Vol. 59, No. 2
OPINION NO. 3 OF 2015 – DEPOSITING FLAT FEES: IN A LAWYER’S TRUST OR OPERATING ACCOUNT? BANKRUPTCY CASE UPDATE WORDWISE: WRITING CONCISELY CONCLAVE EXAMINES EXPERIENTIAL LEARNING
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The Journal of the Indiana State Bar Association
RES GESTÆ September 2015
16 FLAT FEE
20 MIDYEAR REVIEW EDITOR Susan J. Ferrer firstname.lastname@example.org
WRITTEN PUBLICATIONS COMMITTEE CO-CHAIRS Joseph M. Pellicciotti William A. Ramsey email@example.com
PRESIDENT’S PERSPECTIVE Jeff R. Hawkins, Sullivan, 2014-2015
BANKRUPTCY & CREDITORS’ RIGHTS
FROM THE DESK OF DEAN PARRISH
RECENT DECISIONS 4/15
CRIMINAL JUSTICE NOTES 4/15-5/15
GRAPHIC DESIGNER & PHOTOGRAPHER Vincent Morretino firstname.lastname@example.org ADVERTISING Chauncey L. Lipscomb email@example.com
Vol. 59, No. 2
Mark S. Zuckerberg and Amanda K. Quick, Indianapolis
Austen L. Parrish, Bloomington
Donald R. Lundberg and Caitlin S. Schroeder, Indianapolis
Maggie L. Smith and Abigail T. Rom, Indianapolis
Prof. Joan Ruhtenberg, Indianapolis
Prof. Joel M. Schumm, Indianapolis
R. William Jonas Jr., South Bend
F E AT U R E S
CONCLAVE EXAMINES EXPERIENTIAL LEARNING By Bill Brooks, Indianapolis
LEGAL ETHICS COMMITTEE OPINION NO. 3 OF 2015 Depositing flat fees into the trust account
Res Gestae (USPS–462-500) is published monthly, except for January/February and July/August, by the Indiana State Bar Association, One Indiana Square, Suite 530, Indianapolis, IN 46204. Periodicals postage paid at Indianapolis, Ind. POSTMASTER: Send address changes to Res Gestae, c/o ISBA, One Indiana Square, Suite 530, Indianapolis, IN 46204. Subscriptions to members only, $5 annually from dues. All prior issues available exclusively from William S. Hein & Co., 1285 Main St., Buffalo, NY 14209. ISBA members are encouraged to submit manuscripts to the editor for possible publication in Res Gestae. Article guidelines can be obtained by calling 800/266-2581 or visiting www.inbar.org. Res Gestae’s printer, Print Directions, Inc., is an Indiana-certified Woman Business Enterprise. © 2015 by the Indiana State Bar Association. All rights reserved. Reproduction by any method in whole or in part without permission is prohibited. Opinions expressed by bylined articles are those of the authors and not necessarily those of the ISBA or its members. Publication of advertisements is not an implied or direct endorsement of any product or service offered.
RES GESTÆ • SEPTEMBER 2015
1 2 3 N .W. 4T H S T , R O O M 2 2 E VA N SV I L L E , I N 47 7 0 8
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L INDIANA STATE BAR ASSOCIATION One Indiana Square, Suite 530 Indianapolis, IN 46204 800/266-2581 • 317/266-2588 fax http://www.inbar.org
OFFICERS President Jeff R. Hawkins, Sullivan President-Elect Carol M. Adinamis, Westfield Vice President Mitchell R. Heppenheimer, South Bend Secretary Michael S. Dalrymple, Indianapolis Treasurer O. Adedoyin Gomih, Merrillville Counsel to the Ted A. Waggoner, Rochester President
BOARD OF GOVERNORS 1st District 2nd District 3rd District 4th District 5th District 6th District 7th District 8th District 9th District 10th District 11th District 11th District 11th District At-Large District At-Large District Past President House of Delegates
Scott E. Yahne, Munster Robyn M. Rucker, Valparaiso Robert L. Jones Jr., Notre Dame Martin E. Seifert, Fort Wayne Candace D. Armstrong, Brook Patrick J. Olmstead, Greenwood Ann Z. Knotek, Brownsburg Hon. Leslie C. Shively, Evansville Crystal G. Rowe, New Albany Wilford A. Hahn, Huntington Tonya J. Bond, Indianapolis Terry W. Tolliver, Indianapolis Andrew Z. Soshnick, Indianapolis Rafael A. Sanchez, Indianapolis Sonia C. Das, Indianapolis James Dimos, Indianapolis Andi M. Metzel, Indianapolis, Chair House of Delegates Hon. Thomas J. Felts, Fort Wayne, Chair-Elect Young Lawyers Matthew J. Light, Indianapolis, Section Chair
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awyers have been innovative and disruptive change agents in this country’s most pivotal moments. For two examples, consider the lawyers who pleaded their case against tyranny in the Declaration of Independence and an Illinois lawyer who ended slavery through the Emancipation Proclamation. The “disruptive innovation” topic popped up around the American Bar Association’s 2015 Annual Meeting in Chicago Aug. 1-3. Members of the ABA Commission on the Future of Legal Services (the “Futures Commission”) participated in panel discussions throughout the meeting, including a provocative National Conference of Bar Presidents (NCBP) panel discussion featuring Connecticut lawyer Frederic Ury of the Futures Commission; Prof. Renee Newman Knake, co-director of Michigan State University College of Law Kelley Institute of Ethics & the Legal Profession; Dan Lear, Avvo’s director of industry relations; Michael Mills, co-founder & chief strategy officer, Neota Logic; Tom Rombach, president of the State Bar of Michigan; and John Suh, LegalZoom’s chief executive officer. The ABA House of Delegates concluded its first day with “TED Talks” from several speakers, including provocative remarks from Avvo founder Mark Britton. Here are a few comments that surfaced during the aforementioned NCBP panel discussion and TED Talks (I’ve paraphrased some of the comments): • “Legal service consumers care more about cheap than good unless they are getting services from lawyers, from whom they expect services that are cheap and good.” • “Zillow is taking the real estate business from realtors; Uber is doing the same thing to cabdrivers; and Airbnb is crowding the hotel business. Technology-driven disruptors are changing the rules by which we live, and lawyers are as vulnerable as any other profession.” • LegalZoom’s John Suh said, “Technology-enabled lawyers are the future of delivery of legal services. The legal profession can be too insular. It’s not software versus lawyers. It’s technology-enabled lawyers. Work with us. Lawyers should think structurally about collaboration. You need a multitalented team. Think structurally about collaboration. Giant talents are great, but you don’t need a team of five centers.
“ If we, the stewards of justice,
expect to pass our stewardship along to future generations, we must genuinely consider every sacred cow as a potential sacrifice for the heritage with which our predecessors entrusted us. ”
When looking to fix large structural issues, my first instinct is to get capital and form the right team.” • Avvo’s Mark Britton told the ABA to “get rid of UPL if you want innovation and access to justice” (see more comments by Britton and others in an ABA Journal article at www.abajournal.com/news/article/avvo_ founder_tells_lawyers_to_get_rid_of_upl_ if_they_want_innovation_and_to). Most lawyers in the crowd rejected suggestions from the legal profession’s unregulated competitors to eliminate prohibitions against the unauthorized practice of law. However, almost everyone agreed that the current regulatory system hobbles lawyers and prevents them from displacing their unregulated adversaries. Most people also agreed that our courts need relief from pro se litigation, and few of the existing legal service delivery models provide adequate solutions. The bench, bar and legal education academies face integrated, existential threats. The bench is fighting a pro se litigation epidemic that clogs our courts. The bar faces the economic challenges already described in this article amidst the American economy’s transformation from industry to service. Law school admission applications have dropped by 50 percent in the past six years, forcing law schools to choose between admitting fewer (continued on p. 7)
PRESIDENT’S PERSPECTIVE JEFF R. HAWKINS email@example.com 2014-2015 RES GESTÆ • SEPTEMBER 2015
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PRESIDENT’S PERSPECTIVE continued from page 5 students to maintain admission quality versus relaxing admission standards to maintain revenues necessary to support the cost of legal education. These problems are swirling in a death spiral that will only compound each problem’s severity if we do not disrupt these trends. We heard many calls for lawyers to provide more pro bono service, but I am unaware of any scientific studies supporting pro bono service as a sustainably effective pro se litigation intervention. In fact, anecdotal evidence suggests that the “do it yourself” culture and a general aversion to pay for legal services may be growing additional pro se problem factors. A senior Greene County Bar Association member told me that a client referred to him recently through a local pro bono referral service earned more than $2,000 per week (the program has no poverty screening requirements). My conversations this year with largefirm and small-firm lawyers across Indiana confirmed that increasingly savvy clients prefer low-cost legal services to high-quality legal services. Most reputable lawyers provide pro bono service because our mentors enculturated us to do so. Unfortunately, many of us know lawyers that would qualify financially as pro bono recipients. When I spoke earlier this year at the ISBA’s Women’s Bench Bar Retreat in Culver, Ind., a northwest Indiana lawyer told the crowd that a physician in her community barely survives on $25,000 per year. I suggested to the crowd that if we think physicians earn more money than lawyers do, and if some physicians were subsisting in dire financial straits, we must have lawyers drowning in poverty. If you practice in a small community,
you probably know at least one such floundering lawyer. Jim Dimos and I took small steps over the past year to provide some relief for our embattled profession. We redirected the ISBA’s Legal Ethics and Lawyer Advertising committees to propose revisions to the Rules of Professional Conduct (RPC) and the Admission & Discipline Rules (A&D Rules) in response to the controversial private reprimand issued in what some Indiana lawyers referred to as the “Law Tigers case.” Those committees will advise the ISBA House of Delegates at this year’s Annual Meeting in French Lick to seek specific changes in the comments to RPC 7.1, the rule text and comments of RPC 7.2, and the rule text of A&D Rule 23, Section 10. Modest revisions of the RPC and the A&D Rules that retain antiquated practice restrictions are like bailing water from a sinking rowboat with a teaspoon – expending great energy with little effect. Moreover, they saddle officers of the court with burdens that do not encumber nonlawyer providers of unregulated legal services. If readers will indulge my editorial license with the understanding that my finger points toward myself and every other holder of an Indiana bar license, law practice regulation in most states resembles a modified version of this Christian scripture (my additions appearing in square brackets): “You strain your water so you won’t accidentally swallow a gnat [professional misconduct], but you swallow a camel [unregulated practice of law by nonlawyers].” Matthew 23:24, New Living Translation (NLT) of the Bible. I conclude this, my final “President’s Perspective,” with a challenge to the bench, bar and legal education academies. If we,
the stewards of justice, expect to pass our stewardship along to future generations, we must genuinely consider every sacred cow as a potential sacrifice for the heritage with which our predecessors entrusted us. My successor, Carol Adinamis, has advised me that she intends to pursue these daunting problems during her ISBA presidency. I invite the bench, bar and legal education academies to join Carol in that noble pursuit of sustainable justice – even if some solutions disturb us. We cannot defend justice if too few defenders remain standing, so let us dig deeply and discover the disruptively innovative perspectives that we and our progeny must embrace to fulfill the oath of attorneys as entrepreneurial leaders.
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By Bill Brooks
Conclave examines experiential learning & access to justice
I BENCH & BAR NEWS
ndiana Supreme Court Justice Mark S. Massa smiled softly as he wrapped up the 2015 edition of the Indiana Legal Education Conclave, thinking his task was easier than he expected. “I was asked to deliver a ‘call to action,’” Massa said, “but I’m not convinced that’s really necessary.” What Massa, and many others, had heard after a day of reports, testimony and questioning was that law schools had risen to the latest challenge to go beyond the classroom to deliver experiential learning. “I learned our law schools are doing a much better job than they are given credit for,” Massa said, calling the lesson “a largely untold story. It’s good for the bar to learn it.” The evidence included liveclient clinics, semester-away externships, simulation courses and mandatory pro bono for thirdyear students. Despite the good news, there were a few harsh realities that hung over the conclave, hosted June 2627 at the I.U. McKinney School of Law in Indianapolis. Chief among those realities was found in this question: How do you have professors teaching more classes, and how do you provide more professor-supervised experiential offerings – but at the same time cut law school costs? “Addressing all of these issues at the same time presents a conundrum,” said Andrew R. Klein, dean of the McKinney School of Law. He noted the increases in experiential learning – especially law clinics and field placements – but said such programs are resource-heavy. There is a price tag to be paid.
There are many other factors in the equation, as noted by former Indiana Chief Justice Randall T. Shepard, who keynoted the conclave with a talk that focused on 8
RES GESTÆ • SEPTEMBER 2015
the heavy debt too many law school graduates face.
huge institutional problem we need to confront,” he said.
Shepard said the shift to meritbased aid has contributed to the crisis. He said 22 percent of students graduate without any debt, while another 20 percent have only minimal amounts of debt. That leaves more than half of the graduates with “dreadful amounts of debt,” and ironically it’s also those graduates – who weren’t at the top of the rankings and therefore didn’t benefit from merit-based aid – who have the toughest time finding jobs that require a law degree.
Complicating the issue are out-of-date business models that haven’t adjusted to changes such as web-based services and discovery vendors. “The world changes every day, but it takes longer for models to change.”
At the same time, Shepard said, the word has gotten out. Law schools have seen precipitous drops in enrollment. “This is a sea change,” Shepard said, “that makes it even more difficult to be a law school dean.” The logistics were further examined by Prof. William D. Henderson, from I.U. Maurer School of Law, who is one of the nation’s leading experts on the transformations occurring in law firms. From 2002 to 2013, Henderson said, the debt load of law school graduates rose 80 percent, with no change in salary. One reason is that more entry-level lawyers are taking jobs where their degree is an advantage or preferred – but not required. To illustrate the dilemma facing the profession, Henderson said lawyers fall into two camps – “people’s lawyers,” those in solo or small-firm practice who deal with a local clientele, and “organizational lawyers,” those in large firms who serve mostly corporate clients. But rising costs mean the locals can’t afford their “people’s lawyers,” while corporate complaints about rising legal costs have resulted in the large firms hiring fewer entry-level lawyers. “It’s a
Henderson said legal education must adapt as well, the prototype being such programs as the “tech lawyer accelerator” in which students go through intensive shortterm programs in professional skills, especially involving technology. The challenge, Henderson said, “is getting beyond the problems, getting into solutions.” Dean Klein said some have suggested cutting law school to two years. It is a suggestion he dismissed because delivering practice-ready graduates isn’t possible in such a short time. But he had other suggestions. “I’m a huge fan of part-time education,” he said, noting that some schools have gone to a “3 plus 3” program for undergraduate and graduate school. “There’s no quick solution,” Klein said, “but it’s there.” Then he added with emphasis, “It’s time to stand up and say a good system of justice cannot be done on the cheap.” In a breakout session on experiential learning, it became clear that law schools have indeed taken the challenge seriously. 84 percent of law schools now offer experiential learning, and many law schools have created an administrative position in charge of experiential programs. “There are reasonable disagreements over the right balance between broad-based learning, legal analysis and practice-focused skills,” said Austen L. Parrish, dean of the Maurer School of Law, who also broached the subject of costs.
