Attorney And Appointee Fees - Harris County, Texas

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Attorney and Appointee FeesChristine ButtsJudgeHarris County Probate Court 4201 Caroline 7th FloorHouston, Texas 77002Houston Bar Association’s 2012 Wills and Probate InstituteFebruary 17, 2012

ABOUT THE AUTHORCONTACT INFORMATIONChristine Riddle ButtsJudge, Harris County Probate Court 4201 Caroline, 7th FloorHouston, Texas ONAL INFORMATIONDate of Birth:April 12, 1971Place of Birth:Houston, TexasCitizenship:United StatesMarital Status:Married to Donald Butts, IIChildren:Donny, Abby, Thompson, MichaelMISSIONTo serve families in times of crisis in a thoughtful, compassionate, and deliberate way, when thatcrisis involves the loss of a loved one, the need for a guardianship, or a mental health issueEMPLOYMENT HISTORY2011-present Judge, Harris County Probate Court No. 42007-2010Riddle, Butts & Akiens, LLP Partner2004-2006Riddle & Associates, P.C.Associate Attorney1996-2004Riddle & Brazil, LLPAssociate AttorneyProbate and estate planning experience: estate tax disputes with the IRS, independentadministrations, dependent administrations, heirships, modifications and terminations of trust,contests of wills, contested guardianships, 867 Management Trusts, muniments of title, and smallestate administrations, mental health, estate planning, business planning, and charitable giftplanningEDUCATION1993-1996JDUniversity of Houston Law Center1989-1993BBA University of Texas at Austin1984-1989Westfield High School, Houston, TexasPROFESSIONAL QUALIFICATIONSBoard Certified in Estate Planning and Probate by the Texas Board of LegalSpecialization (2003)Attorney Ad Litem appointed by the courts in probate, trust, and mental health mattersPublishing Editor of the Houston Journal of International Law (1995-1996)Attorney and Appointee FeesPage ii

HONORSTexas Rising Star (2008, 2009, 2010) (as published in Texas Monthly Super LawyerMagazine)Houston’s Top Lawyers for the People (2007-2009) (As published in H Texas Magazine)Houston’s Top Lawyers (2007-2009) (As published in H Texas Magazine)Five Star Wealth Manager in Charitable Giving, Estate Planning, Will Preparation (2009)(As published in Texas Monthly Magazine)PUBLISHED WORKS―Choice of Business Entity in Texas.‖ Houston Business and Tax Law Journal, Volume 4, 2004.LECTURES―Coordinating Beneficiary Designations—Has Your World Changed in the Last Five Years.‖Presented at the 24th Annual Wills and Probate Institute, September 24-25, 2009, South TexasCollege of Law.―Using Revocable Trusts as Estate Planning Tools.‖ Sponsored by Lorman Education Services,December 2, 2008.―Intestacy and Closing the Estate.‖ Sponsored by National Business Institute, July 17, 2008.―Tax Exempt Organizations in Texas.‖ Sponsored by Lorman Education Services, February 13,2007.―The Future of Family Limited Partnerships in Estate Planning.‖ Presented to the AmericanWomen’s Society of CPA’s, February 4, 2006.―Choosing a Business Entity in Texas with an Eye Toward Succession Planning.‖ Presented tothe Attorneys in Tax and Probate, May 4, 2004.―Choice of Business Entity in Texas.‖ Presented at the 2003 Accounting Expo Sponsored by theTSCPA Foundation, April 22, 2003.MEMBERSHIPSPlanned Giving Council of Houston, Board MemberAttorneys in Tax and ProbateJunior League of Houston, Active MemberMensaINTERESTSCycling, figure skating, cooking, sewing, and smockingAttorney and Appointee FeesPage iii

TABLE OF CONTENTSIntroduction . 1I.A.Attorney Fees in Historical Perspective . 1B.Public Perception of Attorney Fees . 1C.Attorney Fees in Other Jurisdictions . 21. Outside the State of Texas . 22. Within the State of Texas . 2II.Reasonable Attorney Fees. 3A.Defined . 3B.Fee Sharing. 3C.Reasonable Fees in Context of Probate . 41. Approved Hourly Rates . 42. Defending a Will . 43. Declaratory Judgment Actions . 5III.A.Fee Arrangements . 5Hourly Fees . 51. Defined . 52. Nonrefundable Retainers . 5B.Contingency Fees . 61. Defined . 62. Requirements and Limitations of Probate Court . 6C.Flat Fee . 81. Defined . 82. Limitations . 8IV.A.Fees for Attorney Appointees . 8Heirship . 81. The ―Plain Jane‖ Case . 82. The ―Mystery‖ Case . 8B.Guardianship . 81. Private Pay. 82. Indigent Ward . 93. Contested Matter . 9V.Fiduciary and Attorney Compensation . 10A.Statutory Formula . 10B.Statutory and Other Exceptions Limiting Commission . 11Attorney and Appointee FeesPage iv

