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Law firm can’t collect attorney fees from insurer

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Relying on caselaw from 1892, the Indiana Court of Appeals decided that Ken Nunn Law Office may not collect attorney fees it says are owed by a former client from a third-party insurance company following a settlement.

Kenneth Henderson hired the Nunn Law Office in May 2009 on a contingency fee basis after he was involved in an accident with another driver, Joshua Beal. Beal was insured by State Farm Mutual Automobile Insurance Co. The law firm filed a lawsuit against Beal in March 2010; two weeks later, Henderson fired the law firm because he was unhappy with how his case had been handled.

The law firm then sent a notice of lien for attorney fees to the court, Henderson and State Farm. In late April 2010, Henderson and State Farm settled for more than $12,000. State Farm paid Nunn Law Office the $541 in costs it requested in its lien, but no attorney fees.

The law office sued Henderson and the insurer, and the trial court ordered Henderson pay nearly $4,000 to the law firm after granting default judgment against him. In doing so, the judge also denied State Farm’s summary judgment motion. Nunn Law Office claimed that State Farm and Henderson had a duty and failed to protect the “quantum meriut attorney’s fee lien” of the firm. State Farm argued that it was not liable for attorney fees for services rendered to Henderson.

On interlocutory appeal, the Court of Appeals reversed, finding the Nunn Law Office has no claim for attorney fees through either an equitable lien or quantum meruit. The judges cited Hanna v. Island Coal Co., 5 Ind. App. 163, 31 N.E. 846, 847 (1892), which held that no lien can be acquired before judgment that would prevent the client from compromising and releasing his claim without the attorney’s consent, including in personal injury actions.

“We decline to expand upon this State’s previous articulations of the boundaries of the reach of an equitable lien for the protection of attorney fees where the proceeds of the compromise have been transferred to the attorney’s former client and thus decline to hold that a charging or equitable lien may be enforced against a party other than Nunn’s former client under these circumstances where prior to settlement Nunn was no longer counsel for Henderson and was paid its expenses,” Judge Elaine Brown wrote.

The law firm may not recover from State Farm under the theory of quantum meruit because State Farm was not a party to the fee agreement between Henderson and Nunn Law Office, any work done by the law firm was for the benefit of Henderson, not the insurer, and State Farm was not unjustly enriched by the legal services provided by the firm to Henderson, the judges held.

The case, State Farm Mutual Automobile Insurance Company v. Ken Nunn Law Office, 49A02-1202-CT-68, goes back to Marion Superior Court for further proceedings.

 

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  1. "associates are becoming more mercenary. The path to partnership has become longer and more difficult so they are chasing short-term gains like high compensation." GOOD FOR THEM! HELL THERE OUGHT TO BE A UNION!

  2. Let's be honest. A glut of lawyers out there, because law schools have overproduced them. Law schools dont care, and big law loves it. So the firms can afford to underpay them. Typical capitalist situation. Wages have grown slowly for entry level lawyers the past 25 years it seems. Just like the rest of our economy. Might as well become a welder. Oh and the big money is mostly reserved for those who can log huge hours and will cut corners to get things handled. More capitalist joy. So the answer coming from the experts is to "capitalize" more competition from nonlawyers, and robots. ie "expert systems." One even hears talk of "offshoring" some legal work. thus undercutting the workers even more. And they wonder why people have been pulling for Bernie and Trump. Hello fools, it's not just the "working class" it's the overly educated suffering too.

  3. And with a whimpering hissy fit the charade came to an end ... http://baltimore.cbslocal.com/2016/07/27/all-charges-dropped-against-all-remaining-officers-in-freddie-gray-case/ WHISTLEBLOWERS are needed more than ever in a time such as this ... when politics trump justice and emotions trump reason. Blue Lives Matter.

  4. "pedigree"? I never knew that in order to become a successful or, for that matter, a talented attorney, one needs to have come from good stock. What should raise eyebrows even more than the starting associates' pay at this firm (and ones like it) is the belief systems they subscribe to re who is and isn't "fit" to practice law with them. Incredible the arrogance that exists throughout the practice of law in this country, especially at firms like this one.

  5. Finally, an official that realizes that reducing the risks involved in the indulgence in illicit drug use is a great way to INCREASE the problem. What's next for these idiot 'proponents' of needle exchange programs? Give drunk drivers booze? Give grossly obese people coupons for free junk food?

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