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He said the issue isn’t only about academia. Large firms once wanted to train their own, Parrish said. “That has now changed, so the costs are shifting to law schools.” The various innovations shouldn’t be seen as brand new, said Nell Jessup Newton, dean of the Notre Dame Law School. “This is stuff we’ve been thinking about for years,” she said, adding that the question isn’t whether more experiential offerings should be available, “but what kinds of opportunities are the law schools offering.” Newton added, “We need to match experiential courses with student ambitions.” Subjects addressed in other breakout sessions included the unlicensed practice of law, wellness, diversity, problems of both aging lawyers and clients, and rural access to justice. The latter subject crossed paths with discussions during the experiential learning session, where Dean Parrish said a mission of any law school clinic is to give back to the community. Dean Newton said that while clinics have traditionally focused on serving local, lowincome populations, many schools are now offering non-litigation experiential programs. The same issues hit the rural areas, where there are fewer and fewer lawyers. Reporting on behalf of the session, Evansville attorney Dirck H. Stahl said rural areas have more residents who can’t find or afford a local lawyer – and that when they do reach out to citybased attorneys, they find lawyers who don’t understand the problems of rural areas – “from agricultural law to substance abuse, which is rampant.” Stahl added that a consensus of the breakout session was that there were several entities beyond the legal world that share the moral
obligation to expand access to justice – such as community foundations and the legislature. In his keynote address, Shepard said improvements to legal education and therefore access to justice can begin outside the academic realm. “Bar associations and state courts have a greater impact on all of this than generally under-
stood,” he said, challenging those realms to be more proactive. “Why do it?” he asked. “For pride of profession – but there’s a bigger reason than that, and it has to do with what we lawyers do for society. The American adherence to the rule of law makes everything else possible.”
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ISBA Young Lawyers Section Presents SEMINAR
Oct. 23, 2015
- AGENDA QUICK LOOK 8:30 am – Registration and Breakfast 8:50 am 8:50 am – Welcome and Introductions 9:00 am 9:00 am – CLE Presentation 4:30 pm
Seminar: 9:00 am - 4:30 pm Regions Bank Conference Center One Indiana Square, 5th Floor Indianapolis, IN 46204
Topics will include: Attorney Relationships With Third Parties, Trust Accounts, IOLTA, Attorney-Client Relationships, Professionalism/Civility, and Awareness and Treatment of Impairments Through the Indiana Judges and Lawyers Assistance Program. This course fulfills the requirement for new attorneys. Registration includes electronic program materials, breakfast, and lunch.
CLE Pricing Information ❑ $65 - ISBA Member with less than 3 years of practice ❑ $75 - Non-member with less than 3 years of practice Please indicate any special dietary needs: ❑ Diabetic
❑ $180 - ISBA member, more than 3 years ❑ $360 - Non-member, more than 3 years
❑ Other______________________________ Payment Information
❑ Check (make payable to Indiana State Bar Association)
City, State, Zip____________________________________________
❑ Credit Card (3-4 digit Card Verification Code & signature required) ❑ VISA ❑ MasterCard ❑ Discover
Card Number_____________________________________________ Exp. Date _______ /_______ 3-4 digit Card Verification Code_____________
Signature_______________________________________________ $20 will be added for registrations received after 10/19/15.
Indiana State Bar Association • www.inbar.org One Indiana Square, Suite 530 • Indianapolis, IN 46204 317-639-5465 • 800-266-2581 Toll Free • 317-266-2588 Fax
Young Lawyers Section: Applied Professionalism CLE - 10/23/15
A $25 service fee will be applied to cancellations received on or before 10/19/15. No refunds on cancellations received after 10/19/15. If you send someone else in your place, please provide ISBA with that person’s name.
Register online at www.inbar.org or submit completed registration form to:
Fax: 317-266-2588, Attn: CLE & Events • Email: firstname.lastname@example.org For more information, please call the ISBA at 800-266-2581.
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By Amy Noe, LDA Committee Vice Chair
ISBA releases application for 2016 Leadership Development Academy
LDA graduates are recognized across the state as up-and-coming leaders in their communities, the legal profession, and the state as a whole. Twenty-five successful candidates will spend five sessions learning actively from Indiana leaders to include Indiana Supreme Court justices, Indiana appellate and trial court judges, state and local government officials, business leaders and recognized lawyer leaders from across the state. The program broadly focuses on service: to the legal profession, to the community and to oneself.
ing, when class members focus on developing relationships with each other – a necessary component of leadership. Intense interactive activities guided by professional leadership training facilitators will train class members on servant leadership, consensus building, and recognizing and respecting different learning styles. This sets the tone for the remaining sessions in the program as the class travels the state to see examples of leadership in action and learn about timely issues affecting Indiana communities.
Session 2: Feb. 15-16 Statehouse, Indianapolis The class returns to Indianapolis one more time for a comprehensive visit of the beautiful Indiana Statehouse. Session 2 will give students an inside look at state and local government and the opportunity to get acquainted with members of the Indiana Supreme Court and Court of Appeals. They will hear an oral argument and have a candid discussion about profes-
Applications are now available for download from the ISBA website, www.inbar.org. The application deadline is Nov. 6. Successful candidates will be required to attend and participate in all sessions. Remembering that the topics at any session are subject to change and/or variation, here is what the 25 successful candidates can expect out of LDA V.
Session 3: March 10-11 South Bend In Session 3, LDA V travels north to South Bend, where these future lawyer leaders will focus on issues relating to leadership in education. A combination of interactive methods and panel discussions will provide students with ample opportunities to see servant leadership in application and recognize how techniques learned in Session 1 have been effectively applied to real-life situations. (continued on page 12)
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Session 1: Jan. 21-23 Fort Harrison State Park Indianapolis Session 1 begins with an informal reception on Thursday evening, where class members will meet each other and key members of the LDA faculty and committee. The real work begins Friday morn-
sionalism and ethics with the judges sitting on that panel. The class will begin a program-long focus on the importance of inclusion and wellness. There’s never a dull moment, as the class will engage in active exercise, panel discussions and interactive group discussions to start recognizing where the use (or lack thereof) of consensus building and learning styles affect progress and leadership.
APPLY BY NOV. 6
awyer-members of the Indiana State Bar Association who have been in practice 15 years or less are invited to apply to the ISBA’s Leadership Development Academy. The LDA empowers and develops lawyers to be informed, committed and involved so that they may fill significant leadership roles in local and state bar associations, Indiana communities and organizations, and serve as role models in matters of ethics and professionalism.
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RES GESTÆ • SEPTEMBER 2015
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LDA PREVIEW continued from page 11 Session 4: April 21-22 Muscatatuck Urban Training Center, Butlerville Often cited as a highlight of the LDA, the class will rough it in bunk-like facilities at the urban training center in Butlerville. The class sometimes shares the facility with military units or government
agencies training to protect our nation, with all the bells and whistles (or choppers and bombs) that go along with it. Session 4 includes an interactive tour of the base and the opportunity to discuss military and disaster readiness with people on the front lines. Class members should be prepared to get up early
for a typical (read: watered down) PT (or physical training) session, led by retired Army Colonel Indiana Supreme Court Justice Steven David.
Session 5: May 19-21 Richmond LDA V will end in Richmond, where the class will hear about the importance of arts in community and economic development after being treated to a private viewing of Legally Blonde, The Musical at Richmond Civic Theatre. In addition, Session 5 will interject a study of the inclusion of all voices in community development efforts and how leaders must and should ensure representation of all viewpoints. After five intense months of this program, the class will be treated to dinner and a graduation ceremony, where many of the LDA faculty and committee, as well as representatives from the ISBA and Indiana Bar Foundation, will be on hand to congratulate this ascending group of Indiana leaders.
California Matters If you have matters in California or referrals, we can help you. Please contact Guy Kornblum or his office for information. In addition to litigation and dispute resolution services, Guy also serves as an expert witness in legal malpractice and cases relating to insurance claims. Guy is a native Hoosier and alumnus of Indiana University. He is a member of the Indiana and California bars, and certified in Civil Trial & Pretrial Practice Advocacy by the National Board of Trial Advocacy.
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RES GESTÆ • SEPTEMBER 2015
As part of the LDA, class participants will develop and carry out a class project that will continue their work together even after graduation. Each of the above five sessions will include time for intense group discussion and planning in which leadership skills learned through the LDA experience are given practical application.
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By LDA Class of 2015
LDA Class IV project focuses on health & wellness Development Academy under “For Members” at www.inbar.org) is devoted to promoting attorney wellness through CLE, which will include the services offered via the ISBA Wellness Committee, the Judges & Lawyers Assistance Program (“JLAP”) and other available resources around the state. First up: a live CLE, titled “Ethics & Wellness: The Practice Done Well,” to be presented during the ISBA Annual Meeting at the French Lick Resort on Thursday, Oct. 8, from 10 a.m. to noon, with videotaped broadcasts available for replay thereafter. Personal wellness is important for attorneys as individuals, but we also have a professional and ethical duty to keep ourselves well for the benefit of our clients and our profession.
To that end, the State Bar’s LDA Class IV (see Leadership
That duty is reflected in the Indiana Rules of Professional
Conduct. The preamble to these rules states that attorneys have a “special responsibility for the quality of justice.” Such an important role in society requires that attorneys perform at their peak capabilities. That is nearly impossible to do, however, if an attorney is suffering from untreated depression, addiction to drugs and/or alcohol, or an unhealthy lifestyle. The stress of the job can sometimes lead attorneys to neglect their mental and physical health. There’s good news, however, as attorneys’ rates of recovery from addiction and mental health issues are nearly double that of the general population. The general population recovers at 40-50 percent while attorneys recover at 80-90 percent. JLAP and
ANNUAL MEETING PROGRAM
s attorneys, we are not immune to the pressures and demands of everyday life. Far too often we spend our time solving the problems of others and caring for someone else’s needs, but rarely do we take the time to reflect on our own. Between the ever-demanding billable hour and the genuine desire to be active in professional organizations and community events, personal health and mental wellness are usually the first items neglected on a lawyer’s to-do list. But as healthier and happier individuals, we are better equipped to provide representation that is more effective for our clients, contribute more fully to our communities and, most importantly, lead more enjoyable personal lives.
(continued on page 14)
RES GESTÆ • SEPTEMBER 2015
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LDA & WELLNESS continued from page 13
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RES GESTÆ • SEPTEMBER 2015
similar programs are a key piece in that success. The 2-hr. CLE presented at the ISBA fall meeting will discuss the impact of attorney wellness, including an emphasis on the ethics of staying well. Through interaction, presentations and a panel discussion, the CLE will cover topics such as workload, client retention, stress and ethical obligations as well as challenges like substance abuse, mental health issues and cognitive decline. The panel will provide insight into wellness approaches, focusing on prevention through fitness and health. Attendees will learn about JLAP and its benefits, especially the protections and incentives that it gives to attorneys who seek help, including confidentiality and the potential to increase leniency by the Disciplinary Commission if an attorney has sought help through JLAP. Finally, members of the Disciplinary Commission will discuss the Commission’s approach to addressing mental health and substance abuse challenges. The class project does not end at the Annual Meeting. The CLE will be recorded and replayed throughout the state with LDA class members in attendance to introduce the sessions. Please contact the ISBA (email@example.com or 800/266-2581) to inquire about a replay in your community. The class hopes this will stimulate conversations about wellness among attorneys and judges across the state. The ISBA Leadership Development Academy Class IV encourages all ISBA members to attend this CLE and learn more about the importance of wellness and the resources available to attorneys in Indiana.
at Butler University Law school trained you how to think like a lawyer, but you are left to your own devices when it comes to obtaining the business knowledge and skills required to keep a law practice afloat. Increasing your business skills and resources in an ethical manner is an investment in your career that can change the dynamic of your practice. The State Bar has partnered with Butler University's College of Business to offer the Business School for Lawyers. All sessions will be held on the Butler campus in Indianapolis. The class will be limited to the first 25 registrants. Take all five sessions to earn a Certificate of Business Administration.
Deadline to register: Oct. 9
Register at www.inbar.org
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Opinion No. 3 of 2015
his formal opinion is disseminated in accordance with the charge of the Indiana State Bar Association’s Standing Committee on Legal Ethics (the “Committee”) and is advisory in nature. It is intended to guide the membership of the ISBA and does not have the force of law.
Issue The Committee has been asked whether a lawyer may deposit a “flat fee” into the lawyer’s trust account and about the circumstances under which all or part of the flat fee may be removed from the lawyer’s trust account and placed in the lawyer’s operating account.
Brief answer The answer to these questions turns on the nature of the fee agreement between the lawyer and client, particularly the terms under which the “flat fee” is received. As a general proposition, the Committee concludes that a lawyer may not deposit into trust any portion of a fee that the lawyer has fully earned and which therefore is no longer the property of the client. Conversely, any fee not earned by a lawyer must be placed in trust. So, a “flat fee” that is not treated as fully earned on receipt must be placed in the lawyer’s trust account. Conversely, when the arrangement between the lawyer and the client is that the fee is treated as “earned on receipt,” and subject to refund only if the agreed services are not provided, it becomes property of the lawyer and must be deposited into the lawyer’s operating account. The corollary to these rules is that lawyers should clearly define the terms upon which they accept a fee from a client so that there is no ambiguity about who owns what portion of funds paid to the lawyer by the client at any given point in the representation.1 16
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Depositing flat fees into the trust account Analysis
A. Rule 1.15
The term “flat fee” refers to a fee paid for the completion of specific legal services to be performed regardless of how much time and effort the lawyer must expend in completing the services. See Matter of Kendall, 804 N.E.2d 1152, 1154 (2004); Matter of Stanton, 504 N.E.2d 1 (1987). As discussed in greater detail below, such a fee is different in structure from a “general retainer,” which is for the purpose of ensuring the lawyer’s availability, or an “advance fee,” which is a payment made at the beginning of the representation, against which charges are credited as services are performed, on an hourly or other basis. See Matter of O’Farrell, 942 N.E.2d 799, 803 (2011). The relationship between lawyer and client is fundamentally consensual, existing only after both attorney and client have agreed to the formation of the relationship. Hacker v. Holland, 570 N.E. 2d 951, 955 (1991). The relationship is generally determined by principles of contract and agency. Brown v. St. Joseph County, 148 F.R.D. 246, 250 (N.D. Ind. 1993). The scope of the attorney’s representation of the client as well as the basis or rate of the fee must be communicated to the client before or within a reasonable time after commencing the representation unless the client is regularly represented by the lawyer on the same basis or rate. Ind. R. Prof. Cond. 1.5(b). Simply put, the client must consent to the lawyer’s representation of the client and the terms of the representation, including the basis of the lawyer’s fee. Flat fees implicate a variety of Rules of Professional Conduct, including rules affecting how the fee must be handled when received by the lawyer.
