Opinion ID: 852563
Heading Depth: 2
Heading Rank: 5

Heading: Guidance for a Reasonable Total Fee in Medical Malpractice Actions.

Text: Although a numerical answer to the question of reasonableness might have some utility, it is simply not possible to put a number on the ethical requirement that attorney fees be reasonable. Likewise, there can be no safe harbor range of permissible fees. Each case is unique and must be evaluated on its own terms, considering such factors as the complexity of the medical issues, the risk of a finding of no liability, the degree of dispute over damages, whether the case is fully tried, the anticipated litigation expenses, etc. That said, however, the Court can offer guidance for attorneys seeking to ensure that their fee agreements are ethically sound. That guidance is informed by several principles. First, the constitutionality of the MMA's fee limitation could be questioned if it is applied in a manner that seriously impede[s] the ability of the injured patient to employ effective counsel. Johnson, 404 N.E.2d at 602. Second, the Legislature limited attorney fees from the Fund to 15%, but it left the determination of the reasonableness of the total fee for this Court to determine under the Professional Conduct Rules. Even if a total fee in a medical malpractice case includes 100% of the non-Fund recovery, the legislative limit on Fund money still acts as an effective cap on the total fee at the higher ranges. As demonstrated above, under the Sliding Scale Fee Arrangement, if an attorney undertakes and fully tries a complex, hotly disputed, and risky medical malpractice case, and succeeds in winning a maximum verdict of $1,250,000 for the client, the maximum fee is $400,000, or 32% of the total recovery. Third, as suggested in Johnson, contingent attorney fees of up to 35% are commonly considered reasonable in tort litigation. In complex cases not governed by the MMA, an even higher contingent fee might be considered reasonable, though we agree with the Commission that 40% is ordinarily the maximum. We cannot say the employment of the Sliding Scale Fee Arrangement to yield a contingent fee in the 32-35% range is unreasonable in all medical malpractice cases. To the extent Johnson, Benjamin, or Stephens I suggests otherwise, they are overruled. Fourth, Indiana law holds in high regard the freedom of parties to enter into contracts of their own making. See Fresh Cut, Inc. v. Fazli, 650 N.E.2d 1126, 1129-30 (Ind.1995). If an attorney and client enter into an arms-length, fully informed, and freely negotiated fee agreement along the lines of the Sliding Scale Fee Arrangement, this would be a strong indication that the resulting fee is reasonable and thus ethical. However, the Rules of Professional Conduct impose special requirements with respect to contingent fees. Prof. Cond. R. 1.5(c). An agreement containing a Sliding Scale Fee Arrangement must make clear that the client's recovery, if any, may be paid in part from the Fund and in part from other sources, indicate that the MMA limits the lawyer's fee attributable to that part of the recovery paid from the Fund to 15%, [4] and clearly explain the operation of the Sliding Scale Fee Arrangement in relation to this statutory requirement. Finally, fees of all types in all manner of cases must be reasonable based on all the factors listed in Professional Conduct Rule 1.5(a). In some medical malpractice cases, a total fee of 32-35% may be unreasonably high. The 20 to 35% range mentioned in Johnson suggests that a lower fee may be more appropriate in some cases. It is, of course, permissible to construct fee arrangements that escalate the percentage of recovery, depending on the stage of the proceeding  prepanel, pre-discovery, pre-trial, etc.  at which it is achieved. And the rules with respect to disbursement of attorney fees in the case of structured settlements remain unaffected by this opinion.