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Senate to hear bill banning attorney indemnification clauses

January 26, 2017

A bill designed to prevent attorneys from prohibiting clients from filing legal malpractice claims will soon be heard by the full Indiana Senate.

Members of the Senate Committee on Insurance and Financial Institutions unanimously passed Senate Bill 84 on Thursday. The bill, authored by Sen. Liz Brown, R-Fort Wayne, would hold that any clauses within attorney-client agreements that indemnify the attorney from potential malpractice suits are against public policy, void and unenforceable.

Brown, who is the owner of Brown Mediation, LLC and is licensed to practice law in three states, said she does not take the privilege of practicing law lightly. So when she learned that some attorneys were including clauses in their agreements exempting them from liability and malpractice suits, she said she was shocked.

Although she was unaware of any specific such cases when she authored the bill, Brown told committee members that she is now aware of one pending lawsuit dealing with the legality of attorney indemnification clauses.

Several attorneys sit on the Insurance Committee, including Sen. Rod Bray, R-Martinsville, who is counsel for Morgan County and an attorney and partner at Bray Bray & Bray in Martinsville. He said he was surprised that attorney would try to provide themselves with such immunity and questioned whether indemnification clauses are even enforceable.

“I wouldn’t dare put that in a client contract,” Bray said.

To the best of her knowledge, Brown told Bray such clauses can currently be enforced.

Committee chair Sen. Travis Holdman, R-Markle, who owns Holdman Consult/Holdman Law in Fort Wayne, expressed similar shock and sought the opinion of Sen. Joe Zakas, R-Granger, who is an attorney at Thorne Grodnik LLP.

Zakas said he could think of only situation in which Brown’s bill could pose a problem for an attorney. If a client was insistent that a certain attorney represent them in a case, even though the case fell outside of the attorney’s expertise, the lawyer might feel obligated to continue with the case but include a clause in the attorney-client agreement noting that the subject area falls outside of his expertise, so he is exempt from any liability or malpractice concerns.

But Brown told Zakas she thought it would be unfair for an attorney in such a situation to be able to indemnify themselves. Even if the client was insistent, Brown said the attorney should chose not to continue to in the case if it is truly outside of his scope.

The committee passed the bill to the Senate floor with a 9-0 vote, but Bray repeated that he believes indemnification clauses may not currently be enforceable and, thus, reserved the right to change his vote should he later believe the bill is unnecessary.

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