Thoughtful Guidance From Skilled Attorneys

Attorney Fees in Indiana Courts

| Oct 20, 2015 | Firm News

CAN
THE COURT AWARD FEES, SHOULD THE COURT AWARD FEES AND HOW MUCH FEES SHOULD THE
COURT AWARD?

Indiana
follows the American rule with regard to attorneys’ fees. Under the American rule, attorneys’ fees are
only awarded if allowed by contract, statute, where a common fund applies (such
as probate matters) and obdurate conduct occurs like putting forth a frivolous
claim or defense. See
State Bd. of Tax commissioners v. Town of St. John, 751 N.E. 2d
657 (2001). This CLE will address issues
with regard to the various statutes since contracts will change from contract
to contract.
The
court can award attorneys’ fees under many statutes. The following is a short list of the statutes
under which a court can award attorneys’ fees:
24-5-13-22
Costs and expenses in recovery actions (Consumer Sales)
26-2-7-5
Extent of liability for stopping payment or permitting dishonor of checks
29-3-9-9
Expenses of proceedings (Guardianships and Protective Proceedings)
31-14-18-2
Costs of maintaining action and attorney’s fees (Paternity Actions)
31-15-10-1
Costs and attorney’s fees; order for direct payment to attorney (any proceeding
under dissolution of marriage or legal separation article) (This includes post
judgment proceedings)
31-16-11-1
Costs of proceeding and attorney’s fees (Support of Children and Other
dependents) (This includes post judgment proceedings)
31-17-2.2-1
Notice of intent to move
31-17-4-3
Attorney’s fees, court costs, and litigation expenses (actions to modify or
enforce parenting time)
31-17-4-8
Contempt
31-17-7-1
Costs and attorney’s fees; order for direct payment to attorney (Custody and
Visitation)
31-18.5-3-13 Filing fees Uniform Family
Support Act
32-28-3-14
Attorney’s fees (Mechanic’s Liens Enforcement)
34-52-1-1
General recovery rule (Obdurate conduct statute)
34-50-1-6
Attorney’s fees and costs (Qualified Settlement Offers limited to $1,000.00)
34-57-5-12
Family Law Arbitration Fees ($95,000 fee upheld in Masters v. Masters, ___ N.E.3d ____, (Ind. Oct. 16, 2015) 02S04-1504-DR-156.
Marion County
has local rules governing the awarding of attorney fees. See
LR49-FR00-509 ATTORNEY FEES in Family Law Proceedings and LR49-PR00 Rule 411 for
Probate fees.
SHOULD
THE COURT AWARD FEES

Whether
or not the court can award attorneys’ fees is only the first step. After determining that attorneys’ fees are
allowed, the question becomes whether they are appropriate. There are rules and case law setting forth
when attorneys’ fees are appropriate.
If
a party is found in contempt, under the Marion County Local Rule, attorney fee should
be awarded. See Marion County
Local Rule LR49-FR00-509 Contempt
Citation Attorney Fees: There shall be a rebuttable presumption that attorney fees will be awarded to the prevailing party in all matters involving a contempt
citation. An attorney may submit the requested fee by affidavit
or oral testimony, which may be accompanied by an itemized
statement.”

In Probate Proceedings see LR49-PR00 Rule 411. Accountings Procedures and Reports.

If the subject
matter is not contempt but is a modification or an original action, then the
court can award attorneys’ fees but must determine whether or not such an award
is appropriate in the non-contempt circumstance. Considerations the court is required to take
into account are the relative earning capacity of the parties, the other
portion of the award as to property and child support, and whether either party
caused the amount of attorneys’ fees to be increased for the other.

