Senate committee withholds vote on anti-indemnification bill

An Indiana lawmaker is urging her colleagues to reconsider her proposed attorney anti-indemnification bill after the Senate Civil Law Committee refused to call a vote on the measure.

Sen. Liz Brown, R-Fort Wayne, filed Senate Bill 22 last week and presented it to the Civil Law Committee Monday morning. The bill would prohibit attorneys from indemnifying themselves from malpractice liability, specifically holding 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.”

SB 22 is identical to the bill Brown filed last year, SB 84. Brown told The Indiana Lawyer during the 2017 Legislative Session that she was inspired to take up the anti-indemnification issue based on the decision in Central Indiana Podiatry, P.C., et al., v. Barnes & Thornburg, LLP, 49A02-1603-PL-498.  In that case, Barnes & Thornburg was granted summary judgment in its favor on such an indemnification clause, an outcome Brown said she did not know was possible.

Indiana Court of Appeals Judge Terry Crone dissented from the ruling in Barnes’ favor, yet Sen. Randy Head, R-Logansport, who chairs the Civil Law Committee, used that dissent to justify withholding a vote on SB 22. In his dissent, Crone wrote that, “Until and unless our supreme court abolishes this practice, Hoosiers seeking competent and diligent legal representation may be left to fend for themselves against lawyers who wish to avoid liability for future acts of malpractice.”

While Crone’s dissent disfavored indemnification clauses, Head said the appellate judge’s statement indicated the Indiana Supreme Court, rather than the legislature, should address the issue. Thus, Head decided not to call a vote on Brown’s bill due to separation of powers concerns.

But Brown, who is the owner of Brown Mediation LLC, told the committee she did not think SB 22 presented a separation of powers problems. Rather, she said the anti-indemnification issue addresses contracts and public policy, two issues under the General Assembly’s purview. She also noted that attorneys are given the unique ability to govern themselves through disciplinary processes, but allowing that governance to extend to indemnification provisions in client agreements would constitute a “get out of jail free” card.

Like Head, Sen. Greg Taylor, D-Indianapolis, raised concerns about SB 22, specifically as it relates to attorney performing pro bono work. He likened the situation to a doctor stumbling across a dying person and unsuccessfully trying to administer treatment, conduct protected from liability under Indiana’s Good Samaritan Law. But Brown said the protections offered by the Good Samaritan Law differ from a malpractice indemnification agreement because the Good Samaritan Law considers exigent circumstances.

Taylor also expressed concern about the breadth of SB 22, saying he would support the measure if it related specifically to “wanton and willful misconduct.” But in the context of pro bono service, he said he was worried the language would not protect attorneys when they make smaller mistakes.

“This just says, ‘Period. You cannot cover yourself from liability if you volunteer to do something,’” he said.

Brown, however, defended the broad language of her bill, saying indemnification agreements could be so broad as to allow coverage for an attorney regardless of the size of their mistake or their negligence leading up to the malpractice. If such agreements are in place, then the client would be denied their right to due process and legal recourse against an attorney that wronged them, Brown said.

In response to a question from Head, Brown told the committee the language of SB 22 would further limit the conduct prohibited by Indiana Rule of Professional Conduct 1.8(h). That rule allows for indemnification agreements if the client consults with outside counsel before signing the agreement. But under SB 22, attorneys could not release themselves from prospective liability “even if the client is independently represented in making the agreement.”

Brown urged the Civil Law Committee to reconsider allowing a vote on SB 22 as a way of ensuring clients receive due process when they receive insufficient representation.