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Barnes & Thornburg malpractice suit prompts judge’s warning

October 19, 2016

Indiana’s largest law firm prevailed in defending a judgment in its favor in a legal malpractice suit, but an Indiana Court of Appeals judge took the opportunity to question whether lawyers should be able to shield themselves from liability for future acts of malpractice.

“The practice of law is and should be a profession and not merely a simple business transaction. To hold otherwise is to ignore the fundamental fiduciary relationship an attorney owes a client. For this reason (and others), I do not believe that it is wise public policy to allow lawyers to draft their own ‘get out of jail free’ cards,” Judge Terry Crone wrote in a concurrence in Central Indiana Podiatry, P.C., Northwest Surgery Center, LLC, d/b/a Foot & Ankle Surgery Center, f/k/a Foot & Ankle Surgery Center, LLC and Anthony E. Miller, D.P.M. v. Barnes & Thornburg, LLP, 49A02-1603-PL-498.

The plaintiffs sued Barnes and Thornburg almost four years ago alleging legal malpractice stemming from the firm’s representation of the Miller plaintiffs in a 2005 federal claim filed by podiatrist Thomas Vogel. He claimed his employers, Central Indiana Podiatry and the Foot & Ankle Surgery Center, committed anti-kickback violations, mail, wire and healthcare fraud, money laundering, racketeering, breach of contract, and wage violations, among other things. Another former employee, Dr. Yong Chae, soon filed a suit asserting similar claims. Miller ultimately reached settlements with both doctors.

But as legal fees rose to $190,000 for the Miller parties, Miller sought a reduction and a cap on fees related to this litigation. Barnes & Thornburg provided a release agreement and advised Miller he must have the agreement reviewed by independent counsel before the firm would sign it. The release allowed the Miller parties to pay $145,000, but also contained this provision:

“The Miller Parties hereby release and forever discharge B&T, and all predecessor and successor firms, including without limitation their respective present and past partners, associates and employees, from any and all claims, of any nature, known or unknown, which the Miller Parties now have, have had, or may later claim to have arising from or related to any aspect of B&T’s representation of the Miller Parties relating in any way to the Lawsuits.”

It was this clause that led Marion Superior Court to grant summary judgment in favor of B&T on the malpractice claim and on fraud claims the Miller parties improperly raised for the first time in a reply brief. They argued the release agreement was subject to reformation or rescission.

“The Miller Parties did not properly present their fraud claims to the trial court because they did not do so in a pleading,” Judge Melissa May wrote in affirming the trial court. “The trial court did not err when it granted summary judgment in favor of B&T because the Release Agreement prohibits the Miller Parties from suing B&T for actions taken in the Vogel Federal Litigation.”

Crone agreed with the outcome but wrote separately “to question the wisdom of allowing attorneys to prospectively insulate themselves from liability for future acts of legal malpractice.”

Crone was careful to note there has been no determination in this case as to the quality of legal services B&T provided and that he was expressing no opinion in that regard. But he said in this case, the plaintiffs were sophisticated and had sufficient resources to hire a reputable firm to review the release. “Many clients are not so fortunate. I also find it troubling that the Rules [of Professional Conduct] apparently would not prohibit lawyers from inserting liability releases into initial fee agreements as a matter of course, which would fundamentally change the nature of the attorney-client relationship from one of loyalty and fiduciary duty to one of purely economic self-interest.

“(I)n my view, allowing lawyers to prospectively limit liability to clients for future acts of malpractices subverts the very nature of the attorney-client relationship,” he wrote. “Until and unless our supreme court abolishes this practice, Hoosiers seeking competent and diligent legal representation may be left to fend for themselves against lawyers who wish to avoid liability for future acts of malpractice.”

 




 

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