FOR THE RESPONDENT FOR THE INDIANA SUPREME COURT
Gordon A. Etzler Donald R. Lundberg, Executive Secretary
Hoeppner Wagner & Evans 115 West Washington Street, Suite 1165
Valparaiso, IN Indianapolis, IN 46204
SUPREME COURT OF INDIANA
IN THE MATTER OF )
) Case No. 98S00-0006-DI-390
WILLIAM K. HEFRON )
July 29, 2002
Attorney William K. Hefron agreed to represent a client on an hourly basis
to recover assets belonging to an estate. Upon learning that substantial assets
could be easily recovered, he insisted the client sign a new fee agreement
under which the respondent would receive a significant percentage of the value of
the recovered assets, as well as a percentage of the value of the
estate. For this professional misconduct, we suspend the respondent from the practice
of law in Indiana for six months.
Having been admitted to the bar in this state in 1989, the respondent
is subject to our disciplinary jurisdiction. We appointed a hearing officer, who
determined that the Commission proved by clear and convincing evidence that the respondent
violated Ind. Professional Conduct Rules 1.5(a), which prohibits attorneys from charging an unreasonable
fee, and 1.8(a), which
prohibits renegotiation of an attorney fee absent certain protections for the client. The
respondent, pursuant to Ind. Admission and Discipline Rule 23(15), filed a Petition for
Review of the hearing officers report. The Commission responded, arguing that the
respondents failure to cite to the record is fatal to his allegations of
errors in the hearing officers findings. In his reply, the respondent notes
that the Ind. Rules of Appellate Procedure do not govern briefs in disciplinary
matters, reiterates his allegations of errors, but still fails to provide consistent citations
to the record to support those claims.
Our review of disciplinary cases is de novo in nature, and we will
review the entire record presented. Matter of Tsoutsouris, 748 N.E.2d 856 (Ind.
2001). The hearing officers findings receive emphasis due to the hearing officers
unique opportunity for direct observation of witnesses, but this Court reserves the right
to make the ultimate determination. Id. Although the formal briefing requirements
within the Indiana Rules of Appellate Procedures are not binding in an attorney
discipline action, a party seeking review of the hearing officers report must present
to this Court a record, authority, and cogent argument. Matter of Cook,
526 N.E.2d 703 (Ind. 1988); Ind. Admission and Discipline Rule 23(15). Where
a party cites law or facts within the record, the party should provide
appropriate citations. Matter of Cook, 526 N.E.2d at 705.
As a preliminary matter, the respondent challenges the hearing officers appointment as a
violation of due process. He contends that the hearing officer should not
have served because he: 1) is an attorney subject to the same rules
and regulations as the respondent and 2) serves as legal advisor to the
Indiana State Police. The respondent further suggests the hearing officer was biased
because he was paid by the Disciplinary Commission and chosen from a list
maintained by the Commission. The respondent concedes Admis.Disc.R. 23(14)(a) authorized the respondent
to seek a change of hearing officer upon a showing of good cause
within 10 days after the hearing officers appointment and that he did not
seek such a change until late in the proceeding. The respondent excuses
his untimeliness by claiming the 10-day period is unconstitutionally brief.
The respondent fails to provide cogent argument or to cite to any supporting
authority, including the constitutional provisions upon which he relies. Nonetheless, we note
that hearing officers in disciplinary cases are chosen and appointed by this Court
without input from the Commission. Hearing officers are paid from Supreme Court
funds. Our rules of procedure provide that appointment of lawyers as hearing
officers in disciplinary proceedings is appropriate. Admis.Disc.R. 23(11)(b). In the context
of an attorney disciplinary action, due process requires notice and an opportunity to
be heard in a fundamentally fair proceeding. Matter of Wireman, 367 N.E.2d
1368, 270 Ind. 344 (Ind. 1977). The respondent does not specify how
the hearing officers status as a lawyer or his association with the Indiana
State Police prevented him from fulfilling impartially his duties as a hearing officer
nor does the respondent establish any other unfairness in the proceeding. Accordingly,
we reject the respondents due process claim.
