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!

ICLEF Law Tips this week brings you a few pointers from one of our faculty concerning Evidentiary Matters in Civil Cases.  The CLE from which this article is drawn is “Developing Skills In The Practice of Law,” an important annual ICLEF program geared toward newer lawyers. This 2011 practice skills seminar included a presentation by J. Todd Spurgeon of New Albany entitled “Discovery Strategies & Evidentiary Matters Pertaining to Civil Cases,” which he has allowed us to use once again in this format.  Todd is a partner with Kightlinger & Gray in New Albany, Indiana and concentrates his practice in insurance defense litigation, products liability and administrative law.

Selecting portions of Todd’s CLE materials to include here wasn’t easy as it is all relevant and provides important insight from his experienced standpoint.  So, I had to just do it.  Hopefully, these brief excerpts will serve as pointers for those relatively new to the Rules of Evidence, as well as a healthy review for the closer-to-gray-haired readers.  Here are two segments from within the portion of Mr. Spurgeon’s materials that he calls “Evidentiary Basics at Warp Speed.”

Article IV – Relevancy and Its Limits

…This section of the rules is where creative thinking comes in handily. If something is not admissible for one purpose, it may be admissible for another.

Rule 403 – Prejudice, Undue Delay, Confusion

Rule 403 attempts to level the playing field. It dictates that even relevant evidence can be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, misleading the jury, or by considerations of undue delay or needless presentation of cumulative evidence. Again any probative value must be substantially outweighed, and this is sometimes a high hurdle. As Derrick Wilson says, “Any good lawyer wants evidence which is prejudicial and highly inflammatory because that is the kind of evidence that gets the jury to resolve cases in your favor.” An example of evidence covered under 403 would be whether someone was driving drunk when they injured someone. If there is no punitive damages claim, and liability was admitted, then whether or not the defendant was drinking may be unfairly prejudicial to the defendant.

Rule 403 is almost always used in conjunction with other rules of evidence when making objections to the admissibility of certain items, usually as a catch-all objection.

Rules 404-413 – Guidelines for Specific Types of Evidence.

These rules give guidelines for specific types of evidence that are susceptible to misuse if not controlled by the court. These rules are used quite often in my practice and my standard motion in limine includes many of them. Most of the rules are self explanatory. However, Rule 413 has become a hot button as of late in the personal injury arena. In order to recover for medical expenses, a plaintiff must show that expense was reasonable and that the treatment was necessary. Rule 413 does not specifically mention medical treatment and necessity. However, in Sibbing v. Cave, 922 N.E.2d 594 (Ind. 2010), the Indiana Supreme Court essentially added in those words in practice. The court severely restricted a defendant’s ability to contest whether the medical treatment claimed was necessary.

 Article IX -  Authentication

Although generally used less than other articles of the rules of evidence, Article IX has some important applications. The general rule for authentication is that there must be evidence sufficient to support a finding that the matter in question is what its proponent claims. For example, medical records, phone records, and corporate records need to be authenticated before they are admissible. Also, photos, surveillance video, audio recordings, and other similar items must also be authenticated under this article.

Most civil trials will involve photos of some sort. The rule to remember with photos is merely that the witness must establish that the photograph is a true and accurate representation of what it is meant to portray. Simply asking the witness a question such as “Is Exhibit A a true and accurate depiction of the intersection as it appeared on that day?” is generally sufficient.

With respect to audio and video recordings, generally speaking, there has to be an identification of the voices; the evidence must be admissible on its own merits; and the tape recording must be reasonably clear for the trier of fact to be able to understand the substance of the conversation. Brief portions that become inaudible due to static interference and background noise, but which do not affect the underlying testimony may not be sufficient to exclude the evidence. See, Kidd v. State, 738 N.E.2d 1039 (Ind. 2000).

Authentication will become increasingly important in the age of emails, text messages, and computer imaging. Authentication is crucial due to the relative ease with which these types of records can be created, altered, or manipulated. See, Zitter, Authentication of Electronically Stored Evidence, Including Text Messages and E-mail, 34 ALR 6th 253 (2008).

The Indiana Court of Appeals has held that text messages stored in a phone must be separately authenticated if they are to be offered for a testimonial purpose. Even though we have determined that a text message stored in a cellular telephone is intrinsic to the telephone, a proponent may offer the substance of the text message for an evidentiary purpose unique from the purpose served by the telephone itself. Rather, in such cases, the text message must be separately authenticated pursuant to Indiana Evidence Rule 901(a). Hape v. State 903 N.E.2d 977, 990-991 (Ind. Ct. App. 2009). Hape also includes an example of how to authenticate a cell phone itself. A case which dealt with computer data authentication is Bone v. State, 771 N.E.2d 710 (Ind.Ct.App.2002).

