In the Matter of Everett E. Powell, II
953 N.E.2d 1060 (2011)
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Rule of Law:
An attorney violates Professional Conduct Rule 1.5(a) by collecting a fee, pursuant to a contingency fee agreement, that constitutes an unconscionable windfall because subsequent events revealed the matter to be simple and uncontested, particularly when the client is known to be vulnerable.
Facts:
- T.G., a woman with a history of substance abuse and in a controlling relationship, had $42,500 from a personal injury settlement placed into a 'special needs trust' to protect the funds.
- T.G.'s original attorney, Mark E. Ross, served as trustee and created the trust to preserve T.G.'s public assistance eligibility and prevent rapid depletion of the funds.
- Unhappy with the trust, T.G. sought to access the money; Ross expressed his willingness to step aside as trustee in favor of a qualified successor.
- On October 27, 2004, T.G. hired attorney Everett E. Powell, II, signing a contingency fee agreement entitling him to '1/3 of whatever was in the trust' for his services in removing Ross as trustee.
- The next day, October 28, Powell contacted Ross, who immediately agreed by phone to resign as trustee and allow Powell to take over.
- On October 29, Powell officially became the successor trustee, immediately terminated the trust as per T.G.'s wishes, and gained control of the trust's assets.
- On October 30, Powell wrote a check from the trust account to his law firm for $14,815.55 as his fee.
Procedural Posture:
- The Indiana Supreme Court Disciplinary Commission filed a 'Verified Complaint for Disciplinary Action' against Respondent, Everett E. Powell, II.
- The Indiana Supreme Court appointed a hearing officer to hear evidence regarding the complaint.
- Following a hearing, the officer issued a report finding that Respondent had collected an unreasonable fee in violation of Professional Conduct Rule 1.5(a) and calculated that a reasonable fee would have been $3,000.
- The case was then presented to the Indiana Supreme Court for a final decision based on the hearing officer's report and post-hearing briefs from the parties.
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Issue:
Does an attorney violate Professional Conduct Rule 1.5(a) by collecting a one-third contingency fee for removing a trustee when the trustee immediately and willingly agrees to resign, the matter involves no complex litigation, and the client is known to be vulnerable?
Opinions:
Majority - Per Curiam
Yes. An attorney violates Professional Conduct Rule 1.5(a) by collecting a fee that is clearly excessive and unreasonable under the totality of the circumstances. Even if a fee agreement is reasonable at its inception, subsequent developments can make collecting the full fee unreasonable. Here, within a few days of being retained, Respondent Powell knew that the case involved no complex issues, no prolonged time commitment, no risk of non-recovery, and no opposition from the original trustee. Citing Matter of Gerard, the court found that Powell's proper course of action would have been to renegotiate his fee after it became apparent that the matter was simple and uncontested. Instead, collecting a nearly $15,000 fee for what amounted to a few days of simple work constituted an unconscionable windfall and greedy overreaching. This misconduct was made more culpable by the client's known vulnerability, which the original trust was designed to protect.
Analysis:
This decision solidifies the principle that an attorney's duty to charge a reasonable fee is ongoing and is not fixed at the moment a fee agreement is signed. It establishes a clear expectation that attorneys must reconsider and potentially renegotiate a contingency fee if the matter resolves with unexpectedly little effort, rendering the original fee a 'windfall'. Furthermore, the case underscores the heightened ethical duties owed to vulnerable clients, signaling that exploiting a client's circumstances to collect an excessive fee will be met with significant disciplinary action. This precedent serves as a strong deterrent against overreaching in contingency fee arrangements where the actual legal work performed is minimal compared to the recovery.