We find the respondent agreed to represent a client in identifying and recovering
assets belonging to the estate of her deceased sister. The respondent initially
refused to represent the client on a percentage basis. They agreed on
March 2, 1995, to a fee of $110 per hour, with a retainer
of $2,000 to be paid in advance, but the agreement was not reduced
In March and April 1995, the respondent performed little work in the case,
but the client worked extensively to find the assets and reported all of
her findings to the respondent. On April 24, 1995, the respondent wrote
to the clients sister demanding that she return assets properly belonging to the
estate. On May 1, 1995, the respondent met with counsel for the
clients sister who assured the respondent that his client would cooperate in any
effort to identify, collect and administer assets. The respondent gave opposing counsel
a lengthy list of suspected assets derived from the clients investigation, and opposing
counsel promised a report and accounting soon.
Two days later the client met with the respondent, who presented the client
with a written contingent fee calling for a fee of 33-1/3 percent.
The client refused to consider such an agreement. The respondent revised the
fee agreement to provide for a fee of 21 percent of all assets
he recovered for the estate and, in addition, 4 percent of the value
of the estate for representing the client, as personal representative, in administering it.
The respondent told the client that he was unwilling to perform any
further work in the case without a signed contingent fee agreement because he
expected the case would go to trial and that it would be a
long and difficult battle. The client agreed to consider the contract and
left the respondents office that day without signing it. During the next
six weeks, the respondent contacted the client on several occasions and reiterated his
unwillingness to proceed with the representation absent a signed contingency fee contract.
On June 13, 1995, opposing counsel delivered a partial accounting of estate assets
which proposed that the clients sister return $236,000 in assets to the estate,
along with unvalued stock certificates and securities in 13 companies which were later
valued at slightly less than $120,000. The respondent did not inform the
client about this development until after the client signed the contingency fee agreement
and delivered it to the respondents office on June 22, 1995. On
June 29, 1995, opposing counsel provided another accounting to the respondent proposing that
the clients sister return $363,436.37 in liquid assets, plus the still unvalued stock
certificates and securities listed in the prior accounting. Opposing counsel also offered
to have the clients sister compensate the estate for any actual earned interest
and imputed interest unearned by the estate as a result of the actions
of the clients sister. Ultimately, the value of all assets listed in
that second accounting exceeded $480,000.
Also on June 29, 1995, when the estate was still an unsupervised special
administration, the respondent filed a motion seeking judicial approval of the contingency fee
contract and tendered a draft order approving the contract. The respondent did
not disclose in his motion that he already had received a draft accounting
from opposing counsel and an offer to transfer those assets to the estate
voluntarily. The probate court approved the contract on the same day without
hearing. The client was unaware the motion was to be filed, was
not given advance notice or any opportunity to attend, and was not served
with the order approving the fee agreement.
On July 21, 1995, at approximately 11:09 a.m., after the estate had been
converted from an unsupervised special administration to a supervised estate, the respondent filed
another motion seeking judicial approval of the same contingency fee contract and tendered
a draft order approving that contract. The respondent did not disclose in
his motion that later that day he was scheduled to receive from opposing
counsel all of the assets set forth in the accounting. The probate
court again approved the contract the same day the motion was filed without
a hearing. Once again, the client was not aware the motion was
to be filed and was not served with the signed order. The transfer of
assets occurred as scheduled later that day, and the respondent, in turn, delivered
the assets to the client, as personal representative for the estate.
Without any advance notice to the client or the other heirs of the
estate, the respondent on August 2, 1995, filed a motion to approve his
collection of attorney fees under the contingent fee agreement. The court granted
the motion on the same day without hearing. The order was not
served on the client or any other heirs of the estate.
Later that day, the respondent informed the client that the court had ordered
payment of $76,531.64 in attorney fees to him. That represented 21 percent
of the liquid asserts returned by opposing counsel but did not include a
percentage of the value of the unvalued stocks and securities. After seeking
advice from independent legal counsel, the client discharged the respondent. The respondent
filed a motion to withdraw and sought additional fees of $25,123.50, representing 21
percent of the value of the previously unvalued stocks and securities. The
clients new counsel objected to the fees as excessive and contrary to law.
