Attorneys who represent the personal representative or otherwise provide services to the probate estate are generally entitled to fees as allowed under the Florida Probate Code. Fla.Stat. §733.6171. In order to be entitled to fees, however, the attorney, or anyone else (like an accountant) seeking fees from the estate must show that the services provided were beneficial to the estate. What constitutes a “benefit” to an estate is often subject to debate, but most will agree that an attorney benefits an estate by bringing about an enhancement in value or an increase in the assets of the estate or by aiding in establishing the intent of the decedent and the proper division of the estate generally. A good discussion of what benefits an estate can be found in Segal v. Levine, 489 So.2d 868 (Fla.3d DCA 1986).
Two recent cases from Florida’s Fourth District Court of Appeals shed light on how petitions for fees can be handled, or mishandled, at both the trial and appellate level.
First, Glanz and Glanz v. Chinchilla, –So.3d–, 2009 WL 1531644, 34 Fla.L.Weekly D1124c (Fla. 4th DCA June 3, 2009) reminds practitioners that fee petitions and their approval, or disapproval, by the probate judge are subject to review by the district court of appeals under an abuse of discretion standard.
In Chinchilla, the estate fiduciary was a member of a prepaid legal services program and retained a law firm from a prepaid legal program to handle the estate. Part of the work performed by the law firm for the estate was defending a will contest, filing and pursuing a motion to disqualify another attorney based on a conflict of interest, and working with a curator in connection with the sale of the estate’s property.
Pursuant to the prepaid legal services program, the attorney charged $115 per hour, a 51% discounted rate from the normal billing rate of $225 per hour. The total charges amounted to $12,400 plus costs. The law firm submitted an affidavit from an expert attesting to the reasonableness of the fees and costs, specifically that $13,500 was a reasonable fee for the services rendered. Testimony evidenced that this amount was based on the discounted hourly rate and not on the normal billing rate. Presented with the petition for fees, the probate court further reduced the fees another 51% to $6885.00, or 51% of the $13,500 reasonable fee attested to by the expert.
The appellate court found the probate judge abused his discretion in reducing the fees:
“Here, the prepaid legal services contract rate of $115 per hour is presumed to be reasonable. See, e.g., Sotolongo v. Brake, 616 So. 2d 413, 413-14 (Fla. 1992). The 123 hours expended is also reasonable given that the attorney testified to the services rendered by the law firm in representing the personal representative in a will contest, a motion to disqualify another lawyer, and work done with the curator. The trial court accepted the expert’s affidavit that $13,500 was a reasonable, already discounted fee. The trial court did not find the hours or the discounted rate to be unreasonable. Nevertheless, the trial court inexplicably reduced the reasonable fee by another 51%. In doing so, it abused its discretion.”
In another case decided this week dealing with attorneys fees in the probate context, the Fourth District issued its opinion in Geary v. Butzel Long P.C. -So.3d–, 2009 WL 1606034, 34 Fla.L.Weekly D1173e (June 10, 2009). Geary involved an appeal from the West Palm Beach probate court’s order making the personal representative of an estate personally responsible for the estate’s attorneys’ fees incurred in litigation with the estate’s prior attorney, as well as ordering her to return fees that she paid to herself and the estate’s current attorney.
The probate court looked to the fee petition pursuant to section 733.6175(2) and found that the personal representative and the attorney’s fees were unreasonable. On appeal, the Fourth District noted that section 733.106(4) of the Probate Code, permits the court to direct from what part of an estate a fee assessment shall be paid (just as section 733.6175(2) does). However, the court observed that “[t]his section does not give the trial court unbridled discretion to award fees from any part of the estate. Before the trial court may assess fees against a beneficiary’s share of an estate there must be a finding of bad faith or wrongdoing by the beneficiary or other circumstances which would warrant such an assessment.”
Thus, if a court finds that fees are incurred in frivolous litigation then a probate court can determine that they were unreasonably incurred and can direct from what part of the estate they can be paid.
It is significant, in my view, that the Court maintained adherence to the rule that there must be a specific finding of bad faith conduct or wrongdoing on the part of a beneficiary before the court can order that the fees of a personal representative or attorney be paid from that beneficiaries’ share of the estate. See generally, In re Estate of Lane, 562 So.2d 352 (Fla. 4th DCA 1990); Dayton v. Conger, 448 So.2d 609 (Fla. 3d DCA 1984); Terner v. Rand, 442 So.2d 1038 (Fla. 3d DCA 1983).
