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Attorney Suspended for Charging an Unreasonable Fee and Refusing to Provide an Hourly Breakdown

This week, the Indiana Supreme Court found that an attorney, Lawrence T. Newman, engaged in various misconduct including: failing to comply with a client’s reasonable requests for accounting of hours he worked, charging an unreasonable fee, failing to withdraw from representation promptly after being discharged, and failing to return the client’s file after his retention was no longer necessary to secure payment of his fee. For this misconduct the court suspended Newman for at least 18 months without automatic reinstatement.

In reviewing Newman’s conduct the court first determined that he had violated ethical Rule 1.4(a)(4), which requires lawyers to comply with reasonable requests for information. The court found that Newman had failed to provide timely accounting of the hours he worked despite multiple requests from the client. This information was clearly a reasonable request because upon being discharged the attorney would be entitled to payment under quantum meruit (the lawyer’s contribution to the case prior to discharge). The court held that while the hours worked is not the only factor in determining the lawyer’s contribution, it is the presumptive measure.

The court also concluded that Newman violated Rule 1.5(a), which requires that a lawyer does not negotiate, charge, or collect an unreasonable fee. First, Newman violated this Rule by agreeing to an unreasonable contingency fee. The disciplinary commission had concluded that entering into a contingency fee agreement—when there is no risk of non-recovery—constitutes an unreasonable fee arrangement. While the court refused to establish a per se rule against no risk contingency fee agreements, it found the agreement here to be unreasonable. Additionally, the court held that Newman had violated Rule 1.5 by attempting to collect an unreasonable fee after he was discharged. Once discharged, Newman was no longer entitled to any contingent fee, only quantum meruit, which would likely be based on the hours worked. Despite no longer being entitled to a contingent fee, Newman submitted a claim for 25% of his client’s distribution. Even after dropping this claim Newman submitted a claim for $60,000 in attorney’s fees, which exceeds his typical hourly rate by over $50,000.

The court concluded that Newman’s case required additional discipline because of the circumstances surrounding his misconduct. The court found that he “waged a war of attrition” against his former client in an effort to gain “unfair leverage” in their fee dispute. Due to the considerable bad faith involved in Newman’s misconduct the court suspended him from practicing for 18 months and required that he go through the reinstatement process before resuming practice.

The complete option of In re Newman is available here.

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