Indiana Continuing Legal Education Forum (ICLEF)

Welcome to ICLEF.org. Below is the eighth installment of our newest blog ICLEF Law Tips. Written on a weekly basis by Nancy Hurley, you will find all sorts of gems pulled from some of our most recent CLE seminars. Please visit us a weekly basis to find new legal blogs and CLE seminars from ICLEF. To read all of our Legal Tips blogs Click Here.

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The ICLEF Law Tips blog this week brings you some thoughts on “Attorney Fees; Reasonable and Otherwise.”  We are pleased at ICLEF to partner with the Indiana Disciplinary Commission in producing the “Trust Accounts Made Easy” CLE program that includes pertinent advice from Seth Pruden.  As a member of the Disciplinary Commission litigation staff, Pruden investigates and prosecutes violations of the Indiana Rules of Professional Conduct for Lawyers. He lectures extensively on legal ethics and Trust Account Management. We are going to look inside Seth’s segment on attorney fees presented during the above CLE. Wait, you say: “My fees are always within the Rules of Professional Conduct.  Don’t need to read any further.”  Of course, the majority of Indiana lawyers make reasonable, ethical decisions as to attorney fees.  But….might this be an area in which all practitioners could benefit from a few moments of refresher or update?    If you think so, let’s look briefly at examples that Seth presented as unreasonable fees.

First, as introduction, Seth reminds attendees of Indiana Professional Conduct Rule 1.5(a) that requires that an attorney fee be reasonable, and lists several factors to be taken into consideration. There are eight factors familiar to most attorneys listed in the rule that can be found at the Indiana Disciplinary Commission’s website: http://www.in.gov/judiciary/rules/prof_conduct/

Seth also provides this alert: “Although these factors may be a useful guide to determine the reasonableness of a lawyer’s fee, evidence on each factor is not required to determine whether a lawyer’s fee is reasonable. See, Shell Oil Co. v. Meyer, 684 N.E.2d 504 (Ind. App. 1997). In fact, charging and collecting excessive legal fees may be professional misconduct without there being any evidence of the enumerated factors. See Matter of Gerard, 634 N.E.2d 51 (Ind. 1994).”

His presentation covered a wide-ranging list of examples where attorneys made poor decisions in matters of fees and were then subject to disciplinary action.  Included here are selections that might offer some guidance in the event a question arises and you need a point of reference.

Your fee might be unreasonable if …

you charged your client a contingency fee for a simple uncontested matter.
Matter of Gerard, 634 N.E.2d 51 (Ind. 1990), that a lawyer may have a duty to renegotiate his fee in a contingency matter if it becomes apparent that representation of the client involves a simple, uncontested matter. Respondent was hired by an elderly woman to recover her money from various bank accounts that she believed had been lost or stolen. They agreed the lawyer would receive one-third of all the assets recovered.  After he entered this agreement with his client, the Respondent learned that the money was all safely deposited in accounts at the proper financial institutions with a value of more than $450,000. The lawyer claimed his one-third contingency fee in these assets.

The Court found that the lawyer’s “actions in identifying and collecting the certificates were largely administrative in nature and required no specific legal skill.” Id. at 53. The Court held that the lawyer’s fee was excessive in violation of former Ind. Code of Professional Responsibility Disciplinary Rule 2-105(A). The Court concluded: “Respondent’s acts in securing the inflated fee represent greedy overreaching. His proper course of action would have been to renegotiate his fee after it became apparent that collection of [his client's] assets was a simple, uncontested matter.” Id. At 54.

you charge a fee greater than that allowed by law.
Matter of Benjamin, 718 N.E.2d 11 11 (Ind. 1999). The lawyer agreed to represent a client in a medical malpractice case for a fee of 40% of any recovery. The medical provider agreed to settle the case with the injured party for $100,000, the maximum liability of the medical provider under the Indiana Medical Malpractice Act. The settlement was for the medical provider to pay the injured party an initial payment of $50,000, with the remaining $50,000 to be paid in structured payments over several years. When the injured party’s lawyer received the initial payment of $50,000, the lawyer retained $40,000 as his fee and forwarded $10,000 to his client. The Indiana Supreme Court concluded that the lawyer’s retention of “his entire contingency fee from the first settlement payment amounted to exacting an unreasonable fee.” Id. At 1113.

