Taxation & Estate Planning

Contingent Fees in the Probate/Estate Context

By Joel A. Schoenmeyer

The Wills, Trusts & Estates Prof Blog has this post about a case involving contingent fee arrangement in an estate. 40% of $100 million. Wow.

The court couldn't decide, without additional facts, whether the 40% fee was unconscionable? Gosh -- I don't know how many additional facts you'd need. The "typical" contingent fee amount is either 30% or 33%, and that's for contested matters.

I've got two problems with contingent fees in probate:

1. The value of the estate rarely bears ANY relationship to the amount of time required. Or, to the extent there is a relationship, it's an inverse one. I've had huge probate estates, with millions of dollars in assets, that required little of my time. That's because we'd done a fair amount of planning before death. And I've had a lot of tiny probate estates that required a ton of time. (I've got a bunch of those right now, it seems.)

2. How much of your typical estate is contested? In a PI case, you can argue that every dollar you as plaintiff receive is due to your attorney. That's not really the case in the estate context, where you are just collecting assets, is it? A few years ago, I took over as attorney for two estates (husband and wife). The previous attorney had charged a contingent fee of 30% for collecting estate assets! Yes, that involved some negotiations with insurance companies, but the arrangement always struck me as questionable (especially given the facts of the case, and the identity of the executor).

Note: I do occasionally agree to accept litigation cases on a contingent fee basis (Will contests, claims, etc.).

Full post as published by Death and Taxes Blog on June 28, 2009 (boomark / email).