Beeson v. Christian, 594 N.E. 2d 441 (1992), where the Indiana
Supreme Court, citing the attorney fee section of the dissolution of marriage
statute, upheld the trial court award of fees even though the attorney agreed
to collect no fee from the client and only receive what the court awarded the
attorney. The court went on to say:
That public
policy would be undermined if we were to hold that a party must be personally obligated to pay attorney fees
before the trial court could order the other party to pay those fees. Such a policy might, in some circumstances,
effectively eliminate the right to
appeal in dissolution proceedings. This Court will not force a party in a dissolution action to choose between
foregoing legal action or obligating that party to a fee agreement which such
party could not meet.
This situation is
analogous to some pro bono arrangements where an attorney agrees to represent a client and to accept a fee only
if one is awarded by the trial court and paid by the other side. As here, the client is never legally obligated
to pay the fee, and the attorney
is paid only if the trial court awards a fee. Such an arrangement supports the process of allowing access to the courts
to those with limited means.
We, therefore,
conclude that the trial court did not abuse its discretion in awarding the fees in this case.
Beeson, supra, is an important case.
Some think that if a lawyer takes a case pro bono that the court should not award fees against the other
party. The courts are seeing more and
more pro se parties. While the court is to hold pro se parties to the same rules as
attorneys, my experience is the courts tend to try to help the parties and at
times to the detriment of the represented party. Many lawyers are taking pro bono cases. Under Beeson, supra, the court should
award fees if the pro bono party has
a meritorious claim or defense. When a
lawyer takes a pro bono case, the
lawyer is not only doing a service to the party but is also doing a service to
the court and society at large. The
court benefits from having a properly presented case which allows the court to
more efficiently administer the law which also brings greater respect for the courts at large.
In Luttrell v. Luttrell the Court of Appeals
stated:
The trial court has broad discretion in
awarding attorney’s fees, and we will reverse an award only where the decision
is clearly against the logic and effect of the facts and circumstances. In assessing attorney’s fees, the court may
consider such factors as the resources of the parties, the relative earning
ability of the parties, and other factors which bear on the reasonableness of
the award. An award of attorney’s fees
is proper when one party is in a superior position to pay fees over the other
party.
994 N.E. 2d 298 (2013) (citing In Re Marriage of Bartley, 712 N.E. 2d
537, 546 (Ind. Ct. App. 1999)).

HOW MUCH SHOULD THE
COURT AWARD

In seeking
attorneys’ fees an attorney must comply with the Indiana Rules of Professional
Conduct Rule 1.5. Fees:
(a) A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses. The factors to be considered in determining the reasonableness of a fee include the following:
(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and
(8) whether the fee is fixed or contingent.
How
much should attorneys make? What is
their overhead? How many hours should
they work? Are they entitled to
vacations and free time? Some estimates
are that 50-65% of an attorney’s gross income goes to overhead. While these issues may not be spelled out in
the above rule, Rule 1.5(a) (3) inherently includes these considerations. All of
these questions need to be answered in determining how much their fees should
be. One thing that goes into a fee is
the experience of an attorney. An
attorney who is more experienced may not need to spend as much time on a matter
as one who has just graduated from law school.
Therefore, a more experienced lawyer may spend less time on a case, so
should they be paid less or should they receive a higher hourly rate? Do they have a greater overhead? Younger lawyers may have more than $100,000
in student loan debt to pay. The average
lawyer has spent 7 years while going into debt after high school without
earning a living.
Does
the Fee Agreement Control What Should Be Awarded
One issue is whether or
not the agreement between the attorney and the client as to the amount the
client is paying is controlling. The
court in R.L. Turner Corp. v. Wressell found
that even though the attorney fee agreement called for a fee of 40% of the
recovery of the client, the court allowed for recovery at a reasonable hourly
rate of $300 an hour for the reasonable hours worked. ___ N.E. 3rd ___, (In. Ct of App., 2015) 06A05-1411-PL-540. The Court of Appeals
upheld an award of nearly $100,000 of attorney’s fees on a claim of
approximately $12,000 and stated “‘As the trial court noted, ‘While the fees
claimed in this matter are breathtaking and giving of pause to their
imposition, the law is the law. If reasonable fees cannot be earned, no lawyer
will take the case.’ Were we to find
that the fees awarded in this case were unreasonable solely in light of the
ultimate compensatory award, there would be a chilling effect on the ability of
injured employees to find attorneys willing to take their cases.”
(internal citations omitted).
Also see Beeson,
Supra.