Guidance on how a lawyer must handle flat fees begins with Ind. R. Prof. Cond. 1.15. While entitled “Safekeeping Property,” the Supreme Court has described Rule 1.15 as the “anti-comingling rule.” Matter of Radford, 698 N.E.2d 310, 313 (Ind. 1998). In relevant part, the Rule states: (a) A lawyer shall hold property of clients or third persons that [is] in a lawyer’s possession in connection with a representation separate from the lawyer’s own property. Funds shall be kept in a separate account maintained in the state where the lawyer’s office is situated or elsewhere with the consent of the client or third person. Other property shall be identified as such and appropriately safeguarded. Complete records of such account funds and other property shall be kept by the lawyer and shall be preserved for a period of five years after termination of the representation. … (c) A lawyer shall deposit into a client trust account legal fees and expenses that have been paid in advance, to be withdrawn by the lawyer only as fees are earned or expenses incurred.
This rule requires that fees that a lawyer has earned (and any other funds belonging to the lawyer) must be segregated from client funds and that clients’ funds be placed in the lawyer’s trust account. Matter of Kendall, supra, 804 N.E.2d at 1155 (citing In re McCarty, 729 N.E.2d 98, 99 (Ind. 2000)); see also Matter of Knobel, 699 N.E.2d 1142 (1998) (lawyer violated Ind. R. Prof. Cond. 1.15(a) by failing to hold all client funds, including advance payment of costs and fees, separate from his own). When and if the funds in the trust account are earned by the lawyer, they must be transferred from the trust account to the lawyer’s control. In re Quinn, 738 N.E.2d 678,
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681 (2000) (lawyer found to have violated Rule 1.15(a) by failing to promptly withdraw his fee from trust account).
B. Duty to segregate fees Without specifically overturning Stanton, the Kendall Court held that “Prof. Cond. R. 1.15(a) generally requires the segregation of advance payments of attorney fees.” Kendall at 1158 (emphasis added). As applied to the facts in Kendall where the fees were intended to be applied to future services on an hourly basis, the Court held that “except in the case of flat fees governed by Stanton,” which are fees designed to compensate the lawyer for services regardless of length or complexity, “a lawyer’s failure to place advance payments of attorney fees in a separate account violates this rule [1.15].” Id. at 1156, 1158. So, it seems clear that Kendall holds that any fee not fully earned needs to be placed in a trust account, but that flat fees may be treated as fully earned on receipt and deposited into the lawyer’s operating account if the lawyer and client agree to such an arrangement. In re Quinn, supra at 681, shows that any part of a fee that has been earned needs to be promptly withdrawn from the trust account.
C. Importance of the fee agreement The mandate of segregating fees a lawyer owns from clientowned funds places a premium on the language in the lawyer’s fee agreement. Regardless of the label a lawyer may attach to a fee, such as a “flat fee” or “retainer,” it is the substance of the agreement with the client that determines the nature of the fee. Matter of O’Farrell, at 803, 805. It seems incumbent upon the lawyer to clearly spell out when and how a fee is earned. See generally Ind. R. Prof. Cond. 1.5(b). While Rule 1.5 does not require a written
fee agreement except in the case of a contingency fee, Ind. R. Prof. Cond. 1.5(c), prudence ordinarily indicates that the fee agreement should be in writing. The Indiana Supreme Court has plainly stated that a flat fee is not refundable except for failure to perform the agreed legal services. Matter of Kendall, supra at 1162. The language needed for a flat-fee agreement does not need to be complex, as was illustrated in In re Canada, 986 N.E.2d 254 (2013). In that case the respondent charged a flat fee for representation of a criminal defendant to the conclusion of the case, with a written fee agreement stating that the fee was nonrefundable “unless there is a failure to perform the agreed legal services.” Id. at 254. The fee was paid when the client’s cash bond was released to the attorney after a plea agreement was negotiated. Id. The Court found no infirmity with the fee agreement and specifically noted that “the agreement properly advised Client that a refund was possible in the event of a failure to perform the agreed legal services.” Id. (citing Kendall, supra at 1160).2 But lawyers do not have carte blanche to enter into fee agreements allowing them to deposit all forms of prepaid fees into their operating accounts simply by describing them as “nonrefundable.” In Matter of O’Farrell, the Indiana Supreme Court disciplined a lawyer for using a fee agreement that contained a nonrefundable fee provision. The fee agreement before the Court provided that the fee would be applied against either the lawyer’s flat fee or the lawyer’s hourly rate charges and that no part of the fee would be refunded even if the agreed upon services were not completed by the lawyer. Id. at 805-807. These facts produced the following holding by the Court:
The presence of this contract provision, even if unenforceable, could chill the right of a client to terminate Respondent’s services, believing the Law Firm would be entitled to keep the entire flat fee regardless of how much or how little work was done and the client would have to pay another attorney to finish the task. We conclude that Respondent violated Rule 1.5(a) by including an improper nonrefundability provision in her flat-fee agreements.
Id. at 806. Evidently the infirmity in the fee agreement examined in Matter of O’Farrell was the absence of the caveat that saved the fee agreement in In re Canada – language alerting the client to the fact that a refund would be owed if the lawyer failed to perform the legal services as agreed. In the course of its opinion in O’Farrell, the Court described three common fee arrangements: (1) A “flat fee” is a fixed charge for a particular representation, often paid in full at the beginning of the representation; (2) an “advance fee” is a payment made at the beginning of a representation against which charges for the representation are credited as they accrue, usually on an hourly basis; and (3) a “general retainer” is payment for an attorney’s availability, which is earned in full when paid before any work is done.
Id. “[A]dvance fees … [are] to be earned in the future at an agreed rate …” whereas fixed or “flat” fees are “advance fees that are agreed to cover specific legal services regardless of length or complexity.” Matter of Kendall, 804 N.E.2d 1152, 1154 (2004). It is noteworthy that the pivotal question in determining the character of a fee is whether a fee is accepted in return for a commitment to fulfill a defined set of obligations, irrespective of their ease or difficulty, as opposed to security for payment for services (continued on page 18) RES GESTÆ • SEPTEMBER 2015
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ATTORNEY ETHICS continued from page 17 of an indeterminate amount and value.
D. Duty to refund unearned fees Turning to the treatment of flat fees specifically, it is necessary to look at Matter of Stanton, 504 N.E.2d 1 (1987). In Stanton, the lawyer charged flat fees in advance of work in a criminal case in which the Disciplinary Commission charged the lawyer with failing to deposit the funds in his trust account. Id. The Court rejected the Commission’s argument, stating “[t]he above noted segregation of funds and accounting requirements are not applicable to attorney fees charged in advance for the performance of legal services.” Id. Though the Stanton Court held that flat fees could be deposited in the lawyer’s operating account, it also held “that upon termination of the professional relationship, unearned fees paid in advance must be returned,” pursuant to Ind. R. Prof. Cond. 1.16. Kendall, 804 N.E.2d at 1155 (citing Stanton, 504 N.E.2d at 1). There are many reasons why a lawyer may innocently fail to provide all of the services envisioned by a flat-fee agreement. An unexpected conflict of interest, an illness, a change of law, a family problem, or other circumstances can abruptly interfere with a lawyer’s ability to complete an assignment. The fact that a lawyer may be fully entitled to a flat fee upon receipt does not abrogate the lawyer’s separate duty to refund a part of that fee if the lawyer cannot fulfill his contract with the client. See Stanton, supra at 1.3 If the lawyer and client choose to incorporate a true flat-fee arrangement into the engagement, both the lawyer and the client need to understand that Rule 1.16 has engrafted onto this arrangement an ethical duty on the part of the lawyer to refund any part of the flat 18
RES GESTÆ • SEPTEMBER 2015
fee that the lawyer owns but is subsequently unable to fully earn. And Rule 1.5 requires that the lawyer make clear that a flat fee may not be regarded as nonrefundable. O’Farrell, supra at 806. This remains the case even though the refund of a flat fee that was treated as the lawyer’s property on receipt would necessarily come from the lawyer’s own funds.
E. Importance of client consent After reviewing cases from other jurisdictions, the Court in Kendall noted that a “majority of decisions” hold that client consent is a condition to the lawyer’s right to deposit a flat fee into the lawyer’s operating account. 804 N.E.2d at 1157-58. The Committee interprets this rule as requiring client consent to a flat-fee arrangement subject to Rule 1.15’s anti-comingling requirements. While Stanton and Kendall stop short of holding that client consent is a requirement, the Committee rejects any suggestion that a lawyer is entitled to unilaterally determine the character of funds received from a client. The Committee believes that whenever a lawyer agrees to accept money from a client the lawyer and the client need to consent to the terms under which control over the money passes to the lawyer. If the payment is made pursuant to the creation of an attorney-client relationship, it is incumbent upon a lawyer to clearly define the financial terms of the lawyer’s engagement so that the client understands (a) when funds paid to the lawyer will be considered fully earned by the lawyer, and (b) whether circumstances could create a duty on the lawyer’s part to refund a portion of the fee. When this process gives rise to a payment that is considered the lawyer’s property upon receipt, as in Stanton, the payment must be placed in the lawyer’s operating account. Any payment not
received as a flat fee that is treated as earned upon receipt must be placed in trust. Inevitably this process requires consent by both the lawyer and the client.
Conclusions As discussed above, the Committee has reached the following conclusions: (a) A flat fee, paid in exchange for a commitment by the lawyer to perform a specific task or set of tasks, may not be deposited into a lawyer’s client trust account if the client and lawyer have agreed that, upon receipt, it would become the property of the lawyer. Conversely, if an agreement for a flat fee provides that the lawyer has not earned the fee until the work is completed, any advance payment of the fee must be deposited in the lawyer’s trust account and may not be withdrawn until earned. (b) A lawyer must have a clear agreement with a client as to the ownership of fees received by the lawyer so that the fees can be properly allocated between the lawyer’s trust account and operating account. (c) A client must be notified that even a true flat fee that is treated as earned on receipt and deposited to the lawyer’s operating account might result in a refund if the agreed-upon legal services are not completed by the lawyer. 1. The opinion of the Committee on this question is limited to the handling of money received by the lawyer as fees and does not apply to money received by the lawyer for advance payment of expenses, or reimbursement of expenses, to which different considerations apply. See In re Thomas, 30 N.E.3d 704, 709 (Ind. 2015) (client advance payments for expenses must be deposited into trust account and withdrawn only as the expenses are incurred). 2. The Court separately considered whether the lawyer improperly failed to refund part of the fee in light of the fact that the client discharged the lawyer in favor of another lawyer before the conclusion of the case. Noting that the lawyer spent considerable time on the case and negotiated a plea agreement, which the client initially viewed with favor, the Court found insufficient evidence to support the Disciplinary Commission’s argument that the lawyer had not fully earned his fee. Canada, supra at 255. 3. If agreed work is not completed, the lawyer may also have duties to refund a portion of the fee or pay damages as a matter of contract law. This opinion does not address the contractual duties of the parties in such a situation.
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By Mark S. Zuckerberg and Amanda K. Quick
Midyear review: SCOTUS & 7th Circuit bankruptcy case update
s the first half of the year comes to an end, it is an appropriate time to reflect on the important bankruptcy cases decided to date by the U.S. Supreme Court, Seventh Circuit Court of Appeals and local courts. Due to the sheer number of cases decided and importance of the issues involved, it is imperative for attorneys to be up to date on the opinions. The cases decided had an impact on nearly all chapters of the Bankruptcy Code, including Chapters 7, 11 and 13.
Discharge & dischargeability Although based on Illinois law, the Seventh Circuit’s decision in the case In re Marcus-Rehtmeyer, ___ F.3d ___, 2015 WL 1905878 (7th Cir. 2015), is instructive in demonstrating the importance of debtor cooperation with court orders and full disclosure. In MarcusRehtmeyer, the debtor was ordered by an Illinois state court to pay approximately $168,000 to plaintiffMark S. Zuckerberg appellants. Upon her Law Offices of failure to do so, the Mark S. Zuckerberg, P.C. plaintiff-appellants Indianapolis, Ind. issued a citation to Debtnomo@aol.com discover assets under Illinois law. However, before the matter was resolved, the debtor filed a Chapter 7 bankruptcy petition. The plaintiff-appellants appeared in bankruptcy court to object to the discharge of the debt owed to them, asserting the debtor Amanda K. Quick had concealed her Law Offices of Mark S. Zuckerberg, P.C. assets and income Indianapolis, Ind. during the citation firstname.lastname@example.org
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process. The bankruptcy court denied the plaintiff-appellants’ objection to discharge, and the district court affirmed the holding. Subsequently, the Seventh Circuit concluded the debtor did in fact conceal assets with the requisite intent. The decisions of the lower courts were reversed, and the debtor’s discharge of the debt was denied due to her failure to properly respond to the citation and disclose assets under Illinois law. In the Seventh Circuit Court of Appeals case Sullivan v. Glenn, 782 F.3d 378 (7th Cir. 2015), the court held the debtor must be complicit in the claimed fraud for a debt to be non-dischargeable under Bankruptcy Code §523(a)(2)(A). Code §523(a)(2) bars discharge of a debt obtained by false pretenses, false representations or actual fraud. The facts of the case involved debtors obtaining a line of credit pre-petition from a bank with the assistance of a loan broker. The court found the loan broker was the debtors’ agent, but the debtors did not participate in their agent’s fraudulent misconduct. Accordingly, it was held the debt was dischargeable.
Chapter 11 cases The Seventh Circuit has also recently issued several opinions dealing with issues specific to Chapter 11 cases. In the case In re Sweports, Ltd., 777 F.3d 364 (7th Cir. 2015), the Court of Appeals held that like other courts, bankruptcy courts have “cleanup” jurisdiction to take care of loose ends following the dismissal of a case within their ordinary jurisdiction. Thus, the dismissal of the debtor’s Chapter 11 case in Sweports and the re-vesting of assets of the estate in the debtor did not moot counsel’s subsequent fee application. The bankruptcy court retained jurisdiction to resolve these types of issues.
