COA rules for law firm in unpaid fee dispute

The Indiana Court of Appeals has affirmed judgment for a Fort Wayne law firm after one of its clients refused to pay attorney fees she found to be unreasonable.

Before his unexpected death, Susan Sockrider’s husband requested to cancel his life insurance policy and be paid its surrender value. The process of canceling the policy had already commenced when he suddenly died one month later, leaving Sockrider as the sole beneficiary under the policy.

Sockrider was soon thereafter denied her claim for the entirety of the $100,000 death benefits under the policy, with Lincoln Financial instead paying her the surrender value of $1,737.87. Sockrider was prompted to contact Burt Blee Dixon Sutton & Bloom LLP after several unsuccessful attempts to procure the full policy amount to discuss bringing a potential claim against Lincoln.

After a consultation, however, Burt Blee noted that Sockrider’s claim was properly denied and that she would be likely unsuccessful and “have a substantial bill from [Burt Blee] to show for it.” Instead, the law firm agreed to accept the case on a contingency basis, “despite the inherent risk of zero recovery.” It thus issued Sockrider with a fee agreement and declined to reduce its standard one-third contingency fee upon her request, which she ultimately signed.

In the process of Burt Blee’s initiation of litigation on behalf of Sockrider, Lincoln informed it had reassessed its prior denial and decided to disburse the insurance proceeds to Sockrider in full, plus interest. Although Burt Blee recovered the funds, Sockrider refused to pay attorney fees the law firm was requesting, arguing the amount was unreasonable.

Burt Blee sued Sockrider, alleging she breached the agreement the parties had signed and demanded payment of the $33,635 contingency fee. The Allen Circuit Court ultimately ruled in the firm’s favor, finding Sockrider was bound to pay the contingency fee regardless of whether the monies were filed prior to Burt Blee’s filing suit.

In Susan Sockrider v. Burt, Blee, Dixon, Sutton, and Bloom, LLP, 19A-PL-1155, Sockrider argued there was a genuine issue of material fact that the fee agreement entered into between the parties unambiguously allowed Burt Blee to charge a contingency fee for a matter that did not involve litigation.

“Though we agree with Sockrider that Burt Blee’s Fee Agreement largely contemplates litigation — and the prospect of litigation was precisely the reason a contingency fee agreement was suggested — the Fee Agreement unambiguously indicates that the contingency fee is due upon recovery of any amount regardless of whether, as here, it was achieved prior to filing suit,” Judge Patricia Riley wrote for the appellate court.

The appellate court also found that contingency fee as negotiated between the parties to be reasonable and concluded that due to her failure to raise the affirmative defenses in her response to Burt Blee’s motion for summary judgment, Sockrider waived the issue for the appellate court’s review.

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