The respondents time sheets reflected 48 hours of work performed in the
case by the respondent between the date of his hiring and the date
of his discharge.
The probate court conducted a hearing in the matter and reduced the respondents
fees to $40,000. The court also rejected the respondents claim for the
additional $25,123.50 in fees. The Indiana Court of Appeals affirmed the probate
court in a memorandum decision. Kovacich v. Hefron, case number 64A03-9907-269 (Ind.App.
We find the respondent violated Prof.Cond.R. 1.5(a) by charging an unreasonable fee.
The respondent billed the estate $101,544.14, though the matter essentially was
uncontested and he could document only 48 hours of work on the clients
Although the respondent appears to suggest that the probate court affirmed
the reasonableness of his fee, the court made a contrary finding. It
determined the respondent committed constructive fraud by failing to disclose the opposing sides
cooperation to the client before her return of the signed fee agreement.
In reducing the respondents fees to $40,000 slightly more than half of
what the respondent already had collected and less than 40 percent of what
he billed -- the probate court found:
The recovery of estate assets was ultimately not a difficult
or time consuming undertaking. At the time the contingency
contract was signed(,) Hefron then knew that he would recover
very substantial sums of money without litigation. As the matter
was a simple one, it did not preclude Hefron from undertaking
Commissions Exhibit 47, at 9-10.
We further note the amount the respondent billed was nearly 20 times more
than the $5,280 he would have received under the original fee agreement, which
called for an hourly rate of $110 per hour for the 48 hours
We have stated that a lawyer who, after entering into a contingent fee
agreement with a client, ascertains that recovery by the client will be simple
and uncontested, should renegotiate the fee, rather than accept an inflated contingency fee.
Matter of Gerard, 634 N.E.2d 51 (Ind. 1994). In this case,
the respondent, by insisting on a fee which totaled approximately 25 percent of
the value of the estate, charged an unreasonable fee in violation of Prof.Cond.R.
We further find the respondent violated Prof.Cond.R. 1.8(a) by renegotiating the fee agreement
unfairly. Prof.Cond.R. 1.8(a) provides:
A lawyer shall not enter into a business transaction with a client or
acquire an ownership, possessory, security or other pecuniary interest
adverse to a client unless:
the transaction and terms on which the lawyer acquires the interest
are fair and reasonable to the client and are fully disclosed and
transmitted in writing to the client in a manner which can be
reasonably understood by the client;
the client is given a reasonable opportunity to seek the advice of
independent counsel in the transaction; and
(3) the client consents in writing thereto.
The respondent makes two arguments in support of his claim that he did
not violate Prof.Cond.R. 1.8(a). First, he claims the contingency fee agreement was
not a business transaction with a client. He asserts the parties agreed
at the onset of the representation to two fee agreements an hourly
rate until assets were discovered and a contingency fee afterward. Therefore, the
respondent reasons, no new fee agreement was negotiated after the representation began and
Prof.Cond.R. 1.8(a) does not apply.
While the evidence as to the fee agreements was conflicting, the respondents admissions
contradict his claim that no fee agreement was negotiated after the representation began.
The respondent concedes that prior to May 3, 1995, the terms of
the fee agreement(s) had not been reduced to writing. He also
acknowledges that the client on or around May 1, 1995, rejected the respondents
insistence on a fee of one-third of the value of the estate assets
and that the terms of the contingency fee agreement were negotiated on May
The respondent further concedes he billed at an hourly rate for the first
two months of the representation but later refunded those fees after seeking payment
pursuant to the contingency fee agreement. Such actions suggest that the contingency
fee agreement was a substitute for, not a supplement to, the hourly billing
The probate court, in determining that the contingency fee agreement was the result
of undue influence by the respondent, found that (t)he contingency fee arrangement and
contract was suggested, prepared, negotiated and finally signed while an attorney-client relationship existed.
Commissions Exhibit 47, pp. 7-8. We find the evidence in this
case supports that finding and conclude the respondents negotiation of the contingency fee
agreement with the client constituted a business transaction to which Prof.Cond.R. 1.8(a) applies.