The judgment of the bankruptcy court was reversed, and the case was remanded with instructions consistent with the opinion. The case Listecki v. Official Committee of Unsecured Creditors, 780 F.3d 731 (7th Cir. 2015), involved a church that filed for Chapter 11 reorganization. The creditors’ committee sought to avoid as fraudulent or preferential a transfer of church funds to a trust earmarked for maintaining cemeteries. The committee argued application of the Bankruptcy Code would not violate the church’s federal rights under the Religious Freedom Restoration Act (“RFRA”) because RFRA was inapplicable in cases in which the government was not a party. The Seventh Circuit noted that just because the court appoints an entity and supervises some of its actions did not make it a governmental actor. A committee of unsecured creditors “takes on a life of its own” and “represents the larger interests of the unsecured private creditors, and it is to them, and not the Trustee, court, or any governmental actor” that it owes a duty. Thus, it is not a government actor as used in RFRA, and application of the Bankruptcy Code to the transfers did not violate the free exercise of religion clause set forth in the First Amendment because the provisions were general and neutrally applicable to all bankruptcy cases.
Chapter 13 cases There have been two noteworthy U.S. Supreme Court cases decided this year concerning Chapter 13 cases. The first is Bullard v. Blue Hills Bank, ___ U.S. ___, 135 S.Ct. 1686, 191 L.Ed.2d 621 (2015). In Bullard, the Supreme Court held that the bankruptcy court’s order denying confirmation of the debtor’s proposed Chapter 13 plan with leave to amend was
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not a final, appealable order. The respondent in the matter, Blue Hills Bank, was the debtor’s mortgage lender, and it objected to the plan’s treatment of its claim. The bankruptcy court sustained the bank’s objection and declined to confirm the plan. The debtor appealed to the First Circuit Bankruptcy Appellate Panel, which agreed with the holding of the bankruptcy court. The debtor appealed, but the First Circuit dismissed for lack of jurisdiction. The Supreme Court granted certiorari and affirmed the holding of the bankruptcy court. The Supreme Court noted only plan confirmation, or case dismissal, alters the status quo and fixes the parties’ rights and obligations; denial of confirmation with leave to amend changes little and can hardly be described as final. It reasoned immediate appeals from denial of plans would result in delays and inefficiencies. A debtor’s inability to immediately appeal a denial encourages the debtor to work with creditors and the trustee to develop a confirmable plan and bolsters the conclusion that the relevant proceeding is the entire process culminating in plan confirmation or dismissal. A few days later, the Supreme Court issued another decision concerning a Chapter 13 case in Harris v. Viegelahn, ___ U.S. ___, ___ S.Ct. ___, ___ L.Ed.2d ___, 2015 WL 2340847 (2015). The debtor in Harris filed his Chapter 13 bankruptcy case in part to save his home and cure mortgage arrearage. The debtor’s confirmed plan provided he would continue to pay his mortgage payments directly to Chase. It also provided that trustee Viegelahn would use funds from the debtor’s monthly payments to cure the mortgage arrears and distribute remaining funds to the debtor’s other creditors. The debtor subsequently defaulted on his mortgage
payments, and Chase foreclosed on his residence. The Chapter 13 trustee continued to receive $530 per month from the debtor’s wages, but stopped making the arrearage payments earmarked for Chase. As a result, these funds accumulated in the trustee’s account. A year after the foreclosure, the debtor converted his case to one under Chapter 7 of the Bankruptcy Code. Ten days
after the conversion, the Chapter 13 trustee distributed $5,519.22 of the debtor’s withheld wages to his creditors. Asserting the trustee lacked authority to disburse his postpetition wages after conversion, the debtor sought an order from the bankruptcy court directing a refund of the post-petition wages (continued on page 22)
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BANKRUPTCY continued from page 21 paid to creditors. The bankruptcy court granted the motion, and the district court affirmed the decision. The Fifth Circuit reversed, finding the former Chapter 13 trustee must distribute a debtor’s accumulated post-petition wages to creditors. The Supreme Court granted certiorari and held that a debtor who converts to Chapter 7 is
entitled to return of any post-petition wages not yet distributed by the Chapter 13 trustee. A Chapter 7 bankruptcy estate does not include wages earned or most assets acquired after bankruptcy filing.1 In comparison, payments made under a Chapter 13 plan are generally made from a debtor’s future income.2 A Chapter 13 estate,
unlike a Chapter 7 estate, therefore includes both the debtor’s property at the time of his or her bankruptcy petition and any assets acquired after filing.3 Since many Chapter 13 debtors are unable to successfully complete their plan payments, Congress afforded debtors a nonwaivable right to convert a Chapter 13 case to Chapter 7 “at any time.”4 Conversion does not commence a new bankruptcy case, but it does terminate the service of the Chapter 13 trustee.5 Absent a bath-faith conversion, the Bankruptcy Code limits a converted Chapter 7 estate to property belonging to the debtor “as of the date” the original Chapter 13 petition was filed. Since post-petition wages do not fit under that description, undistributed wages collected by a Chapter 13 trustee ordinarily do not become part of the converted Chapter 7 estate.6 Accordingly, the Fifth Circuit’s decision was reversed and remanded for further proceedings consistent with the Supreme Court’s holding. The Seventh Circuit has also recently decided several cases involving Chapter 13 issues. In the case In re Brooks, ___ F.3d ___, 2015 WL 184325 (7th Cir. 2015), the Seventh Circuit held an above-median Chapter 13 debtor may categorically exclude child support payments from the calculation of disposable income on the
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means test absent rare and extreme cases where payments are so excessive as to not be reasonably necessary. In so holding, the Court of Appeals affirmed the holdings of the district court and the bankruptcy court. Bankruptcy Code §1325(b)(2) allows a Chapter 13 debtor to exclude from the calculation of his or her disposable income – and thereby shield from creditors – “child support payments ... reasonably necessary to be expended for such child.” The Chapter 13 trustee argued that a categorical exclusion of child support payments too often results in a duplicate deduction for the debtor because many of the expenses that child support typically covers (e.g., food and housing) are factored into the standardized living expense deductions otherwise permitted under the Bankruptcy Code. It was noted that under this interpretation of Code §1325, a double deduction would theoretically be possible. However, the Seventh Circuit affirmed the lower courts’ holdings, finding that Congress’ desire to preserve child support payments for their intended beneficiaries prevailed over any risk of duplicate exclusions from income. In addition, the “rare and extreme cases” exception for excluding child support payments would serve as a failsafe to prevent abuse of this rule. Subsequently, the Seventh Circuit issued its opinion in the case In re Pajian, ___ F.3d ___, 2015 WL 2182951 (7th Cir. 2015). In Pajian, the Court of Appeals held that all creditors – unsecured and secured alike – are bound by the Bankruptcy Rule 3002(c) deadline. Rule 3002(c) provides that in a Chapter 7 liquidation, Chapter 12 family farmer’s debt adjustment or a Chapter 13 individual’s debt reorganization case, a proof of claim is timely filed if it is filed within the 90 days after the first date set for
the Code §341(a) meeting of creditors.7 The late-filing, secured creditor in the case, Lisle Savings Bank, missed the claims deadline by several months. The bank argued that Rule 3002(c) should apply only to unsecured creditors; it asserted secured creditors were entitled to file a proof of claim at any time – at least until Chapter 13 plan confirmation. The Seventh Circuit reversed the holding of the bankruptcy court and held a secured creditor must file its proof of claim by the 90-day deadline specified by Rule 3002(c). In two cases affecting numerous Chapter 13 debtors, Judge Klingeberger issued decisions in the case In re Latimer, 528 B.R. 166 (Bankr. N.D. Ind. 2015), and Hegeduis v. Harris, N.A., 525 B.R. 74 (Bankr. N.D. Ind. 2015). The issue in Latimer involved the length of time a bankruptcy debtor has under a Chapter 13 plan to cure property tax arrearage. Judge Klingeberger held that in order to avoid penalties, delinquent property taxes must be paid in full prior to the expiration of the amnesty period8 and not over the life of a Chapter 13 plan. In Hegeduis, Judge Klingeberger held the proper date for valuing debtor’s residential real estate for the purpose of stripping off any junior mortgages is the date of the petition.
Miscellaneous The case Metrou v. M.A. Mortenson Company & Schuff Steel Co., 781 F.3d 357 (7th Cir. 2015) involved a pair of Chapter 7 debtors that discovered a cause of action after receiving their discharge and their bankruptcy case was closed. After closure of their case, the debtors sued two firms, claiming they contributed to an injury related to a worker’s compensation claim. Those tort claims were not listed on the schedules
because at the time of filing the debtors believed they had no such claims. After learning of their mistake, the debtors notified the trustee, who reopened the case and was substituted for the debtors in the litigation. Although the district court allowed the substitution, it limited any recovery to the amounts needed to fully pay creditors. The Seventh Circuit reversed this holding, noting some omissions are culpable and should be punished if it can be done without injuring the creditors. However, other omissions will be innocent and should not be punished. The Metrou court found debtors who make innocent errors should not be punished by loss of their causes of action when they turn the claims over to their trustees. A debtor who errs in good faith and tries to set things right by surrendering the asset to the trustee remains entitled to any surplus after creditors have been paid, just as would have occurred had the claim been disclosed on the bankruptcy schedules. In Peterson v. McGladrey, LLP, ___ F.3d ___, (7th Cir. 2015), the Seventh Circuit affirmed the bankruptcy court’s decision recognizing the in pari delicto defense and dismissing the trustee’s suit against an accounting firm for malpractice. The debtors were mutual funds that were essentially a vehicle for a Ponzi scheme. The accounting firm argued that under Illinois law the trustee’s claims were barred by the in pari delicto doctrine. The trustee argued that Illinois courts only apply the doctrine when the parties have committed the same wrong. He argued it should not apply here, where the debtors committed fraud and the firm committed malpractice for failing to detect the fraud. The Court of Appeals applied the (continued on page 24)
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BANKRUPTCY continued from page 23 doctrine, finding Illinois law does not have such a requirement. Additional decisions have been issued by the Bankruptcy Court for the Northern District of Indiana and the Indiana Supreme Court, which shall undoubtedly impact future bankruptcy cases. The case In re Bell, 526 B.R. 288 (Bankr. N.D. Ind. 2015) (Klingeberger, J.), held Indiana’s wage garnishment statute, Ind. Code §24-4.5-5-105, provides the debtor with an allowable exemption with respect to unpaid wages earned prior to the petition date. The debtor’s claimed exemption in the earned but unpaid wages was sustained in Bell, and the trustee’s objection was denied.
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The Indiana Supreme Court case In re Howell, 27 N.E.3d 723 (Ind. 2015) (taken as certified question from the Bankruptcy Court for the Northern District of Indiana), found Indiana Code §27-1-1214(e) exempts the proceeds and avails of life insurance (including cash value) from the claims of creditors where the named beneficiary is the “spouse, child, or any relative dependent upon” the insured. According to the Court, dependency is not required for the exemption as to a spouse or child; it is only necessary if the beneficiary is some other relative of the insured. The decision provided guidance on a longstanding issue in which federal Indiana courts interpreted the statutory language with differing outcomes. That same day, Judge Klingeberger issued an opinion regarding bankruptcy and life insurance proceeds in the case In re Davis, 527 B.R. 319 (Bankr. N.D. Ind. 2015) (Klingeberger, J.). Judge Klingeberger held death benefits payable to a bankruptcy debtor from life insurance policies covering the debtor’s deceased spouse were exempt from claims
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of creditors under Indiana Code §27-1-12-14(e). The exemption applied after the life insurance benefits were received by the debtor. It was not limited to the time before the benefit was paid. Accordingly, the debtor’s claimed exemption was sustained, and the trustee’s motion for turnover was denied.
Conclusion So far this year, the U.S. Supreme Court, Seventh Circuit Court of Appeals and local courts have issued numerous important bankruptcy decisions. The impact of these decisions has been both narrow – such as in the Chapter 11 case Listecki involving RFRA – and broad – such as in Hegeduis in which Judge Klingeberger for the Bankruptcy Court of the Northern District of Indiana held the proper date to value a debtor’s residential realty is the date of petition when stripping junior liens. Due to the far-reaching impact of these decisions, it is important for bankruptcy practitioners and other attorneys to be aware of these decisions and the impact they may have on their clients’ cases. 1. 11 U.S.C. §541(a)(1) (West 2015). 2. 11 U.S.C. §1322(a)(1) (West 2015). 3. 11 U.S.C. §1306(a) (West 2015). 4. 11 U.S.C. §1307(a) (West 2015). 5. 11 U.S.C. §348(e) (West 2015). 6. See 11 U.S.C. §348(f) (West 2015). 7. Note that there are limited exceptions to this general rule, including an extension of time for filing proofs of claims by governmental units. See Federal Rule of Bankruptcy Procedure 3002(c) (West 2015). 8. See Ind. Code §6-1.1-37-10.1, 11 U.S.C. §108(b) (West 2015).
