Section Review

The Estate of Bartley J. King and In Re: Guardianship of Kenneth E. Simon: Analyzing Attorney's Fees in Probate Litigation

One particularly introspective task that a lawyer can undertake is the preparation of an affidavit of attorney's fees in conjunction with a client's motion for fees. If you are preparing such an affidavit, chances are your client has already prevailed in some way. But having a court evaluate your efficiency and scrutinize your strategy (and perhaps your and your client's personal conduct) can quickly lead to more than just a little second-guessing about the handling of a case.

As part of its usual business, Probate Courts review applications for fiduciary fees, frequently assessing attorney's fees incurred by guardians, conservators, executors, administrators and trustees carrying out their duties. Probate Courts are thus accustomed to evaluating the monetary value lawyers provide. Probate Courts review attorney's fees in other contexts as well. Probate litigation differs from most other types of litigation in that there is a greater risk that an opposing party may pay a prevailing party's attorney's fees. Under G.L. c. 215, §45,1 Probate Courts, unlike other Massachusetts courts, have the discretion to award attorney's fees in contested matters "as justice and equity may require."

G.L. c. 215, §45 deviates from the "American Rule," which provides that litigants pay their own attorney's fees, regardless of the outcome of lawsuits, unless a statute specifically provides for the recovery of fees. The purpose of the American Rule is to encourage parties to utilize the judicial system to resolve good faith disputes even though their claims or defenses may not ultimately be successful. The American Rule permits parties to advocate their positions without the risk that they would have to pay the opposing parties' - as well as their own - legal fees if they do not prevail. A byproduct of the American Rule mindset is that payment of attorney's fees is usually not part of settlement negotiations.

Parties who litigate in Probate Court, however, face a risk that a Probate Court will punish weak claims or obstructionist tactics with an order to pay the opposing party's fees. Two recent high-profile, high-fee cases examine the standards for awarding attorney's fee in probate matters. The cases underscore the critical importance of not using the judicial system - or at least the Probate Court - to wage overly emotional or meritless family battles.

The Estate of Bartley J. King

In the matter of The Estate of Bartley J. King,2 the Supreme Judicial Court undertook a comprehensive analysis of the standard for the awards of fees under G.L. c. 215, §45. In Bartley, beneficiaries of an estate filed suit against the executor and primary beneficiary challenging the validity of the will and pre-death property transfers. After a nine-day trial, the Probate Court trial judge rejected the contestants' claims, finding no credible evidence of the decedent's lack of capacity or undue influence.

Post trial, the executor filed a motion that sought a whopping $710,321.50 in attorney's fees and $95,868.47 in costs. The total estate was only $1.2 million. The executor alleged that the contestants "had engaged in a 'two and half year campaign to punish … [the executor] for her father's generosity,' and should be ordered 'to bear the financial burden that they willfully imposed on … [the executor] by persisting in their unsubstantiated and baseless claims.'" In addition to seeking fees under G.L. c. 215, §45, the executor also sought fees under G.L. c. 231, §6F, an often-pled but rarely invoked statute permitting the recovery of attorney's fees when the opposing claims are "wholly insubstantial and frivolous."

The executor's motion for attorney's fee was heard by a judge different from the trial judge. The motion judge indicated that the hearing was not so much concerned about whether the Probate Court would award fees, but about what amount of attorney's fees was reasonable. The motion judge stated that she was familiar with the lengthy procedural history as well as the trial judge's findings and conclusions and commented that the record implicitly entitled the executor to an award of fees.

After a two-day hearing, the motion judge rejected the executor's claim under G.L. c. 231, §6F, finding that the contestants initially acted in good faith. However, the Probate Court motion judge found that fees were warranted under G.L. c. 215, §45 and awarded the executor $510,321.50 in fees and $64,000 in costs. The motion judge found that the contestants "unreasonably extended litigation" and "[a]fter two years of discovery, [they] should have realized that their claims were no longer reasonable."

Upon appeal by the contestants, the SJC confirmed that under G.L. c. 215, §14 and as part of its general equity jurisdiction, the Probate Court has the authority to award costs in matters involving estate and trusts.3 The SJC stressed, however, that the statute does not contemplate an award of costs or fees as a matter of course. Yet, the SJC also stressed that an award of attorney's fees is not only limited to "rare and egregious cases," as the contestants argued.