you kept a fee greater than the agreed amount.
Matter of Galanis, 744 N.E.2d 423 (Ind. 2001) (, represented a client in a personal injury matter. The lawyer and client agreed that the lawyer would represent the client for a contingent fee of 40% of the gross recovery, and the client would pay an additional 10% of the gross recovery if the matter was appealed. A jury returned a verdict for $250,000 for the client. The defendant filed a motion to correct errors in which she claimed that the damages awarded by the jury were excessive. The defendant’s insurance coverage was limited to $100,000. The trial court denied this motion. However, the lawyer began investigating whether the defendant had any assets from which he could collect the excess judgment directly from the defendant. The lawyer determined that the defendant was judgment proof. That led the lawyer to investigate whether the defendant might have grounds for a claim against the defendant’s insurer for bad faith and seeking an assignment from the defendant to pursue the bad faith claim against the defendant’s insurer. The lawyer discovered that the defendant had a factual basis for a bad faith claim against the insurer but did not receive the assignment or pursue the bad faith claim against the defendant’s insurer. In the end, the lawyer negotiated a settlement with the defendant’s insurer for $200,000. At the time of disbursing the settlement funds to his client, the lawyer claimed and received $100,000, or 50% the total settlement, as his fee. The $100,000 attorney fee was $20,000 more than the fee the lawyer was entitled to under his fee agreement with his client.

The Indiana Supreme Court held that the lawyer violated Prof: Cond. R. 1.5(a) by charging an unreasonable fee. The Court explained: “Where there is a written fee agreement specifying the amount of legal fees the client will pay, an attorney’s retention of a fee greater than that specified in the agreement is strongly indicative of an unreasonable fee.” Id. At 424.

……The above cases are a sample of the valuable presentation by Seth Pruden and his fellow Indiana Disciplinary Commission staff attorney, Angie Ordway, covering these and other trust-account-related issues for “Trust Accounts Made Easy.”  The additional ICLEF faculty member for this CLE  is Chuck Dunlap, Executive Director of the Indiana Bar Foundation, who contributes key information in the area of  the  IOLTA Trust Account program.

The ICLEF CLE Seminar“Trust Accounts Made Easy”  walks through the management of trust accounts with you, using forms and other applicable tools provided in the materials.  To see a Video Replay, Online/On Demand Seminar, or Publication for Trust Accounts Made Easy, Click Here.

Thank you again to the ICLEF faculty for this important presentation for Indiana lawyers.  Come back to “Law Tips” for more clips from our speakers. Let us know what you think about our blog or other ICLEF matters at www.facebook.com/ICLEF.   We are listening!

Case: Zuri K. Jackson v. Demetrius Holiness
Case Summary by Mike Kohlhaas, Bingham Greenebaum Doll
(with thanks to Kathleen Rudis) 

HELD:  The Indiana Court of Appeals held that the trial court did not err when it dismissed Mother’s petition to modify child support for lack of subject matter jurisdiction.  The Court found that Mother’s contention that the federal Full Faith and Credit for Child Support Orders Act preempts the Indiana statute based on the Uniform Interstate Family Support Act must fail given a contrary holding by the Indiana Supreme Court.

FACTS AND PROCEDURAL HISTORY: Mother and Father were married in 1995 in Indiana.  They had two children together. They were then divorced in 1996 in Nevada, with the Nevada dissolution decree including a child support order.  Mother and the children then moved back to Indiana, and Father moved to Maryland.

In 2002, Mother completed the necessary paperwork under the UIFSA to have the decree registered in Maryland.  In 2004, the Maryland court entered a consent order approving the parties agreement to increase child support.

In April, 2009, Mother filed her petition for modification of child support with the Allen County, Indiana, Circuit Court.  Father, who continued to reside in Maryland during that time, filed a motion to dismiss for lack of personal jurisdiction under Trial Rule 12(B)(2).  The trial court dismissed Mother’s petition for lack of subject matter jurisdiction. Mother filed a motion to correct error, which the trial court denied. This appeal ensued.

The Court noted that while Mother was a resident of Indiana, the parties had not filed a consent with the court having continuing jurisdiction under UIFSA to transfer jurisdiction to the Indiana court.  Thus, the Court found that under the statute, an Indiana court could not have subject matter jurisdiction to modify the child support order.

