FOR THE RESPONDENT FOR THE INDIANA SUPREME COURT
Samuel J. Goodman
Donald R. Lundberg, Executive Secretary
9013 Indianapolis Blvd. Seth Pruden, Staff Attorney
Highland, IN 46322 115 West Washington Street, Suite 1060
Indianapolis, IN 46204
SUPREME COURT OF INDIANA
IN THE MATTER OF )
) Case No. 45S00-9712-DI-655
PETER L. BENJAMIN )
November 9, 1999
The respondent, Peter L. Benjamin, retained an unreasonable attorney fee from the settlement
of a medical malpractice claim in reliance on an incomplete fee agreement with
his client. Today we approve a Statement of Circumstances and Conditional Agreement
for Discipline between the respondent and the Indiana Supreme Court Disciplinary Commission which
will result in our public reprimand of the respondent for engaging in this
professional misconduct. See Ind. Admission and Discipline Rule 23, Section 11.
As a preliminary matter, we note the respondent was admitted to practice law
in this state in 1978. Therefore, he is subject to the disciplinary
authority of this Court.
The undisputed facts are that in July 1992, the husband of the respondents
client died while undergoing treatment at a Fort Wayne hospital. In January
1993, the client hired an attorney who shared office space with the respondent
to pursue a medical malpractice action against the hospital. The attorney prepared
a written fee agreement in which he would receive 40 % of total
recovery not to exceed attorney fee of 200,00 (sic).
The respondent and the attorney subsequently formed a partnership to practice law.
No new fee agreement was drafted. When that partnership was dissolved in
May 1995, the respondent retained the clients case in his office. The
respondent and the client did not enter into a new fee agreement; instead,
the respondent proceeded under the fee agreement signed by his former partner and
In the summer of 1995, the hospital and the client reached a settlement
wherein the hospital would pay $100,000, its maximum liability under the Indiana Medical
Malpractice Act. The agreement called for an initial payment of $50,000, with
the remaining $50,000 to be paid in structured payments over a course of
years, with interest. Upon receipt of the $50,000 initial payment, the respondent
retained $40,000 (eighty percent of the total) and forwarded the remaining $10,000 to
the client. Respondent obtained the $40,000 figure by calculating his forty percent
(40%) fee based upon the gross settlement amount of $100,000, rather than the
actual amount forwarded to him ($50,000) or the current value of the future
In September 1995, the respondent filed a petition with the Indiana Patient Compensation
Fund on behalf of the client for damages in excess of the hospitals
settlement. In January 1996, a settlement which would entitle the client to
receive $335,000 from the Fund was finalized. Upon receipt of the Fund
settlement check, the respondent retained $134,000, which was forty percent (40%) of the
$335,000. Indiana Code 27-12-18-1 limits the fees an attorney may receive from
the Patient Compensation Fund to fifteen percent (15%) of the recovery -- $50,250
in this case. The fees retained by the respondent exceeded the statutory
limit by $83,750.
The client challenged this distribution. She requested that the respondent retain only
forty percent (40%) of the $100,000 settlement from the hospital and fifteen percent
(15%) of the Fund portion. The respondent countered by agreeing to pay
a refund based on his former partners interpretation of the fee agreement.
Correspondence from the former partner to the client in the early stages of
the litigation indicates the former partner intended that the forty percent (40%) agreement
was to apply only to the non-Fund, or provider, portion of the settlement.
If the Fund also paid damages, the former partner intended to retain
all of the non-Fund portion (one hundred percent of the $100,000) and fifteen
percent (15%) of the Fund portion pursuant to I.C. 27-12-18-1. In essence,
the former partner had intended to have two (2) separate fee arrangements; one
for settlement from the provider only and another if the client obtained recovery
from the Fund as well.
Using the second fee formula intended by the respondents former partner (but not
set out in the fee agreement itself), the respondent calculated that he was
entitled to one hundred percent (100%) of the non-Fund portion ($100,000 of $100,000)
and fifteen percent (15%) of the Fund portion ($50,250 of $335,000). Thus,
the respondent calculated his total fee at $150,250. As he had retained
$174,000 ($40,000 plus $134,000), the respondent offered to return $23,750, plus interest, to
That result was unacceptable to the client. The respondent thereafter filed a
declaratory judgment action seeking a determination of the appropriate distribution. While that
case was pending, the client and the respondent agreed to settle the matter,
and the respondent returned approximately $75,000 to the client.
We find, and the parties agree, that the respondent violated Ind. Professional Conduct
Rule 1.5(a) by charging an unreasonable fee.
Two aspects of the
respondents fee are strongly indicative of its unreasonableness. First, the respondent retained
a fee greater than that allowed by statute governing recoveries from the Indiana
Patient Compensation Fund. We have held that an attorneys fee greater than
the presumptive limits established by Indiana regulations governing workers compensation was unreasonable.
Matter of Maley, 674 N.E.2d 544, 546 (Ind. 1996). Fee agreements calling
for attorney fees in excess of that mandated by Indiana law also have
been found to be void or unenforceable. See, e.g., Bauer v. Biel,
132 Ind. App. 224, 177 N.E.2d 269 (1961) (agreement to pay more than
presumptive attorney fee in workers compensation case held to be unenforceable).
Also indicative of the fees unreasonableness is the respondents retention of forty percent
(40%) of the $100,000 initial settlement from the first payment of only $50,000.
The balance was to be paid pursuant to the terms of a
structured settlement. We have held that the retention of a ten percent
(10%) contingency fee from a total structured settlement of $550,000, where the entire
fee was retained from the first two payments of $50,000 each and where
the debtor ultimately defaulted after only $160,000 had been paid, was unreasonable.