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FROM THE DESK OF DEAN PARRISH
From thinking like a lawyer to acting like a lawyer: Externships provide invaluable experience Editor’s Note: Recognizing the foundational importance of law schools to our system of justice, we are excited and grateful to debut a periodic column in Res Gestae by Indiana’s law school deans. First up is Dean Austen L. Parrish of the I.U. Maurer School of Law in Bloomington, Ind.
cross Indiana and beyond, they are learning on the job. From the glass-paneled buildings in our big cities to the small town courthouses where the county clerk knows everyone by name, students from the I.U. Maurer School of Law are getting hands-on experience this summer and year-round. The result: a positive impact on their own future and that of our state. After a 1L year spent adjusting to the rigors of legal education and countless hours buried in textbooks and cases, our students begin taking their first career steps. At the Maurer School of Law, part of a well-rounded education means taking advantage of experiential opportunities that help students determine how their values, interests, personality and skills best fit into the legal profession. Some of this happens in simulation and skills courses, in our seven live-client clinics, and in our six projects, where our students collectively volunteer thousands of hours of pro bono service. (See law. indiana.edu/students/ clinic/index.shtml to learn more.) But hands-on learning also happens Austen L. Parrish through field placeDean & James H. Rudy ments. By pursuing Professor of Law a clerkship, externship, IU Maurer School of Law Bloomington, Ind. fellowship or firstname.lastname@example.org ship, students are
RES GESTÆ • SEPTEMBER 2015
test-driving a particular legal career, gaining valuable experience and learning while building a professional track record. Regardless of the path, they are helping themselves and their communities across Indiana. Students who work in prosecutors’ offices throughout the state provide one good example. Students who commit to working at least two semesters with an office can often see a case from the beginning to its resolution, providing invaluable insight into the criminal justice system. “Not many people can graduate from law school and say they’ve tried a bench trial,” says Katie Langlois, director of intern programs for the Marion County Prosecutor’s Office. “Even if a student doesn’t want to become a deputy prosecutor, the experience is worthwhile,” she said. “If they become a public defender, they’ve already been on the other side. There’s a respect that needs to be had on both sides, and if I have a future public defender working here, that attorney is going to go through his or her career knowing how we approach and handle cases. That makes the whole system work better.” Some go on to take even bigger roles within that system. Nathan Harter IV, a 2013 alumnus of our law school, started an internship with his hometown prosecutor’s office in Decatur County in 2012. “Law school for me started as an academic adventure,” he said, “but along the way I found myself seeking ways to actualize the lessons productively. The chance to apply what I was learning in law school to real-world situations and protect the community I love was a thrill. I walked out of the office every day feeling 10 feet tall.” So strong was the feeling of community engagement that
Nathan decided to run for prosecutor in 2014. He won. At Maurer, our Career Services Office works closely with the director of externship and clerkship placements and various other faculty to ensure students who want opportunities have them. For students, this can mean working with federal and state judges, government agencies and nonprofit organizations. The school has eight externship programs, including criminal law, intellectual property, public interest and judicial field placements. For Ashley Lenderman and Von Lovan, it meant clocking in every day in Indianapolis, where this summer they worked with Langlois at the prosecutor’s office. Both rising 2Ls have found their summers enriched by working in the criminal justice system. According to Ashley: “In my first year of law school, I was taught how to ‘think like a lawyer.’ My externship helped inform an equally important part of the equation: how to act like a lawyer. I was able to attend the jury trials of countless attorneys to see how they each handled themselves in court. From there, I was able to pick out things I really want to bring into my legal practice someday, be it a tactic I liked in jury selection or how to close a closing argument.” Von, for his part, has been active in the Indianapolis area, giving presentations to local community organizers as part of the Marion County Community Prosecution Division. That community outreach is helping prevent crimes like arson, burglary and theft by proactively engaging citizens. “Internships or externships provide tremendous experiences for rising 2Ls,” he said. “Prosecutorial
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work allows law students to put the first-year law school courses to use and gain practical experience. It gives you the opportunity to work on a case from the very first stage.” Nate’s, Ashley’s and Von’s experiences underscore how different reality on the ground can be from the narrow, caricatured view of law schools sometimes presented in the national media. The view of the out-of-touch, staid academic institution, with faculty teaching only the theoretical and not the useful, is untethered from what’s actually happening at law schools. Far from having an aversion to all things practical, law schools are strong advocates of externships and experiential education in the development of our young attorneys. This is true even at the most prestigious and highly regarded schools, including Maurer. Mind you, this is not to suggest that law schools should be mere vocational trade schools, whose purpose is to have students attain
narrow technical mastery. Great law schools are scholarly institutions that belong in great universities, and we have more ambitious goals than simply preparing our students for the first day of their first job. But as much as we are committed to providing our students with a deep understanding of law across a wide variety of subject areas, as well as a strong foundation of legal theory, reasoning and analysis, we are also committed to providing meaningful and sophisticated experiential opportunities that introduce hands-on skills. By fully educating students in the theory as well as the practice of the law, we ensure that when students like Ashley, Nate and Von graduate they are prepared to meet the increasingly complex demands of the profession. The bench and bar in Indiana have been critical in these efforts too, helping prepare the next generation of lawyers and leaders. As one example from this June, the ISBA
hosted a panel on “Experiential Education in Legal Education Today” at its Legal Education Conclave. The conclave brought together the practicing bar, the judiciary and legal educators, while the panel described the depth and variety of programs that law schools now offer. (Read more about the Conclave in this issue of Res Gestae at pp. 8-9.) As the new semester gets under way, it’s heartening to hear how Maurer students are spending their summers, discovering new things about themselves and creating a positive impact on their communities. We are grateful for the organizations that create these opportunities and the lawyers who dedicate so much time serving as role models and caring mentors. They are helping our students move beyond the books and into the profession. As a dean, it’s particularly heartening because students like Ashley, Nate and Von give us a glimpse of the future leaders of Indiana.
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By Donald R. Lundberg and Caitlin S. Schroeder
A second five-year retrospective – Part I
thics Curbstone” first rolled out in the July/August 2005 issue of Res Gestae. It’s been 10 years. Thanks for reading.
An introductory note
I continue to hear from readers. It’s gratifying to know that they often agree with me, but I still love hearing from readers who disagree and tell me why. I hope the column has been helpful while remaining true to its modest, original purpose: “It’s in the nature of a curbstone opinion – you get what you pay for.” Continuing the first fiveyear retrospective that ran in the July/August 2010 issue of Res Gestae, herewith is a retrospective of the second five years in the form of an annotated table of contents of those columns. Because of its length, it is being published in two issues – this month and next. An archive of past Res Gestae issues back through 2013 is available on the ISBA website, www.inbar.org, under the “Media” tab (or feel free to Donald R. Lundberg call or email the State Barnes & Thornburg LLP Bar, 800/266-2581 Indianapolis, Ind. or email@example.com, donald.lundberg@BTLaw.com for specific “Ethics Curbstone” columns). I am delighted to introduce my new co-author. Caitlin Schroeder is a Litigation Department associate in Barnes & Thornburg’s Indianapolis office. She graduated summa cum laude from the Caitlin S. Schroeder I.U. Maurer School Barnes & Thornburg LLP Indianapolis, Ind. of Law in 2011. Before Caitlin.Schroeder@btlaw.com joining our firm, she was a law clerk for the
RES GESTÆ • SEPTEMBER 2015
Hon. William T. Lawrence of the U.S. District Court for the Southern District of Indiana. I am excited about partnering with her in this enterprise. After this retrospective column, which is replete with it, we will try to abjure use of the first person pronoun “I.” For Caitlin’s benefit, who, unlike me, has far more years of practice through her windshield than in her rear-view mirror, the excessive candor and downright stupidity you might occasionally read in this column should be attributed to me, not her. Finally, I want to thank Susan Ferrer, the editor of Res Gestae throughout the entire tenure of this column. She is the editor di tutti editors. She is light-footed grace under deadline pressure. She is diplomatically eagle-eyed. She is the mother who instructs you to wear galoshes to school by sweetly asking if you really want to get your nice shoes soaked. You don’t even know what hit you.
A second five-year retrospective Mental State Under the Rules of Professional Conduct (September 2010) This column discussed two lawyer discipline cases applying Rules of Professional Conduct requiring knowledge as a mental state. It includes some observations based on a law review article by Prof. Nancy Moore on the general topic of what proof of mental state is required in lawyer discipline cases. Don’t stick your head in the sand, hoping to avoid the effect of inconvenient, adverse facts. Listen, Do You Want to Know a Secret? Keeping Client Confidences (October 2010) This column uses a key case to discuss how client information learned from an acquaintance who later becomes a firm client must be treated as confidential under Rule of Professional Conduct 1.6(a) even
if some of the information could be found in the public record. Matter of Anonymous, 932 N.E.2d 671 (Ind. 2010). The ethical duty of confidentiality is distinct from, albeit related to, the attorney-client evidentiary privilege. It can be shocking how broad the duty of confidentiality is. The Amended Lawyer Advertising Rules (November 2010) Now controlling for almost five years, the lawyer advertising rules are still worth a close read, as is this article that highlights Indiana’s continuing conservative stance on lawyer advertising. What’s in a Name? The New Restriction on Firm-Like Names (December 2010) Following on my previous column, this one analyzes an amendment to the Rules of Professional Conduct regarding law firm names. Lawyers who are not formally associated with each other in a limited liability entity or general law partnership (such as space sharers) should cease using names like, “Smith & Jones, an association, not a partnership.” Foreign Lawyer Practice Before Executive Branch Agencies: Recent Developments (January/February 2011) Foreign counsel seeking admission to practice before administrative agencies must apply for temporary admission to the Indiana Supreme Court under Admission & Discipline Rule 3(2) or risk the unauthorized practice of law. Fun with Refundability: When Lawyers Owe Their Clients Money (March 2011) This was an overview of three general fee types and their refundability. Be careful how you describe the refundability of a fee in your fee agreement. There are risks with not saying enough or saying too little.
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Choosing Clients Wisely: A Key to Fulfillment in the Practice of Law (April 2011) Representations that involve client-lawyer compatibility, challenging subject matters and fair compensation – or at least two of the three – are most likely to yield fulfilling work. This column describes eight factors to consider when deciding whether to accept a proposed representation. The Zone of Personal Privacy for Judges and Lawyers (May 2011) It may surprise some, but judges and lawyers are human beings who have their own personal interests and views. This column explores to what extent those personal interests and views could rise to the level of a conflict of interest, and to what extent we anticipate that those interests and views are left at the courtroom door when deciding or handling a case.
Fees and Feasibility: Getting Paid (October 2011) Two attorney discipline cases regarding fees yielded two important rules. First, under Rule of Professional Conduct 1.8(a), attorneys must take steps to protect their clients’ interests when they renegotiate fees if there is even a chance that the amended fee agreement will disadvantage the client. Second, a contingency fee that appears reasonable at the outset may become unreasonable in light of developments in the representation; in that case, the fee agreement may need to be reformed. Check out the article and the full opinions for the details. Insurance Coverage for Disciplinary Defense (November 2011) If you find yourself the subject of a disciplinary grievance, take a deep breath, calendar the response deadline, consider hiring an attor-
ney, and consult your malpractice insurance policy, which can provide significant benefits to ease this stressful time. Mandatory Child Abuse Reporting By Lawyers (December 2011) If Rule of Professional Conduct 1.6(b) permits the disclosure of otherwise confidential information relating to suspected child abuse, Indiana’s child abuse reporting statute might require lawyers to report it under some circumstances. The Indiana State Bar Association Legal Ethics Committee recently issued Opinion No. 2 of 2015 on this very topic. It was published in the July/August 2015 edition of Res Gestae. (continued on page 30)
Conflicts of Interest: An Overview (June 2011) The first in an occasional series delving into conflicts of interest, this article provides a high-level overview of current- and formerclient conflicts and informed consent relating to those conflicts. Lawyers and Wellness (July/August 2011) This article heralded the creation of the ISBA Standing Committee on Wellness. The message today is at least as important as it was four years ago – you must take good care of yourself to be able to take good care of your clients. DSK and the Ethics of Criminal Prosecution (September 2011) The criminal prosecutor’s role as representative of a sovereign whose interest is in doing justice – not simply winning – carries with it unique challenges, which this column explores.
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ETHICS CURBSTONE continued from page 29 Chief Justice Randall T. Shepard: An Appreciation, Reminiscence and Retrospective (January/February 2012) Honoring the Chief Justice on the verge of his retirement from the Indiana Supreme Court, this column reviews the history of lawyer discipline cases during his tenure with a focus on the dissent patterns in those cases. Ready, Aim, Disclose: Understanding the Power of the Email ‘Send’ Button in Your Law Practice (March 2012) Together with guest co-columnist Jeff Goens, executive director of the International Legal Technical Standards Organization (ILTSO), this column investigates how an email travels from client to lawyer and back and the ethical implications of safeguarding those communications. It was timely in 2012, and with news of many significant data breaches since then, it remains an important issue.
Current-Client Conflicts of Interest (April 2012) Returning to an occasional series on conflicts of interest, this column offers an overview of current-client conflicts in hopes of tuning your conflicts-of-interest radar. The Disappearing First Free Bite at the DUI Apple (May 2012) Professional lore was that non-prosecutors would not be professionally disciplined as the result of a single, non-aggravated, alcohol-related criminal conviction. That may still be true, but the case discussed in this column raises a question about that. I’ve Looked at Life from Both Sides Now: The Meaning of Agreed Discipline Orders (June 2012) This column described the process behind agreed discipline orders and put forward some ideas about how the Supreme Court should carefully scrutinize conditional agreements for discipline
and be reluctant to give precedential value to the orders of discipline that emerge from them. Former-Client Conflicts of Interest (July/August 2012) As part of the occasional series on conflicts of interest, this column gives a general overview of formerclient conflicts, how to analyze them, and how to avoid finding yourself in the midst of one. Cooperation With and Contempt of Lawyer Regulation (September 2012) Indiana has especially powerful tools for compelling lawyer cooperation with the professional discipline process. The costs of failing to respond to a grievance can be significant, including indefinite suspension from the practice of law. Make sure your address on the Roll of Attorneys is up to date, and make sure you timely respond if the Disciplinary Commission comes calling. We Really Are All in This Together: Imputation of Conflicts of Interest (October 2012) Returning again to conflicts of interest, this column analyzes imputation of conflicts of interest and its exceptions, including ethical screens. It bears repeating: Diligently maintain your conflicts checking system. Lawyers Are People Too: A Story (November 2012) At a recent event, the Hon. Sarah Evans Barker of the U.S. District Court for the Southern District of Indiana encouraged attorneys to tell more stories as a starting point for reflection about personal and professional roles. I shared one of mine and challenged you to share yours. Have you? (continued on page 32)
RES GESTÆ • SEPTEMBER 2015
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ETHICS CURBSTONE continued from page 30 When the Walls Come Tumblin’ Down: Multijurisdictional Practice (December 2012) Thanks to Indiana’s own John Mellencamp for inspiring the title. This column addresses the ins and outs of the unauthorized practice of law, with special emphasis on foreign-licensed in-house counsel who are eligible to be licensed as business counsel (Admission & Discipline Rule 6(2)) and foreignlicensed lawyers providing legal services on a temporary basis in Indiana. See Admission & Discipline Rule 6(2) and Rule of Professional Conduct 5.5, respectively. I’m Sorry, So Sorry: The Element of Remorse in Professional Regulation (January/February 2013) I hope my allusion to the Brenda Lee classic did not pass you by. Remorse or perceptions or misperceptions thereof play an impor-
tant role in lawyer discipline and reinstatement and bar admissions. I had the opportunity to think a bit more deeply on this intriguing topic thanks to having been a panelist on a related topic at the 2013 ABA National Professional Responsibility Conference. This column might be a good place to start if you find yourself in a legal representation where client remorse is a relevant consideration. Moral Dissonance in the Practice of Law (March 2013) This qualifies as one of my personal favorites. It’s one of those thought pieces that mulls over the fundamental role of lawyers in the legal system. Are we moral eunuchs? Where does our role as non-judgmental and amoral client agents end and our role as independent moral actors begin? Nobody will read this column and get any concrete suggestions about staying out of trouble as a lawyer.