Attorney Fees in Probate Cases:

The
issue of an award of attorney fees only arises in supervised administrations,
as the court does not review fees in unsupervised estates. The fees the court can award are to be “just
and reasonable.” IC 29-1-10-13. See also, MSCPR LR49-PR00 Rule 420.2 which also
sets a “reasonable” fee standard. Fees
are awarded to a contesting party in a will contest only when the contesting
party is a “devisee” and the proponent of a new will, if a successful contest
would result in intestacy the statute does not allow for fees for the
contesting party. IC 29-1-10-14. A trust beneficiary is entitled to
reasonable attorney fees if the trustee has breached his fiduciary duty. IC 30-4-3-11.
In
determining reasonableness of fees, a court can consider a variety of factors,
including, but not limited to, time spent, unique skill required, size of
estate, result obtained, particular difficulties involved, customary fees
charged in the area, i.e., it is fact
sensitive. Not all estates or trusts are
created equal. Two estates of the same
monetary value could justify differing determinations of reasonable fees,
although on paper the two inventories and other pleadings look substantially
similar.
Do the beneficiaries get along, or do they bitterly
contest each item of property. Arguing
over personal property can, at times, generate many attorney hours. The author
has seen a beneficiary expend over $10,000 dollars on private counsel arguing
over a fifty-fifty split of tangible personal property. The Estate can try to
compromise such disputes, but the attorney for the Estate must respond to
constant challenges.
How organized are the decedent’s records? Two otherwise similar or identical
inventories could require different amounts of attorney time. If the decedent died a long time resident of
a nursing home with her daughter, the personal representative, having taken
care of the decedent’s finances for years, the attorney time could be
minimal. On the other hand if the
decedent’s affairs are in disarray, the time necessary to determine ownership,
values, and the like could be extensive.
It should be noted that the banks appear to be
“pushing” transfer on death accounts as opposed to just giving a child
signatory authority, giving more issues that the Estate attorney must
investigate. For example, a decedent and
his institutionalized spouse did “Medicaid planning” prior to the first
spouse’s death. In transferring a joint
account into the name of the non-institutionalized spouse’s name, the bank made
it “TOD” to the spouse’s child. It should have gone into the deceased
spouse’s estate and then to the testamentary “Medicaid” trust. The Medicaid planning had to be “saved” by
additional research and disclaimers.
The nature of the assets also impacts the amount of
time spent on an estate administration.
If the estate is comprised of commercial real estate as opposed to just
a home and a few bank accounts, the difficulty of and the time spent on
administration can be vastly different.
The relationship among the beneficiaries, if bad, can exacerbate the
situation with both simple and complicated assets. The infighting among the children over
control of the decedent’s businesses can easily increase the attorney time.
Although value of the estate needs to be considered,
sometimes the smaller estates require more time and effort than the much larger
estates that have the benefit of advanced estate planning. The sophistication of the estate plan
definitely impacts the time required in administration. A $2,000,000 estate consisting of cash and a
large residential piece of real estate can be much simpler to administer than a
$2,000,000 estate consisting of several small, closely held businesses and with
only 2 of 5 children participating in the businesses. On the other hand, if an estate consists of
only mom’s home and a few bank accounts, the children frequently argue over
what expenses should or should not be charged to the residuary, should one
child pay rent for living in the home while maintaining it, etc.
The increase in the Federal Estate Tax equivalent
exemption and the elimination of the Indiana Inheritance Tax would seem to
decrease the time necessary to administer most estates. In actuality, many of the same activities
involved in preparing a tax return are still required. Instead of valuing assets for inheritance tax
purposes, the same valuations are needed for purposes of establishing income
tax basis and values for distributions defined by percentages where in kind
distribution is not feasible.
There also seems to be a trend in which the
elimination of most estate and inheritance taxes creates more problems than it
solves. Inheritance tax used to throw
roadblocks up in front of heirs rushing to collect joint or TOD assets, causing the heirs to seek legal counsel
to obtain consents to transfer in order to collect such funds and, thereby,
causing the other issues of title to real estate and the like to be addressed
in a timely fashion shortly after death.
Now with the fear of taxes gone and the ease in collecting joint
accounts after death, the heirs frequently do not seek legal counsel until an
issue arises weeks, months, or even years following the death of dad. For
instance they cannot sell the real estate which they “inherited.” As in most cases it takes more work for an
attorney to correct errors after the fact than it would have to address the issues
at the time. For example, unfunded
estate planning trusts and the attendant beneficiary rights, final income tax
returns, and fiduciary returns, identifying expense payments, and other items
must be reconstructed well after death.
The result of the representation and the requirement
of particular expertise by the attorney can also impact what constitutes a
reasonable fee. The most obvious example
is an attorney experienced in taxation.
Not all attorneys can unravel issues with prior tax returns or defend
estate tax returns.
The size of the estate must be taken into
consideration in order to avoid having the entire estate go to legal fees. However, the size of the estate can also
hinder the hiring of counsel especially in estates requiring any type of
special expertise. Limiting the amount
of fees allowed purely because of the small size of the estate could result in
attorneys not being compensated for their work, especially in cases where the
attorney works on an hourly basis. Such
limitations could also cause experienced estate attorneys to refuse to take on
cases where it is clear the amount of time that would be required would exceed
what a court may determine to be reasonable fees.
The balancing of fees in the sense of what is
reasonable purely in terms of purely the work performed versus what is
reasonable in terms of the nature and extent of an estate is a tough decision,
but it is one that should be fair and reasonable to both the estate and the
attorney.