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The above advice provides examples of the valuable information contained in Todd Spurgeon’s CLE presentation on discovery and evidence in civil cases.  A flavor of additional topics  on which he shared his expertise is hearsay, privileges and expert testimony in the evidentiary area and interrogatories, sanctions and subpoenas in the discovery area.  The “Developing Skills In The Practice of Law” CLE includes a plethora of information from knowledgeable attorneys and jurists; everything from appellate legal writing and ADR to Tax Law and Business Transactions.  If you have interest in the seminar manual that includes the full content of Mr. Spurgeon’s advice as well as the 18 additional faculty, please Click Here.

Thank you for visiting ICLEF’s Law Tips blog.  We wish you success in your evidence and discovery matters.  If you have comments or suggestions on topics or anything ICLEF-related, please let us hear from you at www.facebook.com/ICLEF.

If you are a new or young lawyer and wish to learn more about evidentiary matters and developing trial skills, please Click Here for the Trial Advocacy Skills College, March 15-18, 2012, 28 CLE / 3 E, Indianapolis, IN

Law Tips – Jury Psychology

Our Law Tips this week shares some interesting insights from Dr. Eric Rudich, Senior Litigation Consultant at Magna Legal Services, New York, NY, who participated in the 2011 Midwest Intellectual Property Law Summit.  As an expert in jury psychology, he specializes in identifying powerful themes and arguments, developing persuasive visual graphics, creating sophisticated juror profiles and preparing witnesses.  Dr. Rudich has developed a unique niche of advising investment clients on jury trials that have market significance for publicly-traded litigants. On behalf of these clients, he has conducted jury research and monitored the trials of over 20 patent cases.

His ICLEF presentation at the Intellectual Property Summit gave some powerful recommendations on conducting research, developing strategies and profiling jurors that could be of value beyond the patent practice area. To compliment his CLE he provided a reprint of an article he wrote for the January/February 2011 issue of Landslide, a publication of the ABA Section of Intellectual Property Law entitled “Litigation strategies that win or lose patent jury trials.”   In this article he notes that “although the subject matter in these trials is complicated and tedious, there are strategies that enable attorneys to prevail in patent cases.”  I am including an excerpt that addresses how vital it is to understand how jurors make decisions based on complex information.

Juror Decision-Making in Patent Trials

To understand the information-processing strategies of patent jurors, the Elaboration Likelihood Model (ELM) provides a theoretical model of persuasion that is used for understanding how individuals make decisions based on complex information.viii The ELM has been significantly researched in communication studies and social psychology and offers insight into ways in which individuals process information after being exposed to persuasive arguments during trial.

According to the model, there are two distinct and mutually exclusive information-processing pathways that people use when making decisions. Which one of the two pathways used by an individual is determined by the complexity of the information presented and the ability of the message recipient to comprehend the message. xi When individuals have the ability to understand and scrutinize a message, they form their verdict decisions by what is known as the central route for decision-making. This describes decisions characterized by careful, deliberate, and rational thinking and requires for the decision-maker to carefully scrutinize the content of the message. x   In a patent case, this would necessitate jurors to rationally consider the invention, patent language, infringement, validity defenses, claim constructions and other court instructions. Litigators typically seek to deliver the types of evidence and arguments that facilitate this careful and rational approach to verdict decisions in patent cases.

The model also instructs that when complex information is presented, people make verdict decisions without scrutinizing the message. Such a superficial thought process is referred to as the peripheral route of decision making. Under these conditions, a complex message is not only evaluated on its merits, but is also assessed based on surface characteristics otherwise known as peripheral cues.xi  A peripheral cue refers to information that is tangential to the message, for example, the   witnesses’ credibility, credentials or demeanor.

Based on the model, jurors will use both the central route and peripheral route for making verdict determinations. Although most jurors do their best to comprehend the technology and law, their limited expertise in the technology and patent issues leads them to rely heavily on peripheral cues for making infringement and validity verdict decisions. While it is critical to educate jurors about the technological and legal issues, these peripheral cues provide insight into how jurors make verdict decisions in patent cases.

In conclusion Dr. Rudich addresses how important it is that attorneys remain courteous and respectful of witnesses in order to have the greatest impact on the jury.  And lastly, that the difference between winning and losing is often related to the attorney’s use of peripheral cues to their advantage.  Perhaps this advice could be applied to any negotiation or persuasion situation in our lives.

Thanks again to Dr. Eric Rudich for his contribution as an ICLEF faculty member.

If you wish to take advantage of the full presentation of the 2011 Midwest Intellectual Property Law Summit, Click Here for the Online / On Demand Video. An ICLEF Video Replay is scheduled for February 10, in New Castle, Indiana - Click Here for more information or to register. You may also purchase the E-Publication of the 2011 Midwest Intellectual Property Law Summit by Clicking Here.

