## Facts

- The insured homeowners suffered fire damage to their mobile home covered by their insurer.
- After the insurer offered a settlement the homeowners considered inadequate, they signed a contingent-fee agreement with a licensed public-adjuster corporation to handle the claim for a percentage of any recovery.
- The adjuster inspected the loss and prepared detailed estimates and valuations, including depreciation, replacement costs for personal property, and additional living expenses.
- The adjuster submitted an alternative claim to the insurer and negotiated a higher settlement figure than the insurer’s initial offer.
- The homeowners then retained an attorney to complete the settlement; settlement proceeds were paid to the homeowners and counsel without payment to the adjuster or recognition of the adjuster’s asserted assignment of claim rights.
- The homeowners refused to pay the adjuster, asserting the adjuster’s activities amounted to unauthorized practice of law.
- The adjuster sued the homeowners to enforce the fee agreement and sued the insurer for settling without protecting the adjuster’s asserted contract/assignment interest.
- The trial court dismissed for failure to state a claim, concluding the public-adjuster statute was unconstitutional insofar as it authorized a corporation to practice law; the state supreme court accepted transfer.

## Issues

1. Whether the public-adjuster licensing statute unconstitutionally permits nonlawyers, including corporations, to engage in the practice of law, infringing the judiciary’s exclusive authority to regulate law practice and violating separation of powers.
2. Whether a contingent-fee agreement (and related assignment-based claims) is enforceable when the services performed constitute unauthorized practice of law.

## Decision

- The court affirmed dismissal for failure to state a claim.
- The adjuster’s services, as performed, constituted the practice of law because they involved advising and acting for insureds regarding rights under an insurance contract and negotiating settlement of a monetary claim.
- The legislature could not validly authorize such conduct by statute because regulation of the practice of law is an exclusive judicial function.
- Because the underlying services were unauthorized law practice, the contingent-fee contract was illegal and unenforceable as a matter of public policy.
- The adjuster’s claims against the insurer based on an asserted assignment or duty to “protect” the adjuster’s interest also failed because they depended on an unenforceable, unlawful arrangement.

## Legal Principles

- Regulation and definition of the practice of law are within the judiciary’s exclusive constitutional authority; legislative enactments cannot authorize law practice in conflict with that authority.
- Activities that go beyond appraising physical damage and instead include evaluating coverage/rights, preparing and presenting claims for money, and negotiating settlement on another’s behalf may constitute the practice of law.
- A contract for compensation based on unauthorized practice of law is void and unenforceable, even if services were performed and produced value.
- Derivative claims premised on an illegal fee arrangement (including assignment-based theories against third parties) are not enforceable in court.

## Conclusion

The court held that the public adjuster’s claim preparation and settlement negotiations amounted to unauthorized practice of law that the legislature could not sanction, so the adjuster could not enforce its contingent-fee agreement or related claims arising from the settlement.


Professional Adjusters, Inc. v. Tandon, 433 N.E.2d 779 (Ind. 1982)