September 30, 2011
Exploitive Contingent Fee Results In Suspension
The Indiana Supreme Court has imposed a suspension of at least 120 day for "misconduct by collecting a clearly unreasonable and exploitive fee." Reinstatement is not automatic.
The attorney was newly admitted when he was approached by the client. The client, through other counsel Ross, had settled a personal injury case. A trust was established with Ross as trustee. The trust was intended "to preserve [the client's]eligibility for public assistance and to prevent rapid depletion by [the client's abusive, substance abusing boyfriend]."
The client (under pressure from the abusive boyfriend) later wanted access to the trust money. Respondent agreed to take the case on a contingent fee basis.
Ross immediately agreed to resign as trustee and have respondent appointed as sucessor trustee. After the transition, the attorney paid himself one-third of the funds held in trust, nearly $15,000. The client got nearly $30,000, which presumably is now spent.
The court emphasized that a contingent fee is not unreasonable "every time a case turns out easier or more lucrative than contemplated by the parties at the outset." Further, a fee that is not unreasonable at the outset may become unreasonable in light of developments.
...Respondent may have reasonably believed at the outset that removing Ross as trustee would be contested (despite documentation indicating Ross was willing to step aside in favor of a qualified successor). He may have even reasonably questioned the amount of money in the trust upon which his fee would be calculated and collected (despite documentation that $42,500 had been deposited in it just a few months earlier). But within two or three days, Ross agreed to resign as trustee in favor of Respondent, and Respondent had assumed control over the trust, knew the balance in the trust account, had gained access to those funds, and had cut himself a check for his fee. At this point, he knew the case did not involve any complex issues, prolonged time commitment, risk of no recovery, or even any opposition.
Respondent was not remorseful, made misrepresentations and "took an indifferent attitude" towards his vulnerable client and her situation, among other aggravating factors. The client's vulnerability seems to have been a particularly significant factor to the court. (Mike Frisch)
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