1. General Rule. 112. Specific Exceptions Relating to Guardians . 113. Specific Exceptions Relating to Dependent Executors and Administrators . 11C.Statutory Formula Unreasonably Low . 12D.Attorney Fiduciaries . 12E.Dual Compensation . 121. Authority Allowing Dual Compensation . 122. Making Application. 133. Commission vs. Hourly Compensation . 14F. Accounting for Time and Invoices . 14VI.Conclusion . 15Appendix AI. Attorney’s Fees . iA.Court-Approved Fees for a Fiduciary’s Attorney . iB.Attorney Ad Litem and Guardian Ad Litem Fees . iC.Fees when an Attorney is also the Fiduciary . iiII. Paralegal/Legal Assistant Charges . iiiIII. Billing in Ongoing Guardianship and Estate Matters . iiiIV. Court Action on Fee Applications . vAttorney and Appointee FeesPage v

I.IntroductionA.Attorney Fees inHistorical Perspectiveduplicating machines and methods, andincreasing the ease with which frequentbilling statements were produced and sent.Though well over half of theattorneys surveyed by the American BarAssociation Commission on Hourly Billingreported that more than 81% of theirinvoices are based upon the traditionalhourly billing model, other lawyers basefees upon contingency fee contracts and stillothers upon a flat fee approach. Id.Before the advent of the billablehour, lawyers charged clients in other ways.The lawyers considered many factorsincluding the expertise required, the noveltyof the issues involved, the result or value tothe client, the opportunity cost to the lawyerB.Public Perception offor taking the case, the time required tobring the matter to conclusion, and whetherAttorney Feesthe fee was fixed or contingent. See ABAHenry Brougham, a Victorian Age,Commission on Billable Hours Report 2001British Statesman who practiced law for a2002. Many times, the charges to the clientshort time, defined a lawyer as, ―a learnedwere determined retrospectively at thegentleman who rescues your estate fromconclusionoftheyour enemies and keepsmatter; and as a result,it himself.‖there were fewer feeFor some time,disputes.With thisthe Houston attorney fees awarded bylawyer’s fee was tied totheHarrisCountythe results enjoyed byProbate Judges. In 2010,the client and thethe paper published anbusiness risk of thearticle entitled, ―Harrisrelationship was moreCounty Probate Feesheavily borne by theProvide Bonanza forattorney. Id. ThoughSome Lawyers,‖ inFigure 1 Houston Chronicle October 22, 2010no one expects hourlywhichLiseOlsenbilling to go away, it is valuable toreported that Harris County Probate judgesrecognize the historical concepts that oncehad awarded over 8,000,000 in attorneygoverned how lawyers charged clients.fees in one year, far more as compared toThe 1950s and 1960s saw theany other county in Texas.burgeoning of hourly billing. LawyersA good attorney’s billing practiceincreasingly began to take notes as casesshouldreflectethicalandmoralprogressed and keep better records. Hourlyresponsibility,commonsense,andbilling gained popularity as it enabledprofessionalism. Judge Mike Wood said itlawyers to gage their productivity and thatbest when he described an attorney feeof others. What’s more, hourly billingapplication as a ―public relations document.‖added the transparency increasinglyIt is the attorney’s opportunity to establish indemanded by clients. Id. Importantly, inthe public record the attorney’s manner of1959,Xeroxintroducedthefirstpractice and billing and his dedication to hisphotocopier, replacing less efficientclient’s case.Attorney and Appointee FeesPage 1