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RES GESTÆ • SEPTEMBER 2015
However, if I stop caring about some of the basic questions that underlie my profession and my condition as a human being with a sense of right and wrong, I might as well still be building silos on farms. We’re (Not) All In This Together: Aggregate Settlements (April 2013) Aggregate settlements can be tricky, and it is a mistake for lawyers to forget that Rule of Professional Conduct 1.8(g) regulates them. This column used Matter of Ross, 982 N.E.2d 295 (Ind. 2013), as the occasion to discuss aggregate settlements. The Ross case was a straightforward and fairly benign application of these principles. Some of you may recall the Kentucky Fen-Phen aggregate settlements where lawyers were disbarred, criminally convicted and sentenced to do many years of hard time in federal prison. This is serious business. Oh Canada: The Limited Duty to Refund Fixed Fees (May 2013) Matter of Canada, 986 N.E.2d 254 (Ind. 2013), was an interesting case because it was a rare example of a lawyer not completing all of the work in a fixed-fee representation, but not being subjected to discipline for failing to refund some portion of the fee. This is a perfect opportunity to mention that the ISBA Legal Ethics Committee has issued an opinion discussing the related topic of when fixed fees or some portion of fixed fees must be held in trust until earned (see pp. 16-18 in this issue of Res Gestae). We plan to write about Opinion No. 3 of 2015 soon.
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By Maggie L. Smith and Abigail T. Rom
Appellate civil case law update
SUPREME COURT DECISIONS Fee to be paid discharged lawyer originally retained under contingent fee contract is to be measured by proportion of total fee equal to contribution of discharged lawyer’s efforts to ultimate result Law Firm handled several contingent fee cases while Associate was part of the firm. After Associate left the firm and started a new one, the clients went with him, and the cases ultimately were settled, generating significant attorney fees. Law Firm filed a quantum meruit claim for part of the contingent fees earned in cases that were handled by Associate and other firm attorneys while the clients were there. Although the trial court found that Law Firm attorneys worked a substantial number of hours on those cases and that most of those cases generated attorney fees, the court denied Law Firm quantum meruit relief because it found the associate was not unjustly enriched where: (1) the client in each case at issue chose to continue with the associate when he left the firm, (2) Law Firm and the associate “had no agreement about what would happen if they parted ways, (3) their employment agreement had no provision for file ownership and lacked a non-competition covenant, and (4) [Law Firm] made a ‘very shrewd deal’ for [associate’s] services when it employed him on a salary basis, and [Law Firm] was ‘very well compensated’ for [associate’s] time.”
On transfer, the Supreme Court in Cohen & Malad, LLP v. Daly, 27 N.E.3d 1084 (Ind. 2015) (per curiam), noted that Galanis v. Lyons & Truitt, 715 N.E.2d 858 (Ind.1999), had previously held, “Absent agreement otherwise, ‘a lawyer retained under a contingent fee contract but discharged prior to the contingency is entitled to recover the value of services rendered if there is a subsequent settlement or award[,]’ and in that case, ‘the fee is to be measured by the proportion of the total fee equal to the contribution of the discharged lawyer’s efforts to the ultimate result[.]’” But the trial court did not acknowledge Galanis or apply its standards. The Supreme Court therefore reversed and remanded with instructions to determine, in accordance with Galanis, “what proportional contributions toward the results in the cases at issue were made by attorneys working for Law Firm, and to enter a corresponding judgment in Law Firm’s favor.”
Unanimous Supreme Court confirms that trial court’s discretion on forum non conveniens issues is extremely broad In DePuy Orthopaedics, Inc. v. Brown, 29 N.E.3d 729 (Ind. 2015) (Massa, J.), a unanimous Supreme Court issues a concise opinion confirming that “Trial Rule 4.4(C) imposes no mandatory obligations upon trial courts in dismissing a case on forum non conveniens grounds; rather, the court may dismiss ‘under such reasonable conditions as the court in its discretion may determine to be just.’… Moreover, Rule 4.4(C)’s enumerated list of factors is merely permissive, to the point of including a catch-all provision of ‘any other factors having substantial bearing upon the selection of a convenient, reasonable and fair place of trial.’”
Because the record on appeal revealed at least some facts supporting retaining Indiana as venue, the record contained sufficient evidence for the trial court to have reasonably concluded that Indiana was the appropriate forum for this litigation.
Excess reinsurers must indemnify Anthem for its ultimate settlement, defense costs and other losses it incurred in the settlement agreement
RECENT DECISIONS 4/15
n April, the Indiana Supreme Court issued four civil opinions and granted transfer in five civil cases. The Indiana Court of Appeals issued 19 published civil opinions. The full texts of these opinions are available via Casemaker at www.inbar.org.
Anthem had a multi-tiered insurance arrangement to reinsure itself for errors and omissions (E&O) liability. It was self-insured for liability and had purchased policies from other insurers to reinsure its E&O liabilities. Anthem was sued in multi-district litigation alleging that, after promising to pay doctors in a timely manner for rendering covered, medically necessary services in accordance with standard medical coding procedures, Anthem engaged in an improper, unfair and deceptive scheme designed to systematically deny, delay and diminish Maggie L. Smith Frost Brown Todd LLC payments due. Indianapolis, Ind. Anthem settled vari- firstname.lastname@example.org ous lawsuits without admitting liability and then sought indemnification from its reinsurers for its ultimate settlement for $198 million, its defense costs and other losses it incurred in the settlement agreement. The primary reinsurer for Anthem’s self-insurance E&O policy paid and ultimately exhausted its cov- Abigail T. Rom erage. The excess reinsur- Frost Brown Todd LLC ers, however, denied Indianapolis, Ind. (continued on page 34)
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RECENT DECISIONS 4/15 continued from page 33 coverage for Anthem’s defense, arguing in part that there was no coverage under the relevant policy language because the claims settled in the litigation had not arisen out of acts that had occurred “solely” in Anthem’s rendering of, or failure to render, professional services. The Supreme Court ruled in favor of Anthem in WellPoint, Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 29 N.E.3d 716 (Ind. 2015), opinion modified on reh’g, (Ind. July 29, 2015) (Dickson, J.), concluding, “The Policy covers not only Anthem’s actions in adjusting and paying reimbursement claims from health care providers – but also its failure to do so. The use of the word ‘solely’ in the professional liability insuring agreement operates here to prescribe coverage for Anthem losses resulting from claims for any wrongful acts by Anthem in the course of its claims handling and adjusting services but not for losses resulting from claims for wrongful acts that occur outside its rendering of such services.” The Supreme Court also rejected the argument that Anthem cannot recover other settlement costs as a matter of public policy because Anthem intentionally engaged in improper business practices. The Court found the excess reinsurer “fails to point to a well-defined and dominant Indiana public policy prohibiting coverage for specific intentional conduct in the context of alleged systematic failure to adequately reimburse claims for medical service, versus, e.g., murder or arson to receive occurrence-based coverage. In light of the very strong presumption of enforceability of contracts, and the relative equality of sophistication and bargaining power among the parties, we decline to find the covered risks to be uninsurable under Indiana law.” The Supreme Court similarly rejected the argument that the relief 34
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Anthem seeks should be denied because it is contractual or restitutionary in character. The Court explained that the parties are “sophisticated, professional insurance companies” and while recognizing that some authorities “have supported the idea that a business cannot insure anticipated economic responsibility or known losses,” the Court noted different circumstances existed here. The Court also held that Anthem’s claim of settlement losses falls within a contractual exemption providing the exclusion for “any dishonest or fraudulent act or omission … shall not apply to any Claim seeking both compensatory and punitive damages based upon or arising out of allegations of both fraud and bad faith in the rendering of or failure to render Professional Services.” Finally, the Supreme Court reversed the entry of summary judgment in favor of the excess reinsurers on Anthem’s bad faith claim, finding that issues of fact exist to be resolved by the factfinder at trial. On rehearing, the Supreme Court clarified that its opinion only addressed the issues raised in the summary judgment proceeding and that the excess reinsurers did not waive remaining affirmative defenses that were not asserted.
Unanimous Supreme Court finds child support modification was properly handled as summary proceeding and that exercising additional overnight visits does not require corresponding decrease in child support obligations Mother and Father dissolved marriage. Years later, Father sought to modify his child support obligation given his increased number of overnight visits with their child and
a decrease in Mother’s childcare costs. Mother sought a deviation from the amount recommended by the Indiana Child Support Guidelines because that amount failed to allow her to continue supporting Child considering all of the attendant costs she incurs as the custodial parent. The parties agreed to proceed in a summary fashion, and the trial court entered findings that reduced Father’s previous support obligation some, but the trial court concluded the support provided under the Guidelines was unreasonable and created a hardship on Mother and therefore deviated upward from the recommended support and ordered that Mother would claim the child dependency tax exemption every year, instead of alternating years with Father. A unanimous Supreme Court in Bogner v. Bogner, 29 N.E.3d 733 (Ind. 2015) (David, J.), first addressed the summary proceedings aspect of the appeal, recognizing that “[s]ummary proceedings function to efficiently resolve disputes by allowing parties and the court to forego the use of formal rules of procedure and evidence and instead allow the court to base its findings and conclusions upon the arguments of counsel and limited evidence. Summary proceedings commonly take place when parties are not disputing essential facts, but rather the legal outcome compelled by those facts … . Thus, where parties agree to most of the relevant facts, summary proceedings may be appropriate to provide the parties with an expedited resolution.” Second, the Supreme Court confirmed that “the Guidelines should not be treated as immutable, black letter law. Rather, some situations require greater flexibility.” The Court recognized that it is not clear whether an overnight visit “truly shifts the financial burden
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from one parent to the other.” More important, “this Court does not believe that exercising additional overnights should be used as a bargaining tool for parents to decrease their child support obligations. Rather, we encourage parents to exercise flexibility and to deviate from strictly scheduled parenting time when the parents are able to make those arrangements amicably and in the best interests of the child. We do not seek to encourage custodial parents to withhold additional parenting time from noncustodial parents for fear that trial courts will be required to reduce the noncustodial parent’s ordered support obligation, without due consideration of all the circumstances.” Flexible standards allow trial courts to “fashion child support orders that are tailored to the circumstances of the particular case.” Finally, with regard to the issue of who would receive the tax exemption, the Court noted that Father was given full opportunity to present his own argument regarding the tax exemption and never objected. “Given that it was a summary proceeding, the trial court properly relied upon the arguments of counsel and the offered exhibits.”
TRANSFER DISPOSITIONS The Indiana Supreme Court granted transfer in the following five civil cases, with the opinions to follow at a later date:
JPMorgan Chase Bank, N.A. v. Claybridge Homeowners Association, Inc., 19 N.E.3d 324 (Ind. Ct. App. 2015) (Brown, J.), transfer granted April 23 (dealing with motion to intervene in homeowners association’s action to foreclose on lien against homeowner’s real estate). • Goodrich Quality Theaters, Inc. v. Fostcorp Heating and Cooling, Inc., 16 N.E.3d 426, affirmed on rehearing, 23 N.E.3d 28 (Ind. Ct. App. 2015) (Robb, J.), transfer granted April 23 (dealing with mechanic’s lien on commercial property). • Clifton v. McCammack, 20 N.E.3d 589 (Ind. Ct. App. 2015) (Brown, J.), transfer granted April 23 (dealing with negligent infliction of emotional distress under bystander rule).
SELECTED COURT OF APPEALS DECISIONS Unanimous Court of Appeals reverses, remands and orders that summary judgment on malpractice claim be entered on behalf of the defendant, while panel of two determines that defendant did not breach any duty that he owed to the plaintiffs prior to or at the time he terminated his employment with law firm and representation of plaintiffs
• Masters v. Masters, 20 N.E.3d 158 (Ind. Ct. App. 2015) (Najam, J.), transfer granted April 2 (dealing with award of attorney fees in marriage dissolution case).
In 2012, it came to light that a prominent attorney had a history of settling his clients’ claims without authority and converting a large portion of those settlement funds to his own use and benefit. The plaintiffs were victims of the attorney’s scheme.
• Huntington National Bank v. Car-X Associates Corp., 22 N.E.3d 687 (Ind. Ct. App. 2015) (Brown, J.), transfer granted April 14 (dealing with default judgment in mortgage foreclosure).
The defendant resigned from the attorney’s firm in December 2011 due to concerns about the attorney’s failure to timely pay firm expenses. The defendant had been working on the plaintiffs’ case with
the firm, but the plaintiffs chose not to remain with the defendant when he left the firm. The defendant believed and was later told that the firm handled his withdrawal from the firm’s cases. He later learned in April 2012 that the firm had not filed a motion to withdraw his appearance from the plaintiffs’ case, and he immediately withdrew. In January 2012, the defendant reported his concerns about the attorney’s handling of firm finances to the Indiana Supreme Court Disciplinary Commission and was contacted soon after by the Federal Bureau of Investigation, which was investigating the attorney for failing to properly fund annuities for clients arising out of personal injury settlements handled by the firm. In February 2012, the defendant became aware that the attorney had settled a client’s case without the client’s knowledge, and he informed both the Disciplinary Commission and the FBI of this new information. In July 2012, the plaintiffs’ counsel in the instant case wrote the defendant and informed him that the attorney had settled the plaintiffs’ case with the firm in February 2012 without the plaintiffs’ knowledge. The letter alleged that the defendant had knowledge of the plaintiffs and a duty to inform them that the attorney was in “serious ethical and criminal predicaments and that the [plaintiffs] were in peril of being victimized.” The defendant responded that at the time he terminated his employment with the firm and thus his representation of the plaintiffs, “he had no reason to know, did not know and could not have known that [the attorney] would settle a client’s case without their knowledge and then keep the settlement proceeds for himself.” The instant lawsuit followed. (continued on page 36) RES GESTÆ • SEPTEMBER 2015
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Expertise + Passion = Results Estate & Trust Litigation & Mediation Brian C. Hewitt, Esquire Alerding Castor Hewitt, LLP Indianapolis & Greenwood 317-829-1910 email@example.com } Fiduciary Litigation Committee – American College of Trust & Estate Counsel } Mediator of Over 750 Probate, Trust & Guardianship Disputes } Counsel in Hundreds of Will Contest, Accounting, Breach of Fiduciary Duty & Guardianship Cases } Super Lawyer® Top 50 – Numerous Years } Board Certified Indiana Trust & Estate Lawyer
continued from page 35 The parties filed competing motions for summary judgment, which the trial court denied. In Devereux v. Love, 30 N.E.3d 754 (Ind. Ct. App. 2015) (Bradford, J.), the Indiana Court of Appeals – unanimous in result and a panel of two in reasoning – held in the interlocutory appeal that summary judgment was appropriate in favor of the defendant. In finding for the defendant, the majority acknowledged that attorneys owe a duty to exercise ordinary skill in knowledge to clients. However, it found that the designated evidence showed that the defendant lacked knowledge as of December 2011 that the plaintiffs were at risk of harm from the attorney. It further agreed with the defendant that it would have been inappropriate to share his concerns as of December 2011 with the plaintiffs because the defendant lacked knowledge that the attorney had mishandled any active cases or that the wrongdoing amounted to any more than delaying payments. Additionally, the majority agreed with the defendant that, even though he did not officially withdraw from the plaintiffs’ case until April 2012, it was undisputed that the plaintiffs did not consider the defendant their attorney after December 2011 and the defendant had no involvement in the case after that date. The majority held that although the determination of an attorney’s duty is usually one of fact and not law, in this case, the designated evidence led to only one conclusion: “… that [the defendant] did not breach any duty that he owed to [the plaintiffs] prior to or at the time he left his employment with the firm.”