Matter of Myers, 663 N.E.2d 771 (Ind. 1996). While there is no
mention of any subsequent default on the agreed total settlement in this case,
we find under the circumstances of this case that the respondents insistence (in
the face of clear opposition from his client) that he retain his entire
contingency fee from the first settlement payment amounted to exacting an unreasonable fee.
We therefore conclude that the respondent violated Prof.Cond.R. 1.5(a).
We also find, and the parties agree, the respondent violated Prof.Cond.R. 1.5(c) by
failing to set forth the complete method of calculating fees in the written
While the parties have not provided a copy of
the fee agreement to the Court, they agree that the fee agreement does
not contain the entire formula used to calculate the fee retained by the
Given our finding of misconduct, we must determine an appropriate sanction. In
making that assessment, we consider the nature of the misconduct, the lawyers state
of mind which underlies the misconduct, actual or potential injury flowing from the
misconduct, the duty of this Court to preserve the integrity of the profession,
the risk to the public in allowing the respondent to continue in practice,
and any mitigating or aggravating factors.
Matter of Lehman, 690 N.E.2d 696
The parties offer a number of mitigating facts. They agree that the
respondent miscalculated his original fee and neglected to review the settlement statement prepared
by his legal assistant; therefore, they suggest his acceptance of the original fee
was not the product of deceit or intentional wrongdoing, as evidenced by his
filing of the declaratory judgment action. They also note the respondent has
fully cooperated with the Commission and has settled the fee dispute with his
client. They also state that the respondent recognizes his error with respect
to the fee agreement and has drafted a new fee agreement for use
in medical malpractice cases. Finally, they state that the respondent is
remorseful and that he has never before been disciplined during his twenty (20)
years of practice.
These factors mitigate the severity of respondents conduct, but do not excuse it.
The reasonableness of an attorneys fee is an important question of public
import with broad implications; it has an impact on the availability of legal
services to the public and the administration of justice, and, ultimately, reflects on
the attorneys status.
Myers, 663 N.E.2d at 774. Excessive legal fees
may have a chilling effect on the publics reliance on the legal system
as the means for protecting rights.
Whether the respondents actions were the product of omissions or active deceit, the
fact remains that he created the confusion which surrounded the payment of fees
in this case. First, he failed at the time he took
over the clients case to review the fee agreement which the respondents partner
and the client had signed. Cursory review of that document would have
revealed its ethical and practical shortcomings. Moreover, such review should have
prompted the creation of a new fee agreement consistent with I.C. 27-12-18-1 and
Rules of Professional Conduct. The respondents inappropriate reliance on what turned
out to be an ambiguous and incomplete contingency fee agreement substantially prompted the
confusion regarding his fees.
Second, the respondent ignored the statutory limitation on recovery from the Fund and
retained fees from the settlement far in excess of the statutory maximum.
When the client disputed the fee, the respondent forced the client into further
litigation by initiating a declaratory action to determine the appropriate distribution of the
settlement proceeds. The respondent did not return the excess funds to the
client until after this disciplinary matter was filed.
The parties suggest a public reprimand is the appropriate sanction for this misconduct,
in light of the mitigating circumstances. We have imposed such a sanction
when faced with substantially similar misconduct.
See, e.g., Myers, supra (public reprimand
where attorney retained full contingency fee from first payment of structured settlement and
fee agreement did not set forth specific method of calculating fee); Maley, supra,
674 N.E.2d 544 (Ind. 1966) (public reprimand where attorney retained contingent fee beyond
limit set by Workers Compensation Act). Given that precedent and the mitigating
factors in this case, we conclude that the appropriate sanction for respondents misconduct
is a public reprimand.
It is, therefore, ordered that the respondent, Peter L. Benjamin, is hereby reprimanded
and admonished for the misconduct occurring in this case.
The Clerk of this Court is directed to provide notice of this order
in accordance with Admis.Disc.R. 23(3)(d) and to provide the Clerk of the United
States Court of Appeals for the Seventh Circuit, the Clerk of each of
the United States District Courts in this state, and the Clerk of each
of the United States Bankruptcy Courts in this state with the last known
address of the respondent as reflected in the records of the Clerk.
Costs of this proceeding are assessed against the respondent.
Prof.Cond.R. 1.5(a) provides:
A lawyers fee shall be reasonable. 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
(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
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the
(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.
Adopting his former partners interpretation of the original fee agreement,
the respondent attempted to retain as his fee $100,000 of the $100,000 settlement
from the defendant hospital, in addition to 15 percent of the recovery from
the Indiana Patient Compensation Fund. We find that approach to be an
attempt to circumvent the statute limiting the recovery allowed from the Fund.
By retaining as his fee an unreasonable portion of the recovery from the
settlement with the hospital, the respondent would have effectively offset the 15 percent
limitation on his fee from the Fund recovery.
We note, in any event, that an attorneys written disclosure to the client
of the fee and the method by which it is to be determined
is of key importance in avoiding disputes over the reasonableness of a fee.
Prof.Cond.R. 1.5(c) provides:
A fee may be contingent on the outcome of the matter for
which the service is rendered, except in a matter in which
a contingent fee is prohibited by paragraph (d) or other
law. A contingent fee agreement shall be in writing and
shall state the method by which the fee is to be determined,
including the percentage or percentages that shall accrue
to the lawyer in the event of settlement, trial or appeal,
litigation and other expenses to be deducted from the
recovery, and whether such expenses are to be deducted
before or after the contingent fee is calculated. Upon
conclusion of a contingent fee matter, the lawyer shall
provide the client with a written statement stating the
outcome of the matter and, if there is a recovery, showing
the remittance to the client and the method of its determination.