order apportioning the reasonable and necessary expenditures, including attorneys’ fees, incurred in effecting such recovery. Such expenditures shall be equitably apportioned by the court between the employee * * * and the lienor” (Workers’ Compensation Law, § 29, subd 1; emphasis supplied). Furthermore, this court has ascertained from plaintiff’s attorney that the third-party settlement has been finalized.
. As noted, infra, section 22 of the Workers’ Compensation Law provides for the modification of compensation awards where there has been "a change in conditions”. (See, also, Workers’ Compensation Law, § 15, subd 6-a; § 123.) Improvements in the physical conditions of employees have not been unknown to occur, and there is *236always the possibility that a compensation award may be diminished or terminated (see, e.g., Matter of Sepulveda v Fischl Bros. Button Co., 38 AD2d 983; Matter of Mesiti v Lucille’s Beauty Salon, 31 AD2d 859; Matter of Blanchard v U.S.O. Camp Shows, 4 AD2d 894).
. One third of such "excess” is apparently intended to compensate the carrier for attorney’s fees expended in securing the recovery. It is significant that where the carrier sues as subrogee of the injured employee, its attorneys’ fees are effectively assessed against the employee since no "excess” is payable to the employee until the carrier’s expenses of effecting its recovery are deducted and, even then only two thirds of such "excess” is payable to the employee.
. The figure of 4547%o weeks is obtained by dividing the $80 plaintiff was receiving per week into the $36,399 "actually collected” in the third-party suit.
. The figure of 585 Vs o weeks is obtained by subtracting the 4547 % o weeks which correspond to the amount "actually collected” from the 1,040 weeks plaintiff would have received payment, under this hypothetical, had he never brought á third-party action.
. We have not undertaken an exhaustive study of the workers’ compensation statutes in those jurisdictions cited by the minority opinion. It is readily apparent, however, that primarily because of the provision for "deficiency” payments contained in subdivision 4 of section 29 of the Workers’ Compensation Law, and the construction of that section by the courts (e.g., Matter of Curtin v City of New York, 287 NY 338), the reasons which may have prompted courts in other jurisdictions to apportion expenses as they have are not apropos in this State.