Other COA decisions • “While Woroszylo’s pursuit of his claim in the U.S. District Court 36
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for the Northern District of Illinois was plainly a poor decision, we cannot agree with Munoz that it amounts to negligence in the prosecution of the action under the Statute. Woroszylo filed suit in the federal court before the expiration of the Indiana statute of limitations for a personal injury claim. Nor was Woroszylo dilatory in filing suit in Indiana after his claim was dismissed from federal court: Woroszylo’s original suit was dismissed on April 4, 2014, and he filed his claim in Indiana less than two weeks later, on April 15, 2014. Indeed, there is no record before us that Woroszylo made any efforts to appeal the federal court’s order. At no point did any of this fail to satisfy other statutory bars to Woroszylo’s suit, and Munoz’s defense of the suit in the federal court demonstrates that he had notice of the claim.” Munoz v. Woroszylo, 29 N.E.3d 164 (Ind. Ct. App. 2015) (Bailey, J.). • “‘Unlike a motion for summary judgment under Rule 56, the sufficiency test of Rule 50(A) is not merely whether a conflict of evidence may exist, but rather whether there exists probative evidence, substantial enough to create a reasonable inference that the nonmovant has met his burden. The crux of the qualitative failure analysis under Rule 50(A) is whether the inference the burdened party’s allegations are true may be drawn without undue speculation.’ Therefore, the same evidence that allowed Think Tank to defeat a summary judgment motion could be insufficient to overcome a motion for a directed verdict. Thus, Think Tank cannot argue that – in defeating the defendant’s summary judgment motion – it has also automatically defeated a motion for directed verdict.” Think Tank Software Dev. Corp. v. Chester, Inc., 30 N.E.3d 738 (Ind. Ct. App. 2015) (Baker, J.).
Hamilton County leads court e-filing project amilton County is the leader in the statewide court e-filing project. Chief Justice of Indiana Loretta H. Rush traveled to Hamilton County last month to meet with court and clerk staff as well as judges and attorneys to congratulate them on being the first county to implement e-filing as part of a statewide measure. “This is a major step toward all 92 counties accepting electronic filings rather than paper. We wanted to say thank you in person.” In 2014, the Indiana Supreme Court announced the implementation of statewide e-filing, which will reduce paper copies, postage and trips to the clerk’s office. With strong support from the legislative and executive branches, attorneys, clerks, judges and staff, the path to e-filing is underway with plans for statewide implementation by the end of 2018. Supreme Court Justice Steven H. David and Court of Appeals Judge Paul D. Mathias (leaders of the project) were also present to recognize Hamilton County. Justice David explained, “The Indiana Supreme Court is committed to the most effective use of technology to ensure that courts operate with efficiency and fairness – e-filing is a key component of our modernization plans.” Hamilton County is now accepting e-filing of most civil cases. Information about e-filing can be found at courts.in.gov/efile. The rules and implementation schedule, list of service providers and details about training sessions will be updated online. Those interested can also subscribe to receive email updates about e-filing.
Children’s Commission releases annual report he annual report for the Commission on Improving the Status of Children in Indiana is now available online at www.in.gov/ children. The 35-page report is a window into the collaborative work being done across all three branches of Indiana government to improve the lives of Hoosier children – especially the most vulnerable. The report was developed by the 18-member Commission. The report concentrates on access to and availability of mental health and substance abuse services; information sharing; promoting best practices, policies and programs; and obtaining information from agencies and experts. The report also includes extensive information about its work: meeting summaries and links to materials and webcasts for each session, and detailed information about the Commission’s six task forces: Child Services Oversight Committee; Cross-System Youth Task Force; Data Sharing & Mapping Task Force; Educational Outcomes Task Force; Infant Mortality & Child Health Task Force; and Substance Abuse & Child Safety Task Force.
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By Professor Emeritus Joan Ruhtenberg
he way lawyers write has been criticized for decades. As one author noted, “[L]awyers are known for polysyllabic prose and unrelenting bombast.”1 Although the plain English movement has had a positive impact on legal writing, there is still room for improvement. One pervasive problem is verbosity. Members of your audience (judges, other lawyers) are busy people. They are usually reading your paper not because they want to but because they must. They hope, often in vain, that you will be concise. There are many reasons for the verbose style that pervades so much legal writing, but two seem to be at the root of the problem. (1) Many legal writers do not know how to be concise without sacrificing accuracy, precision, and clarity. (2) Legal writers are often as busy as the audience to whom they are writing, and being concise takes more time than being wordy. Nathaniel Hawthorne is reported to have said, “Easy reading is damn hard writing.” Eliminating unnecessary words, however, is not difficult. Listed below are some sources of verbosity and guidelines for pruning out the deadwood.
1. Lengthy or unnecessary introductions
Joan Ruhtenberg Professor Emeritus IU McKinney School of Law Indianapolis, Ind. firstname.lastname@example.org
Clauses and phrases such as “it is important to note that,” “another point to be made is that,” and “the fact that” can be eliminated. Compare these sentences: Another point to be considered is that the
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defendant did not read the no-contact order, but that is irrelevant. (19 words)
3. Wordy phrases
The fact that the defendant did not read the no-contact order is irrelevant. (13 words)
at a previous time at the time that despite the fact that for the reason that in the event that
That the defendant did not read the no-contact order is irrelevant. (11 words) Contrary to popular opinion, it is permissible to begin a sentence with “that.” In the examples above, “that” serves the same purpose as “the fact that” and makes the sentence more emphatic. If you begin a sentence with “it is/was” or “there is/was,” consider whether those words are necessary. Examples: There was a heavy fog that blocked the driver’s view of oncoming traffic. (13 words) A heavy fog blocked the driver’s view of oncoming traffic. (10 words)
2. Redundant expressions The English language has many synonyms because it is derived from different sources, primarily Anglo-Saxon, Norman French, and Latin. In England during the Middle Ages it was common for lawyers and judges to combine synonyms such as “aid and abet,” “null and void,” and “cease and desist,” probably to avoid ambiguity.2 This tradition is followed today, but other common tautological phrases and clauses, such as those listed below, cannot be explained: basic fundamentals each and every final result it is possible that he may sufficient enough the reason is because unexpected surprise
Many phrases can be replaced with one word. Examples: earlier when although because if
Consider these sentences: The new regulation can have consequences of a serious nature to the public at large. (15 words) The new regulation poses a danger to the public. (9 words)
4. Nominalizations A nominalization is a noun derived from a verb, such as “resolution” from “resolve,” and expresses an action in several words that can usually be expressed in one. Consider these sentences: The committee took into consideration a proposal for the elimination of certain rules and the clarification of others. (18 words) The committee considered a proposal to eliminate certain rules and clarify others. (12 words) Other nominalizations that could be replaced with a single verb include: bring about the destruction of destroy engaged in a conversation talked held a meeting met made an observation that observed made a statement stated voiced an objection objected Replacing nominalizations with verbs can make your writing not only more concise but also more forceful.
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5. Passive voice Prefer active over passive voice unless one of these exceptions apply: • the actor is unknown The car was stolen. • the actors are irrelevant The rule was violated many times. • you want to emphasize the action The woman was beaten and left bleeding in the alley. Passive voice generally requires more words than active voice because you must identify the actor with a prepositional phrase. Consider these sentences: It was stated by the court that before a new duty of care is imposed by the courts the nature of the risk must be weighed against the burden of guarding against the risk. (34 words)
The court stated that before imposing a new duty of care courts must weigh the nature of the risk against the burden of guarding against the risk. (27 words) Previous cases defining “sudden” to mean either “unexpected” or “abrupt” were examined by the court, and it was determined that seepage from a landfill did not qualify as sudden under either definition. (32 words) The court examined previous cases defining “sudden” to mean either “unexpected” or “abrupt” and determined that seepage from a landfill did not qualify as sudden under either definition. (28 words) 6. Unnecessary modifiers The following advice is commonly attributed to Mark Twain: “Substitute ‘damn’ any time you are inclined to write ‘very’; your
editor will delete it, and your writing will be as it should be.” The five most overused and often unnecessary modifiers are “very,” “clearly,” “actually,” “obviously,” and “basically.” Delete them unless they are essential to the idea you wish to convey. One final note: Writing concisely does not mean that you should write only short sentences. That, in fact, is poor style. Vary your sentence length so that the writing flows smoothly, but scrutinize each sentence for needless words. 1. George Grellas, “Writing Skills – What Makes for Good Legal Writing,” http://tinyurl.com/Grellas-article-May-2009. 2. Before the Norman Conquest in 1066, legal documents in England were written in Latin. After the Normans became the ruling class, they were written in Norman-French, and after 1300 they were written primarily in English.
Become an Indiana Registered Paralegal Brought to you by the ISBA Affiliate Membership Committee Visit www.inbar.org to learn more! RES GESTÆ • SEPTEMBER 2015
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By Prof. Joel M. Schumm
Severance law, insanity grounds, other holdings
CRIMINAL JUSTICE NOTES 4/15 -5/15
n April and May, the Indiana Supreme Court issued four opinions in transfer cases involving the issues of severance, the continuous crime doctrine, insanity in the face of unanimous expert opinions, and fair notice to support a conviction of a nonlesser-included offense. It also addressed a claim of prosecutorial misconduct in a death penalty case and decided two life-withoutparole cases. The Court of Appeals decided cases involving bail in a (self-defense) murder case, the breaking element for burglary, material variance when the wrong battery victim is named, and an inappropriate sentence for child molesting.
INDIANA SUPREME COURT Severance law remains in a ‘state of confusion’?
In Pierce v. State, 29 N.E.3d 1258 (Ind. 2015), a three-justice majority upheld several convictions for child molesting over a defendant’s claim that they should have been severed. The Court held separate trials are not required when a defendant “commit[s] the same crime, in substantially the same way, against similar victims.” Id. at 1267. Specifically, the defendant had “exploited his position of a trusted grandfather or great uncle by molesting young female family members in his care” and employed a similar method of inviting each victim to spend the night when no other children were present. Id. at 1266-67. Justice Rucker, Joel M. Schumm joined by Justice Clinical Professor of Law Dickson, dissented, IU McKinney School of Law noting that a divided Indianapolis, Ind. Court of Appeals’ email@example.com panel applying the “traditional approach”
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had found the trial court erred in denying severance, and a majority of the Indiana Supreme Court had reached the opposite conclusion. Id. at 1272. Instead of continuing “down this path of inconsistency,” the dissent urged providing “greater clarity to an area of law that remains in a state of confusion.” Id.; see also Wells v. State, 983 N.E.2d 132, 137 (Ind. 2013) (Rucker, J., dissenting from the denial of transfer) (explaining “our traditional approach in resolving claims of severance fails to provide meaningful guidance to either the bench or the bar, and thus lends itself to inconsistent results, even where the facts are very similar”).
No reversal on insanity grounds despite unanimous expert testimony
Continuous crime doctrine inapplicable
Id. at 712 (internal citation omitted).
In Hines v. State, 30 N.E.3d 1216 (Ind. 2015), the Indiana Supreme Court clarified limitations on the application of the continuous crime doctrine. Resolving a conflict between Buchanan v. State, 913 N.E.2d 712, 720-21 (Ind. Ct. App. 2009), trans. denied, which applied the doctrine to two distinct chargeable crimes, and Walker v. State, 932 N.E.2d 733, 737 (Ind. Ct. App. 2010), which disagreed with Buchanan and limited the doctrine to situations “where a defendant has been charged multiple times with the same offense,” the justices agreed largely with Walker. Hines, 30 N.E.3d at 1219. The doctrine, which is a rule of statutory construction and common law, applies only when a defendant has been charged multiple times with the same continuous offense and did not apply in Hines, where the defendant was charged with criminal confinement and battery. Id. at 1220-21. Nevertheless, the battery conviction was vacated under the actual evidence test of Indiana’s seminal double jeopardy case, Richardson v. State, 717 N.E.2d 32 (Ind. 1999).
Applying that precedent but distinguishing the facts in Myers v. State, 27 N.E.3d 1069 (Ind. 2015), the majority affirmed a jury’s verdict of guilty but mentally ill to four counts of attempted murder, rejecting the defense claim that he was insane at the time of the offense. Although the experts who testified at trial unanimously agreed that the defendant was incapable of understanding the wrongfulness of his conduct at the time of the offense, the Court reiterated that “testimony regarding behavior before, during, and after a crime may be more indicative of actual mental health at [the] time of the crime ... .” Id. at 1076 (quoting Thompson v. State, 804 N.E.2d 1146, 1149 (Ind. 2004)).
In Galloway v. State, 939 N.E.2d 699 (Ind. 2010), a 3-2 majority of the Indiana Supreme Court held: Where there is no conflict among the expert opinions that the defendant was insane at the time of the offense, there must be other evidence of probative value from which a conflicting inference of sanity can be drawn. Such probative evidence is usually in the form of lay opinion testimony that conflicts with the experts or demeanor evidence that, when considered in light of the other evidence, permits a reasonable inference of sanity to be drawn.
Justice Rucker, a member of the Galloway majority, dissented. He acknowledged that Myers • “had seemingly been coping better with his mental illness over the past several years”; • “had never met the individuals he shot at, and nothing in the record indicates that he had ever attacked any other individuals due to delusions regarding his believed involvement in the military or CIA”; and
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• “did nothing during the incident itself that explicitly demonstrated he was suffering from a delusion at that time, while the defendant in Galloway shouted out that he believed his grandmother was the devil.”