The respondent also asserts that the transaction was fair to the client and,
therefore, not prohibited by Prof.Cond.R. 1.8(a). He contends the fee agreement negotiations
were concluded on May 3 and that as of that date, only one
specific asset an $84,000 bank account had been identified. The
respondent also claims the opposing sides cooperation was uncertain until he received the
letter and accounting from the opposing counsel on June 29, 1995 a
week after he received the signed fee agreement from the client. He
claims his refusal to perform any further work in the case until the
client signed the contingency fee agreement was not an attempt to coerce the
client but, rather, his diligent effort to comply with Prof.Cond.R. 1.5(c), which requires
that contingency fee agreements be reduced to writing.
The evidence establishes that the respondents motivation for his renegotiation of the fee
agreement was his own pecuniary gain and that he withheld information from both
the client and the probate court in his effort to procure his unreasonable
fee. The respondent insisted on an hourly rate when recovery was not
assured but coerced his client into acquiescing in a contingency fee agreement once
the likelihood of a substantial recovery arose. Though the opposing side on
May 1, 1995, pledged its cooperation and promised a full accounting, the respondent
represented to his client on May 3 that litigation was likely. In
fact, the respondent did not inform the client of the opposing sides cooperation
until after the client returned the signed fee agreement on June 22, 1995.
The respondent also omitted essential facts when he petitioned the probate court
for approval of the fee agreement and his fee. The probate court
ruled that the respondent did not disclose the circumstances relating to or existing,
concerning the execution of the attorney fee contract, collection of assets or administration
of the estate. . . including that opposing counsel was scheduled to
deliver estate asserts to the respondent later that day. Commissions Exhibit 47,
p. 5. This evidence establishes that both the contingency fee agreement and
the circumstances under which it was negotiated and approved were unfair. Indeed,
they amount to a clear violation of Prof.Cond.R. 1.8(a).
Even if the terms of the renegotiated fee agreement were fair and fully
disclosed in writing as Prof.Cond.R. 1.8(a) requires, the respondent nonetheless did not give
his client a reasonable opportunity to seek the advice of independent counsel in
Having found misconduct, we must now assess an appropriate discipline for it.
The respondents insistence on an unreasonable fee negotiated unfairly led to additional court
proceedings and, ultimately, an appeal. He omitted or misrepresented essential facts in
his presentations to his client and the probate court to secure the unreasonable
fee. Where an attorney has obtained a more lucrative fee agreement through
fraud, we have determined that a suspension from the practice of law is
appropriate. Matter of Thayer, 745 N.E.2d 207 (Ind. 2001). Accordingly,
the respondent, Willaim K. Hefron, is hereby suspended from the practice of law
in this state for six months, effective September 7, 2002, after which he
shall be automatically reinstated.
The Clerk of this Court is directed to provide notice of this order
in accordance with Admis.Disc.R. 23(3)(d) and to provide the clerk of the United
States Court of Appeals for the Seventh Circuit, the clerk of each of
the United States District Courts in this state and the clerks of the
United States Bankruptcy Courts in this state with the last known address of
respondent as reflected in the records of the Clerk.
Cost of this proceeding are assessed against the respondent.
In determining the reasonableness of a fee, we consider the following:
the time and labor required, the novelty and difficulty of the
questions involved, and the skill requisite to perform the legal
the likelihood, if apparent to the client, that the acceptance of
the particular employment will preclude other employment by the
the fee customarily charged in the locality for similar legal services;
the amount involved and the results obtained;
the time limitations imposed by the client or by the circumstances;
the nature and length of the professional relationship with the client;
the experience, reputation, and ability of the lawyer or lawyers
performing the services; and
(8) whether the fee is fixed or contingent.
The respondent testified that he typically did not record hours worked in
contingent fee cases. He also asserted that the hourly billings he submitted
to the client for work on her behalf in March and April 1995
were not complete that he performed additional, unspecified, undocumented work on behalf
of the client. He did not explain why he submitted a written
bill to her detailing hourly charges for part of his work in that
two-month period but failed to note or charge her for other work.