Indiana – No Liability for Departing Lawyer’s Failure to Blow the Whistle
By Will Jordan
A recent case out of the Indiana Court of Appeals teaches some important lessons for lawyers dissociating from firms with shady practices. The Defendant practiced law with another attorney and the two represented the Plaintiffs. During the course of the representation, the Defendant grew concerned about the other lawyer’s business practices, including failing to pay attorney’s fees to a law firm that had served as co-counsel, failing to deliver settlement proceeds to a client, and providing misleading and inaccurate information to a litigation financing company. Wisely, the Defendant parted ways with the other attorney and the firm. After the Defendant’s departure, the other attorney continued to represent the Plaintiffs and, according to the federal criminal complaint filed against him, ran a Ponzi-scheme with clients’ (including Plaintiffs’) settlement funds and converted a large portion of those settlement funds to his own use and benefit. Plaintiffs sued the lawyer who departed, claiming he committed malpractice by failing to warn the Plaintiffs of the other lawyer’s potential wrongdoing. The Court disagreed, finding that the Defendant’s concerns “related only to what he classified as poor business practices” and that the Defendant did not have any specific knowledge of wrongdoing with respect to the representation of the Plaintiffs.
Devereux v. Love, No. 49D03-1209-CT-35875 (Ind. Ct. App., Apr. 22, 2015).
Here’s the full opinion.