Senator re-introduces attorney anti-indemnification bill

An Indiana lawmaker is once again proposing a bill that would prohibit attorneys from indemnifying themselves against legal malpractice actions after a similar measure failed to pass last year’s General Assembly.

Sen. Liz Brown, R-Fort Wayne, filed Senate Bill 22 on Jan. 3, a measure that would hold that “any provision in an agreement between an attorney and a client that purports to prospectively release the attorney from liability for malpractice is against public policy, void, and unenforceable.” The language of SB 22 mirrors that of SB 84, which Brown filed last year.

During last year’s legislative session, Brown – who is the owner of Brown Mediation LLC – told the Indiana Lawyer she filed her anti-indemnification bill after learning about the case of Central Indiana Podiatry, P.C., et al., v. Barnes & Thornburg, LLP, 49A02-1603-PL-498. In that case, Barnes represented a series of medical centers and Anthony Miller in a lawsuit filed by a podiatrist, then later offered its clients a release agreement imposing a cap on legal fees.

The agreement also contained a provision requiring the Barnes clients to “release and forever discharge B&T, and all predecessor and successor firms … from any and all claims, of any nature, known or unknown, which the (parties) now have, have had, or may later claim to have arising from or related to any subject of B&T’s representation.”

“I just didn’t think that was really possible, and I wanted to make sure going forward that we didn’t do that,” Brown said in 2017.

Though Barnes advised its clients to consult with independent counsel before singing the agreement, SB 22 would make anti-indemnification agreements entered into after June 30 null and void “even if the client is independently represented in making the agreement.”

The Indiana Court of Appeals upheld summary judgment in favor of Barnes on its indemnification clause in October 2016, then again on rehearing in May. The Indiana Supreme Court subsequently denied transfer in June.

Though SB 84 unanimously passed the Senate Insurance and Financial Institutions Committee and received near-unanimous support from the full Senate, it failed to make it out of the House Judiciary Committee. Further, Republican Sen. Aaron Freeman and Democratic Sens. Lonnie Randolph and Greg Taylor – all attorneys – opposed the measure.

The practicing legal community also had a mixed response to SB 84, with some legal malpractice attorneys calling it “a solution in search of a problem” and advocating for the Supreme Court, rather than legislature, to address anti-indemnification issues. The Lake County Bar Association – one of Indiana’s largest bar associations – also took a public stance against Brown’s bill, claiming it ran afoul of Indiana’s Rules of Professional Conduct and limited “the public’s access to attorneys in especially difficult situations for the person in the need of (a) lawyer.”

“The Indiana Court of Appeals recognized these situations and specifically permitted attorneys and clients to agree to limit the attorney’s liability when it issued its opinion in Central Indiana Podiatry, P.C. v. Barnes & Thornburg LLP in 2016,” the Lake County Bar wrote last March. “Senate Bill 84 is a legislative attempt to overrule what the courts have already decided.”

Brown, however, said then that she has not received any feedback on SB 84 since it passed the Senate in February. She also defended the measure and said it would be “disturbing” for an attorney to offer legal advice to someone in a situation requiring quick counsel, yet at the same time seek to indemnify themselves for not providing the same counsel they would offer “in a more timely, thoughtful manner.”

The Senate Civil Law Committee will consider Brown’s 2018 bill, SB 22, at 10 a.m. Monday in Room 130 of the Indiana Statehouse.