Mother contended that the FFCCSOA  preempted the Indiana statute based on the UIFSA because the Indiana Act does not impose a non-residency requirement.  However, the Indiana Supreme Court has previously held that the FFCCSOA does not preempt UIFSA, as “[t]he very fact that Congress mandated that all fifty states adopt UIFSA strongly mitigates against construction of FFCCSOA that would impliedly preempt UIFSA to any degree.”

Although Mother did not prevail in this appeal, the Court paused to note what it found to be an incongruity in the statutory scheme.  Relevant to this case, the Court discussed that Indiana may modify an out-of-state child support order only if neither the child nor either parent lives in the issuing state, the person seeking modification is a non-resident of Indiana, and the person against whom modification is sought is subject to personal jurisdiction in Indiana.  However, the Court found that because the incongruity between the statutory sections is a legislative matter, it must conclude that the trial court did not err in dismissing Mother’s petition to modify because she is not a non-resident petitioner as required by Ind. Code Section 31-18-6-11.

In sum, the trial court did not err when it dismissed Mother’s petition to modify child support for lack of subject matter jurisdiction.

OUTCOME: Affirmed.

To view the text of this opinion in its entirety, click here: Zuri K. Jackson v. Demetrius Holiness

Written by Marty Latz, Latz Negotiation Institute

Kellogg announced today it is buying Procter & Gamble’s Pringles business for $2.7 billion. Last April, Diamond Foods outbid Kellogg and signed a deal with P&G to buy Pringles for $2.4 billion in a mostly stock-based transaction. That deal was derailed by an accounting scandal at Diamond, which last week was forced to restate earnings for the past two years.

While Kellogg couldn’t compete with Diamond’s original offer because of tax savings generated by how it was structured, once that deal fell through, Kellogg swooped back in. From a negotiation perspective, two important lessons can be learned. First – be prepared. Kellogg could have given up and moved on ten months ago but they clearly were ready to strike when the Diamond deal fell through.  Second – leverage is fluid and timing is critical. By moving quickly, Kellogg took advantage of their improved leverage and reached an agreement with P&G before other potential bidders could get involved.

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Marty Latz is the founder of Latz Negotiation Institute, a national negotiation training and consulting company, and ExpertNegotiator, a Web-based software company that helps managers and negotiators more effectively negotiate and implement best practices based on the experts’ proven research.  He is also the author of Gain the Edge! Negotiating to Get What You Want (St. Martin’s Press 2004). He can be reached at 480-951-3222 or Latz@ExpertNegotiator.com

Tips for Managing Risk
Written by Marty Latz, Latz Negotiation Institute

Concerned that you may not be able to trust your negotiation counterpart to follow through on their promises?

Here are four ways to minimize your risk:

1. Evaluate the risk of trusting your counterpart

The bigger the deal and the greater the risk, the more you will want to do more than just blindly trust your counterpart.

2. Research your counterpart’s reputation

Find out if they or their organization are subject to some independent oversight, like having to be licensed (like doctors and lawyers), registered with an oversight agency (like many contractors), and/or a member of the Better Business Bureau.  Search out their online presence, too, like on LinkedIn, etc. And take the time to follow up on recommendations and references. Find out what others’ experiences with them have been.

3. Give your counterpart reasons to follow through

Positively incentivize them to perform and fulfill their commitments and take away their possible incentives to breach, which could involve requiring up-front payments, using escrow agents and using signed, enforceable contracts with liquidated damages clauses.

4. Don’t put all of your eggs in one basket

Finally, even with all the ways you can try to protect yourself in any one deal, sometimes it might just go south. So, protect yourself by ensuring you have a decent alternative if your deal goes in that direction. Otherwise your leverage in that negotiation will be weak. Bottom line – diversification is almost always good.

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Marty Latz is the founder of Latz Negotiation Institute, a national negotiation training and consulting company, and ExpertNegotiator, a Web-based software company that helps managers and negotiators more effectively negotiate and implement best practices based on the experts’ proven research.  He is also the author of Gain the Edge! Negotiating to Get What You Want (St. Martin’s Press 2004). He can be reached at 480-951-3222 or Latz@ExpertNegotiator.com