FOR THE RESPONDENT
1000 East 80th Place
Suite 502 North
Merrillville, IN 46410
FOR THE INDIANA SUPREME COURT DISCIPINARY COMMISSION
Donald R. Lundberg, Executive Secretary
Dennis K. McKinney, Staff Attorney
115 West Washington Street, Suite 1165
Indianapolis, IN 46204
IN THE MATTER OF ) ) CASE NO. 45S00-0109-DI-402 ROBERT E. STOCHEL )
The parties agree that: (1) the respondent and the referring attorney were not
members of the same firm; (2) the payment was neither proportional to the
services performed by each attorney nor pursuant to a written agreement with the
client under which each attorney assumed joint responsibility for the representation; and (3)
the client was neither advised of nor consented to the division of the
fee. The parties concede that other than his initial consultation with the
client, for which he received a fee of $250, the referring attorney had
no other contact with the client or the litigation. The client ultimately
sued the respondent and the claim was settled by the respondent paying the
client the amount paid to the referring attorney. We find that the
respondent violated Prof.Cond.R. 1.5(e).
Professional Conduct Rule 1.5(c) requires that contingent fee agreements be in writing and state the method by which the fee is to be determined. Professional Conduct Rule 1.5(b) requires the basis or rate of a fee be communicated, preferably in writing, to a client that the attorney does not regularly represent. We find that the respondent, by failing to reduce his contingent fee agreement with the client to writing and by failing to communicate the rate or basis of the fee to his client, violated these provisions.
We also find that the respondent violated Prof.Cond.R. 1.5(a), which prohibits an attorney from charging an unreasonable fee. The fee agreement called for the respondent to receive a contingent fee of 40%, yet upon receipt of the first payment, the respondent retained in excess of 83% of the funds received as his fee. Though in the end the respondents fee represented only 40% of the total settlement, the respondent initially denied the client of the use and benefit of funds he was entitled to receive. The respondents collection of over 80% of the initial settlement proceeds was contrary to the parties agreement and unreasonable. In a similar case, where the contingent fee agreement called for a total fee of ten percent (10%), we found that the retention of $50,000 from initial payments totaling $100,000 in a structured settlement totaling $550,000 was unreasonable. Matter of Myers, 663 N.E.2d 771 (Ind. 1996). Absent a contrary written agreement between the lawyer and the client, attorneys fees should be taken only as settlement proceeds are received. Restatement (Third) of the Law Governing Lawyers, Section 35(2) (providing that Unless the contract construed in the circumstances indicates otherwise, when a lawyer has contracted for a contingent fee, the lawyer is entitled to receive the specified fee only when and to the extent the client receives payment.).
Having found misconduct, we must now assess the appropriateness of the agreed sanction, a public reprimand. It is clear that the respondents failure to reduce the terms of the contingent fee arrangement to writing led to the confusion regarding the payment of his fee. This failure also was responsible for the client not knowing or consenting to a division of the attorney fees. As we have noted previously:
Lawyers are obligated to act with an allegiance to the interests of their clients. Most clients must pay lawyers engaged in private practice for their services, thus creating a risk of conflicting economic interests. Lawyers almost always possess the more sophisticated understanding of fee arrangements. It is therefore appropriate to place the balance of the burden of fair dealing and the allotment of risk in the hands of the lawyer in regard to fee arrangements with clients.
Myers, 663 N.E.2d at 774.
Because we favor agreed resolutions of disciplinary charges, we accept the parties agreed sanction of a public reprimand. However, we note that in the future it will be appropriate in such cases to impose greater sanctions, including, but not limited to, restitution to the client of the economic value of the loss of the use and benefit of funds rightfully belonging to the client.
The respondent, therefore, is hereby reprimanded and admonished for the misconduct set out above.
The clerk of this Court is directed to provide notice of this order in accordance with Admis.Disc.R. 23(3)(d) and the hearing officer in this matter, 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 clerk of each of the United States Bankruptcy Courts in this state with the last known address of the respondent as reflected in the records of the clerk.
Costs of this proceeding are assessed against the respondent.
DICKSON, SULLIVAN, BOEHM and RUCKER, JJ., concur.
SHEPARD, C.J., concurring. I have voted to approve this sanction only because it comes to us in the form of an agreement. If it came to us as a litigated case, I would vote for a suspension.