Id. at 1082-83. But he concluded these were “distinctions without a difference,” and Galloway instead held “where there is no conflict among the expert opinions as to the defendant’s insanity then there must be other evidence either from ‘lay opinion testimony that conflicts with the experts or demeanor evidence.’” Id. at 1083 (quoting Galloway, 938 N.E.2d at 712).
Convictions reversed based on lack of fair notice In Young v. State, 30 N.E.3d 719, 720-22 (Ind. 2015), an opinion that addresses two separate cases involving co-defendants, the trial judge convicted defendants charged with murder of attempted aggravated battery, a purported lesser included offense, because he found the defendants intended a group beating of the victim, but they did not know a member of their group would shoot him. In reversing the convictions, the Court explained:
Id. at 727-28 (internal citation omitted).
Prosecutor misconduct in death penalty case The Indiana Supreme Court has long held that the imposition of the death sentence must be based on those aggravating circumstances listed in the statute, and a prosecutor commits misconduct by requesting “a jury to return a death penalty for anything other than that the mitigating factors are outweighed by the aggravating factor or factors.” Isom v. State, 31 N.E.3d 469 (Ind. 2015). Thus, a prosecutor “stepped over the line” in Isom when arguing the following during the rebuttal phase of closing arguments: “Kevin Isom failed Cassandra as a wife [sic] and as a life partner. He failed the children as a father. He failed himself as a man. He failed his mother as a son.
And he failed the community as a productive and constructive member of that community.” Id. at 492-93. Because the defendant did not object, reversal would only be warranted if the remarks were so prejudicial as to make a fair trial impossible. Id. at 493. Finding that any harm from the remark as part of several weeks of testimony and two days of mitigation testimony and evidence was “de minimis and not substantial,” the justices affirmed. Id.
Two life-without-parole cases affirmed The Indiana Supreme Court has mandatory jurisdiction over cases in which a defendant is sentenced to life imprisonment without parole. Ind. Appellate Rule 4(A)(1). The justices dispatched with two LWOP cases (continued on page 42)
[F]air notice of the lesser offense was so lacking as to establish fundamental error. The charges rested solely on the shooting, and were entirely silent about a beating. Then, apparently relying on that silence, defense counsel made prejudicial admissions about the (uncharged) beating as a defense against the charged shooting – indeed, winning acquittal on that charge. Only then did the State advance the beating as alternative grounds for a lesser included offense. But once those admissions were made in reliance on the charges, switching theories placed Defendants in a Catch-22 from which no objection and no continuance could have freed them – a fair trial on the alternative theory of attempted aggravated battery by beating had become impossible. RES GESTÆ • SEPTEMBER 2015
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CRIMINAL JUSTICE NOTES 4/15-5/15 continued from page 41 in unanimous opinions. In Bell v. State, 31 N.E.3d 495, 500 (Ind. 2015), the Court concluded that the defendant’s “statement to police was not unreliable as a matter of law[,] and standing alone was sufficient to sustain his murder conviction.” In Stephenson v. State, 29 N.E.3d 111 (Ind. 2015), the justices rejected the following challenges: “(1) insufficient evidence of robbery; (2) insufficient evidence to support the sentence of life imprisonment without parole; (3) erroneous admission of suicide attempt evidence; (4) erroneous admission of evidence regarding the defendant’s appearance after the victim’s apparent death; and (5) sentence inappropriateness.” Id. at 114. In a footnote, the Court added that “the defense presented additional matters for the first time at oral argument. Because these were not raised in his briefs and not fully subject to the adversarial process, we decline to consider them.” Id. at 114 n.1.
INDIANA COURT OF APPEALS
Naming wrong battery victim is a material variance
Denial of bail in (self-defense) murder case reversed
In Adetokunbo v. State, 29 N.E.3d 1277 (Ind. Ct. App. 2015), the State charged the defendant with battery and named a security guard as the victim in the information. No evidence of battery of that person was offered at trial, but the State pointed to evidence on appeal of a battery of a police officer who was not named in the charging information. Id. at 1282. In addressing the defendant’s challenge to the sufficiency of the evidence, the Court of Appeals cited the longstanding principle that “the name of one injured in his person or property, by the act of the accused, or the name of one whose identity is essential to a proper description of the offense charged should be alleged if known ... .” Id. (quoting Robinson v. State, 232 Ind. 396, 398, 112 N.E.2d 861, 862 (1953)). Although not every variance involving a victim’s name is fatal, the one involving “a different battery against another victim” was, and the battery conviction was therefore ordered vacated. Id. at 1282.
Fry v. State, 990 N.E.2d 429, 443-44 (Ind. 2013), reversed 150 years of precedent in requiring in murder cases that “the burden lies with the State to show that ‘the proof is evident or the presumption strong,’ if it seeks to deny bail to that defendant.” In Satterfield v. State, 30 N.E.3d 1271, 1279 (Ind. Ct. App. 2015), the defendant admitted that he shot the victim but asserted self-defense because the decedent had “forcefully attempted to enter [his] car while holding a shiny object.” In denying his request for bail, the trial court refused to consider any facts related to self-defense. Id. The Court of Appeals reversed and remanded for a new bail hearing, emphasizing “the defendant’s right to present exculpatory evidence as to his or her culpability during a bail proceeding and the trial court’s duty to take this evidence into account when considering a request for bail.” Id.
Breaking element of burglary satisfied
ISBA members: Update your addresses email & postal online at www.inbar.org 42
RES GESTÆ • SEPTEMBER 2015
In Jenkins v. State, 34 N.E.3d 258 (Ind. Ct. App. 2015), a homeowner opened his door after recognizing the man through the door’s peephole. The defendant then pushed that man aside, hit the homeowner with a bottle and pistol, and proceeded to steal items from the residence. Id. at 262. The Court of Appeals affirmed the burglary conviction, concluding “[w]hile there was no conclusive evidence Jenkins used force to open the door, there existed sufficient evidence to prove he used physical force to move [the man outside the door] from the doorway and to subdue [the homeowner].” Id.
Sentence reduced in child molesting case In Carter v. State, 31 N.E.3d 17, 32 (Ind. Ct. App. 2015), trans. pending, a defendant who was in his early 20s at the time of the offenses, had maintained steady employment and had no criminal history sought a reduction of his 98-year sentence for multiple child molesting offenses against the same victim. Although the defendant occupied a position of trust as the victim’s stepfather and the offenses were “undeniably serious,” the Court of Appeals concluded that the 98-year sentence was “out of the range of appropriate results,” reducing it to 68 years. Id. at 33.
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FAIR COMMENT continued from page 46 Anderson community. In 1985, he was named “Man of the Year” by the Anderson Herald Bulletin.
secret, Charlie and Hazel’s lead gift paid for construction of the narthex.
His philanthropy is equally varied and expansive. With his wife, Hazel, Charlie has established 12 distinct perpetual endowment funds through the Madison County Community Foundation. His community contributions total more than $1 million. DeVoe nearly gushes, “Charlie is unique – he’s the most creative philanthropist I know. He is remarkable for his allegiance, dedication and constant monitoring of the community and the organizations in which he has an interest. Give me a hundred Charlie Dickmanns! Not only does he donate, he DOES. Even now [at] 90, it’s not nominal involvement – it’s real involvement.”
There’s Charlie’s army experience, where his ability to type led him to be the administrator of an army field hospital in the north Africa campaign, as well as in Sicily and Italy thereafter. “For a young man who loved to travel, seeing Tunisia, Algiers, Morocco, Sicily and Italy was a rare treat. Yes, the army experience certainly enhanced my love of travel.”
Charlie is 90, and with all he’s accomplished, he’s had a fulltime sheet throughout his life. Not surprisingly, there are some memorable stories along the way. There are the family trips of his youth, as when his parents and five siblings set out in their 1932 Plymouth for the wonders of Yellowstone National Park. “We stayed in tourist camps, and we never went out to eat, but those trips were wonderful and gave birth to my love of travel,” Charlie recalls. There are the trips with Hazel and his own daughters: out west to San Diego, east to Washington, D.C. and Gettysburg, northeast to New York and New England. There’s the 1960 fire at the First United Methodist Church when the janitor, who had been declared insane by the Circuit Court judge, set fire to the church and went across the street and drank coffee while he watched it burn. It was Charlie Dickmann who chaired the Finance Committee that arranged for rebuilding the church, and true to his fundraising
There’s the one about the YMCA president who hired a new executive director for a YMCA that was struggling and on the brink of foreclosure. That director, Dan Sager, recently retired after 27 years in his post, is now one of Charlie’s closest friends. He’s also an admirer. “I don’t know of anyone else with such a varied record of community work and philanthropy. Charlie was – and still is – sharp as a tack. He analyzes situations so well, explores all options and considers the most minute of details. He devises a plan and then urges others to challenge all facets of it. Then, after he’s certain all angles are covered, he moves ahead. Charlie embodies the YMCA principles of spirit, mind and body through his work, wisdom and philanthropy. I’m so honored to call him my friend.” Charlie Dickmann’s journey through life in the Anderson community is as rich as his travels across the world. And if you ask him what’s been the best, he’s likely to tell you about travel. “People often ask what I like best. I say, ‘How can you compare the Swiss Alps to the Eiffel Tower or the Great Wall of China?’ But after each trip, I say, ‘I think this was the best.’ Hazel looks at me and says, ‘Oh, Charlie, that’s what you always say!’ And you know what? She’s right.”
Charlie’s law partner, J.R. Builta, sums it up best: “Charlie has a rare combination of abilities ... he can do the tedious work of reading abstracts or completing a final accounting. But, unlike so many people who have that gift, he also can take over a room with his advocacy, his personality and his leadership skills. I’ve not seen many individuals with that mix of talents, and that’s one of the reasons Charlie is so uniquely successful. “I have never seen him come walking into the office and look like he doesn’t want to be here. He has always enjoyed being a lawyer, doing his work and being at the office. And, with him coming in four days a week at age 90, I’m still glad to have him here. I’m not sure there are a lot of people you could say that about.” Builta, like his fellow lawyers and neighbors, is happy Charlie chose Anderson as home and happier still that his travels always bring him back home.
The ISBA Leadership Development Academy Class of 2016 application is now available at the State Bar’s website, www.inbar.org, under “ISBA News.” For more information on LDA, see p. 11 of this issue of Res Gestae. Questions? Contact Catheryne Pully on the State Bar staff 800/266-2581 firstname.lastname@example.org RES GESTÆ • SEPTEMBER 2015
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RES GESTÆ • SEPTEMBER 2015
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By R. William Jonas Jr.
Charles H. Dickmann: ‘The heart of a giver’ Editor’s Note: Charles Dickmann, 96, Anderson, a longtime lawyer and philanthropist, passed away on Aug. 11. State Bar Past President Bill Jonas replaced traditional “President’s Perspectives” in Res Gestae during his term with a series of articles that he titled “Lawyers Are Great People!” What follows is his October 2009 article.
nderson lawyer Charlie Dickmann (“Charlie” to some and “Mr. Dickmann” to many others) is blessed with the “heart of a giver,” says Madison County Community Foundation Executive Director Sally DeVoe. A probate lawyer for nearly 60 years who has raised a family and traveled the world, Charlie’s ingenuity, hard work and remarkable generosity have improved and inspired his hometown. And no matter where he travels, Charlie always comes home to Anderson and back to his office at Sansberry Dickmann Freeman Builta & Cook. Born in 1919 to a lawyer and a school teacher in pre-depression rural Hancock County, Charlie learned early that giving was expected – if you had time you participated; if you were fortunate enough to have money, you opened your wallet. “It was not the professions of my parents that were the source of my need to give – it was their example and their character,” the 90-year-old lawyer said recently from the office where he regularly sees clients four days a week. “We weren’t what you would call poor, but with six children, my mother and father did not have a lot of extra money.” Still, his parents were devout Methodists (to this day, Charlie cherishes the Bible he was awarded at age five and the award he received for 10 years of perfect attendance at Sunday School); his father, a law school classmate and I.U. debate teammate of Wendell Willkie, was active in local Republican politics; his mother served (to high school Charlie’s chagrin) as the head of the Women’s Christian Temperance Union. “It was expected that you would participate and give ... and do it the best you could,” Dickmann said.
Charlie was the first-ever freshman letter winner in basketball at Greenfield High School, and outside of his father, one of his first encounters with another lawyer (albeit a future lawyer) was on the basketball court. “I played against John Townsend in my first game ... long before he went to Michigan and long before he became a lawyer.” And while Hammerschmidt, Amaral & Jonas, P.C. Charlie is justifiably proud of his athletic South Bend, Ind. accomplishments, it was as an adolescent email@example.com that he learned the lesson that has led to his notable success as a community fundraiser.
RES GESTÆ • SEPTEMBER 2015
When Charlie was 13 and delivering The Indianapolis News to the good citizens of Greenfield, there was a contest. If a carrier could sign up 40 new subscribers, he or she (and, yes, Charlie’s sisters had paper routes, too) could win a trip to the World’s Fair in Chicago. Naturally, Charlie had his heart set on winning that trip. But this was the depths of the Great Depression, and Charlie knew well that even the discounted price of seven cents per week for home delivery of The Indianapolis News was viewed by many as a nonessential luxury. He approached his district manager and shared his desire to qualify for the trip as well as his doubts about how it could be accomplished. From that district manager, Charlie learned the lessons that led him to be the Anderson area’s most effective fundraiser. He told Charlie to make a list with 40 spots and to talk with the people about his hopes for the trip and the benefits of having a subscription. “It’s not enough to sell the product,” he told Charlie. “You’ve got to sell yourself, and you’ve got to put those people on your team and show them how to win. Everyone wants to be part of a winning team.” Today Charlie says those lessons form the basis for his secret to successful fundraising. He said he always explained the benefits of the organization and got people to want to be part of the winning team. And Charlie had two other rules for fundraising “I always had my lead gift in my pocket, my gift, and I never asked anyone else to give more than I did.” Charlie Dickmann has served on numerous boards of community organizations – from his beloved First United Methodist Church to the YMCA of Madison County with stops along the way at the United Way, the Boys and Girls Club, the Madison County Community Foundation, the Anderson Symphony Orchestra Association, Anderson Area Chamber of Commerce, and Anderson Fine Arts Foundation. His service was varied and legendary: three years as president of the YMCA followed by a year as chair of a capital campaign that exceeded its goal by nearly 50 percent; nine years on the board of the Madison County Community Foundation. He is an emeritus director of the YMCA, the Madison County Community Foundation and the Anderson Fine Arts Foundation. He has been honored by his church with its first ever “Living Your Faith” Award designed to honor long-term service to the church and the (continued on page 43)
September 2015 edition of Res Gestae, the journal of the Indiana State Bar Association