Another opportunity for CLE in this area:
INTELLECTUAL PROPERTY VALUATION: Manner, Methods, Litigation, Enhancing Value & Portfolio Development
6 CLE – Live In-Person, Live Individual Webcast & Live Group Webcasts Available
Thursday, February 23, 2012
ICLEF Conference Facility, Indianapolis, IN

Click Here for additional info or to register for the Live In-Person or Live Group Webcasts
Click Here for additional info or to register for the Live Individual Webcast

This week’s Bankruptcy Law topic features a CLE presentation during ICLEF’s 2011 Annual Bankruptcy Institute by Sally J. O’Connor of the Law Office of Mark Zuckerberg, Indianapolis. Sally’s presentation entitled, “Emerging Issues, Quirky Tips and Bankruptcy Tidbits offered timely updates for any lawyer with bankruptcy-related matters.  She alerts her colleagues to the shifting landscape in bankruptcy practice, including trusts, same-sex marriages, Chapter 13, FMV Credit, Liens, IRAs and other areas. Overall, she summarizes the significant impact from recent cases as follows:

•  Balance between the rights of debtor and trustee have shifted in trustee’s favor;

•  Opportunity for malpractice by debtor’s counsel has increased;

•  Debtors’ assets remain at risk as long as they remain in bankruptcy estate;

•  Assets will remain in estate until trustee formally abandons them or until they are abandoned by operation of law when case is closed;

•  Claiming exemption labeled as “100%”, “unknown” or “to be determined” is not a fail safe way to protect an asset

Here are two excerpts relating to trust issues that give some insight into the recent developments:

Funeral Trusts in Indiana

The pre-payment of funeral expenses by virtue of an irrevocable funeral trust is becoming more common as individuals attempt to simplify the burial process and avoid placing a financial burden on their family members. Funeral trusts in Indiana are specifically governed by Ind. Code § 30-2-9- 1.5 et seq. and  § 30-2- 10- 1 et seq. See also Ind. Code 30-2- 13 et seq. The entire value of an irrevocable trust or an escrow established under Ind. Code § 30-2-13-12.1 may not be considered as a resource in determining a person’s eligibility for Medicaid under Ind. Code § 12- 1 5-2- 1 7. Consequently, a client contemplating relocation to a nursing home or retirement facility may consider pre-paying his funeral expenses. Indiana Code § 30-2-10-3 sets forth that such a trust must be irrevocable; have only one settler; names as trustee an Indiana institution qualified under section 2 of this chapter and requires that all funds be deposited in that institution; names a funeral home, licensed under Ind. Code § 25-15, as sole beneficiary; and is accompanied by a written contract between settler and beneficiary as provided in section 5 of this chapter. Indiana Code § 30-2-10-5 requires the contract to be in writing and contain, at a minimum, twelve delineated requirements which must be met in order for the contract to be valid.

An attorney faced with a client who has a funeral trust fund must take care to verify the validity of the irrevocable trust. If all requirements are not met under Ind. Code § 30-2-10 et seq., the bankruptcy trustee may be able to seize the assets of the funeral trust and liquidate said assets for distribution to the debtor’s creditors.

Exemptions in Property Held in Revocable Trusts

Whether or not a debtor can claim the homestead exemption for real estate held in a revocable trust for the benefit of the debtor is still in question in Indiana. However, a few Courts have found in favor of allowing the exemption.

In re Kester, the Tenth Circuit Court of Appeals held that a beneficial interest in a self settled revocable trust to which the debtors had transferred their residence was a sufficient equitable interest to qualify for a homestead exemption under state law.
–In re Kester, 493 F.3d.1208,2007 WL 19821 54 (1 oth Cir. July 10,2007). See also, In re Szwyd, 370 B.R. 882 (lSt Cir.BAP 2007), a favorable decision from the First Circuit.

The Bankruptcy Court for the Middle District of Florida is also in favor of allowing the exemption if certain conditions are met: 1) the debtor has the intent to make the real property his or her homestead; 2) the debtor actually maintains the property as his or her principal residence; and 3) the debtor has a legal or equitable interest that gives the debtor the legal right to use and possess the property as a residence.
–In re Cocke, 371 B.R. 554, 556-557 (Bankr. M.D. Fla.2007). In re Cocke, the debtors were the grantors of the trust, had the right to revoke the trust at any time, and the trust granted them the same rights as anyone holding fee simple title. The Court found that the debtors had met the conditions and were entitled to claim the homestead exemption.

A different result was reached, however, by the Bankruptcy Court for the Middle District of Florida in a case where title to the real property at issue was held by a limited partnership. In that case, the limited partner was a trust, the limited partner held 100% of the stock of the general partner, and the debtor was the sole beneficiary of the trust.
–In re Steffen, 391 B.R. 874, (Bankr.M.D. Fla. 2008), affirmed. In re Steffen, 405 B.R. 486 (M.D. Fla. 2009).

Similarly, an Arizona Court ruled that the debtors could not claim the Arizona homestead exemption in property where debtors had transferred title of the property to a limited partnership, even though the debtors held 100 percent in the partnership.
– In re Lyle, 355 B.R. 161 (Bankr. D.Ariz. 2006).

Thanks again to Sally O’Connor, contributing authors Amy Baker and Amanda Quick, and all our faculty who continue to provide cutting edge education for lawyers.

Follow this blog for the weekly “Law Tips” filtered from the volumes of ICLEF publications.   Any topic suggestions?  Comments and questions are welcome at www.facebook.com/ICLEF.