The SJC first analyzed whether fees under G.L. c. 215, §14 were limited to cases involving bad faith or wrongful conduct.4 The SJC noted that some "judges have used bad faith, or its absence, as a touchstone in determining whether to make an award under §45." But the SJC concluded that the "bad faith" standard is not mandatory and delineated examples of conduct that has resulted in orders to pay fees, including: causing confusion by "equivocal conduct in relation to estate property;"5 a party who had "torpedoed the settlement to which he previously agreed;"6 and where the defendant improperly refused the administrator's demand for release of estate funds.7 Another key fact for consideration is whether refusal to shift attorney's fees and costs to the prevailing party ends up distorting the valid estate plan of the decedent.8 In other words, do the intended beneficiaries of an estate end up with far less than the decedent intended because they needed to pay so much in attorney's fees as a result of misguided litigation?

After finding that the award of fees could be appropriate, the SJC in Bartley considered whether an evidentiary hearing on the fee issue was necessary. In the Probate Court, the motion judge held a hearing, but did not take evidence on whether to award fees. The SJC found that this procedure was error and concluded that prior to determining an amount of fees, the motion judge should have made specific findings on whether fees should be awarded rather than just referring generally to the contestants' efforts to prolong and complicate the litigation.

The SJC next considered whether the record supported the motion judge's award of $510,321.50 in attorney's fees. Below, the motion judge determined that it was reasonable for the executor to expect and defend a will contest. The motion judge then arrived at the award of fees by subtracting what that litigation should have cost the executor from what the litigation actually cost the executor ($710,321 - $200,000 = $510,321) given that the contestants "were excessively zealous in litigating" the case.

In reviewing the propriety of the motion judge's award, the SJC noted the following familiar factors:

In determining what is a fair and reasonable charge to be made by an attorney for his services many considerations are pertinent, including the ability and reputation of the attorney, the demand for his services by others, the amount an importance of the matter involved, the time spent, the prices usually charged for similar services by other attorneys in the same neighborhood, the amount of money or the value of the property affected by controversy; and the result secured. Neither the time spent nor any other single factor is necessarily decisive of what is to be considered as a fair and reasonable charge for such services.9

The SJC delineated other important considerations as well, such as: the necessity of the services; the extent to which duplicate or redundant efforts were involved; the conduct of the party seeking the award of fees; and the complexity of the matter.

The SJC stressed that the motion judge gave no indication that she evaluated the billing records submitted by the executor's attorneys and erroneously assumed the reasonableness of the total fees requested. Thus, while the SJC indicated that Probate Court has wide discretion to determine a fair award of fees, it must consider the applicable factors and must "undertake a more specific and searching analysis of the actual request for fees and costs submitted …."

The SJC remanded the case to the Probate Court for a determination as to whether the executor was entitled to an award of attorney's fees, and, if so, with the instruction that the Probate Court analyze whether the requested fees are fair and reasonable.

In Re: Guardianship of Kenneth E. Simon

In the matter of In re Guardianship of Kenneth E. Simon,10 the Barnstable Probate Court issued detailed findings of fact and conclusions of law concerning excessive fees - about $500,000 - charged by a guardian and his counsel in connection with a guardianship lasting only about 83 days. The case involved a rather sordid tale of a former mutual fund manager, Kenneth Simon, and his much younger wife, who had served jail time for running a prostitution ring. The thrust of the saga was the guardian's apparent allegiance to Simon's children, who disapproved of the wife, and the guardian's apparently obsessive campaign to alienate and even imprison Simon's wife.

Because Simon lacked legal capacity, attorney E. James Veara was appointed guardian. Simon's assets at the commencement of the guardianship totaled about $4.5 million. Veara's efforts to bilk the estate and conflicts of interest began immediately when Veara increased his customary rate of $100 to $300 per hour to $400 per hour and hired a significant referral source, attorney Gerald Nissenbaum, as his personal counsel.

The matter was brought before the Probate Court on Simon's children's challenge to Veara's accounts. In the lengthy proceedings, Veara and Nissenbaum's fees and tactics were scrutinized.

After trial, the Probate Court chastised Veara for billing in quarter-hour increments, for his poor recordkeeping and for not having a fee agreement with Nissenbaum. The Probate Court emphasized disapprovingly that Veara and Nissenbaum kept large retainers of $50,000 and $25,000 to $35,000 respectively.

The Probate Court also made many finding that suggested that Veara and Nissenbaum did not act objectively or in the ward's best interests. The Probate Court stressed that Veara did not meet with Simon immediately after his appointment and questioned Veara's motives in waiving Simon's attorney-client privilege. The Probate Court found that Nissenbaum improperly represented both the guardian as well as Simon's children. The Probate Court also lambasted Veara and Nissenbaum for putting pressure on Simon's wife to leave Simon for money as well as tactics orchestrated to put her in jail, including paying $20,000 to hire a private investigator to follow her. Veara improperly tried to revoke Simon's will, change his estate plan and even attempted to file for a divorce and an annulment.