DOES THE COURT WANT TO HEAR MORE OR
FEWER CASES

A common theme today is that courts
are overcrowded and many people cannot afford an attorney. If attorney fees are awarded in the proper
cases then the courts can eliminate cases that should never come before it,
providing more time to hear the cases where there exists a good faith dispute.
As the courts in Beeson and R.L. Turner,
supra, said, the court should encourage attorneys to represent people who have
a valid claim but if left to pay for their own attorney may not have access to
the courts. In R. L. Turner the court
noted that the defendant delayed and put forth an “obstructive
litigation” defense. It is well
known that sometimes litigants try to make it so expensive that the other side
will not pursue their rights. As a
mediator, one wants to say to a party who is making a bad faith argument that the
court will likely assess attorney fees against them which may result in the case
settling. Many cases that do not settle
are a result of attorney fees being the major stumbling block. Currently with cases in Marion County,
I cannot in good faith warn a party or client that attorney fees are likely to
be assessed against them or in an amount that is justified in the case.
The Court of
Appeals
has upheld significant awards of attorney fees even
compared to the party order to pay’s income. In
In re Paternity of M.R.A., — N.E. 3d —- (2015), the Indiana Court of Appeals upheld a trial court award of
$19,000 in attorney fees on a modification of support and parenting time. The fees were assessed against a father who
only made $60,000.00 a year. In that
case the court ruled in his favor on the issues except attorney fees in the
appeal.
If a parent is seeking contempt of court on support and
hires a lawyer for the contempt, under the current case law a lawyer has to
obtain a child support printout which requires a trip to the city-county
building, stand in line, pay for the print out, pay for parking, meet with the
client and go over the facts, accumulate any other documents or evidence if not
just a support issue, prepare the pleadings, file the pleadings, have the
pleadings served, meet with the client to go over the facts, prepare exhibits, and prepare for a hearing, travel to the hearing,
attend the hearing, obtain an update of the child support printout if that is
an issue, hopefully speak with the other side in an attempt to settle the
issues, and prepare proposed orders for the court. So just in “simple” child support
contempt you are looking at a minimum of 5-6 hours. Based upon the calculations that are attached
on the amount an attorney should earn, the fees should be at a minimum of $1200
to $2000. If an attorney bills their
client that amount and the court does not award and enforce the fee order, then
the client will next time likely either be pro
se
, hire an attorney who may not prepare as well, go to the prosecutor
causing the taxpayers to pay, or just decide pursuing the few hundred dollars
in support is not worth it. Under the
current law the court can and should also add additional fees if the attorney
has to seek court enforcement of the prior award. See Walton v.
Claybridge
, 825 N.E. 2d 815 (In.
Ct
of App., 2005), where the court upheld the
award of nearly $12,000.00 in attorney fees for time preparing and defending
its request for attorney fees on the underlying award.
If the parties have a good faith dispute then the court
can weigh the factors set out in the case law about relative earnings, etc. in
family law cases. But if the court wants
cases to settle and not have litigants take unreasonable positions, then they
should know if they are taking unreasonable positions, are delaying the matter
so they do not have to pay support such as in preliminary matters, or when they
are not paying their court ordered support, then they will bear the expenses of
the litigation. In civil cases where the fees are allowed by
statute or contract then the prevailing party may not actually prevail if the
court does not award them all their reasonably incurred fees as the fees could
be more than the judgment. See R.L.
Turner
, supra.




Prepared by Richard A. Mann of Mann Law, P.C. Attorneys
at Law, www.rmannlawoffice.com
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us on Twitter: https://twitter.com/RAMattorneys

This blog does not constitute legal advice nor does it establish
an attorney client relationship. This is
for general information purposes as in most legal situations the facts and
terms of an agreement between the parties can affect the result.