The Probate Court criticized Veara and Nissenbaum for filing numerous frivolous pleadings and their general contentious conduct. Veara and Nissenbaum allegedly spent $80,000 just taking depositions. They also charged an extraordinary amount of money performing ministerial tasks and duplicating each other's efforts.

The Probate Court noted that a fiduciary should be allowed his reasonable expenses, costs and counsel fees incurred in the execution of his fiduciary duties. What is a reasonable fee is a question of fact for a trial judge. The facts that a Probate Court should take into account when approving fees under G.L. c. 206, §16 include the size of the estate, the marketable nature of the assets, the factual and legal questions involved in administering the estate, the time necessary to do the work, the skill and ability employed, the amounts usually paid to others for similar work and the results accomplished.11

The Probate Court concluded that tactics taken by Veara and Nissenbaum from the beginning of the case were improper and that many of their actions were unnecessary. The Probate Court seemed particularly offended by Veara's altered high hourly rate and the witch hunt against Simon's wife. The Probate Court noted that at trial, Veara and Nissenbaum did not present any evidence that Simon would have consented to these expenses had he been aware of them and that Veara and Nissenbaum were "far less concerned with the ward and his health than they were getting rid of Mrs. Simon and the ward's money."

In its judgment, the Probate Court reduced Veara's hourly rate to $200 and cut his total time by 50 percent. The Probate Court likewise slashed Nissenbaum's claimed fees in half. As part of the judgment, the Probate Court surcharged Veara and Nissenbaum for frivolous expenses, including fees paid to a private investigator and money paid to a research firm for research that the court deemed unnecessary.

Key consideration in submitting applications for fees to the Probate Court

Probate Courts adjudicate often contentious family disputes. As a result, lawyers representing fiduciaries or beneficiaries have to be particularly careful not to become embroiled in self-serving or even vindictive emotions that often engender legal family disputes. In probate litigation, because the American Rule does not necessarily apply, lawyers must be careful to advise clients that wrongful conduct, or even lack of reasonableness, could result in paying opposing parties' legal fees. While the award of legal fees is still the exception, and while the lessons in Simon are extreme, Bartley clearly illustrates that the award of fees is within the Probate Court's discretion and Simon illustrates how critically a court can scrutinize legal fees.

Legal efficiency is a goal in any legal representation, but the possibility of receiving or paying fees should be an incentive to pay particular attention in filling out a timesheet every day. Lawyers should take particular care to avoid duplication of efforts and to minimize charging for ministerial tasks. Lawyers also need to be cognizant when both the fiduciary's and the lawyer's meters are running at the same time.

As with all litigation, in probate cases lawyers need to ensure that the requested fees are a reasonable proportion of the amount in controversy. In both Bartley and Simon, the courts noted that the fees were extremely high in view of the total value of the estate. So much of litigation is reactionary and most litigators spend a fair amount of time explaining the costs of litigation are subject to many variables beyond the lawyer or litigant's control, but in contested probate matters, lawyers need to take particular care that the cost of the fight does not supersede the economic reality of the controversy.

Notes

1.    "In contested cases before a probate court or before the supreme judicial court on appeal, costs and expenses in the discretion of the court may be awarded to either party, to be paid by the other, or may be awarded to either or both parties to be paid out of the estate which is the subject of the controversy, as justice and equity may require. In any case wherein costs and expenses, or either, may be awarded hereunder to a party, they may be awarded to his counsel or may be apportioned between them. Execution may issue for costs awarded hereunder." G.L. c. 215, §45

2.    455 Mass. 796 (2010).

3.    Mulloney v. Barnes, 226 Mass. 50, 53-54 (1929).

4.    See Old Colony Trust Co. v. Third Universalist Soc'y of Cambridge, 285 Mass. 146, 150-151 (1934).

5.    Hurley v. Noone, 347 Mass. 182, 190 (1964).

6.    Strand v. Hubbard, 31 Mass. App. Ct. 914, 914-915 (1991).

7.    Bright v. American Felt Co., 343 Mass. 334, 337 (1961).

8.    Strand v. Hubbard, 35 Mass. App. Ct. at 914-915.

9.    Cummings v. Nat'l Shawmut Bank, 284 Mass. 583, 569 (1993).

10.   Docket No. BA05P-110-GI1.

11.   McMann v. Krapf, 323 Mass. 118 (1948).

The Author

Patricia L. Davidson is a partner at Mirick O'Connell in the Probate, Trust and Fiduciary Litigation Group and the Business and General Litigation Group. Her practice focuses on resolving issues involving wills, trusts and real estate, as well as disputes involving family and closely-held businesses. In addition, she represents individual and institutional fiduciaries. She also litigates complex business matters.

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