C.Attorney Fees in OtherJurisdictions1.Outside the State ofTexasThe California Probate Code sets themaximum statutory fees that attorneys cancharge for a probate. The fees are calculatedon the value of the gross probate estate andamount to 4% of the first 100,000, 3% ofthe next 100,000, 2% of the next 800,000,1% of the next 9,000,000, and .5% of thenext 15,000,000. The court will determinethe fee for the probate of an estate valued at 25,000,000 or more. See CAL. PROB. CODE§ 10810 (West 2010). In addition, in morecomplex probate cases, the attorneys mayapply for and receive a higher fee thanprovided under such statute when theattorney has provided ―extraordinary‖services to the estate and personalrepresentative of the estate. Id.Like California, lawmakers inFlorida have codified a schedule setting outreasonable attorney compensation for estateadministration. Though the law providesthat attorneys for personal representativesare entitled to reasonable compensationwithout court order, Section 733.6171(3) ofthe Florida Statutes, presumes that such feesare reasonable if they are no more than: 1,500 for estates of less than 40,000; 2,250 for estates of less than 70,000; 3,000 for estates of less than 100,000; 3%of the value of the estate from 100,000 to 1,000,000; and 2.5% of the estate valuefrom 1 million to 3 million. See FLA.STAT. ANN. § 733.6171 (West 2010). Thestatutory fee schedule applies to routineprobate administrations. If extraordinaryservices are required, Florida courts willallow reasonable attorney fees for suchextraordinary services in addition to the feesreceived under the statutory formula. Id.Of the states in the United States, themajority of states require by statute thatAttorney and Appointee Feeslegal fees associated with probate matters be―reasonable.‖Several states, includingCalifornia, Florida, Wyoming, Virginia,Missouri, Montana, and Nebraska codifyreasonable fees based upon the value of theassets under administration. A few states,including Louisiana, Massachusetts, andNew Hampshire make no provisionsregarding attorney fees in statutes relating toestate administration.Texas2.Within the State ofPeriodically, the State Bar of Texas,Department of Research & Analysisproduces an Hourly Rate Report (―SBOTHourly Rate Report‖). The stated purposeof the Report is ―to obtain information onhourly rates charged . . . by Texas attorneys‖and provide attorneys with a ―valuablecompetitive tool in today’s environment.‖See State Bar of Texas Department ofResearch & Analysis’s Hourly Fact Sheet.According to the SBOT Hourly RateReport, the median hourly rate for attorneyspracticing in the areas of wills, trusts, andprobate is 206. For probate attorneyspracticing in Houston area, the median rateincreases to 223.The geographic areareporting the highest hourly rate for probatepractitioners is Dallas-Fort Worth, withattorneys clocking in at 239 an hour. Ruralarea Texas probate attorneys report thelowest hourly rate, at 187.Probateattorneys outside the State of Texascommand an average of 230 an hour,relatively high according to Texas standards.The Report added credibility to thenotion that attorneys from larger law firmscharge higher hourly rates. According to theSBOT Hourly Rate Report, the median ratefor a solo practitioner is 198, while themedian rate for an attorney working for alarge law firm with more than 200 attorneysis around 370. Id.Not surprisingly, the Report alsoanalyzed the impact years of practice had onPage 2

the hourly fees sought by attorneys. Whilethe Report failed to provide data specific toattorneys practicing in the areas of probate,wills, and trusts, the Report set out themedian hourly rates being charged byattorneys in the Houston area according toyears of practice. Attorneys practicing fortwo years or less had a median hourly rate of 192. Attorneys having between eleven andfifteen years of practice experience chargeda median hourly rate of 275. The attorneyswith the most experience, having been inpractice over twenty-five years, enjoyed amedian rate of 283. Id.Figure 2 Data Extracted from SBOT 2009 Fact SheetII.Reasonable Attorney FeesA.DefinedRule 1.04 of the Texas Rules ofProfessional Conduct provides that attorneyfees must be reasonable. In evaluatingwhether or not attorney fees are reasonable,the following factors are considered: the time and labor required, thenovelty and difficulty of thequestions involved, and the skillrequisite to perform the legal serviceproperly; the likelihood, if apparent to theclient, that the acceptance of theparticular employment will precludeother employment by the lawyer;Attorney and Appointee Fees the fee customarily charged in thelocality for similar legal services; the amount involved and the resultsobtained; the time limitations imposed by theclient or by the circumstances; the nature and length of theprofessional relationship with theclient; the experience, reputation, andability of the lawyer or lawyersperforming the services; and whether the fee is fixed or contingenton results obtained or uncertainty ofcollection before the legal serviceshave been rendered.See Texas Disciplinary R. Prof’l Conduct1.04 reprinted in TEX. GOV'T CODE ANN.,tit. 2, subtit. G app. A (Vernon 2005).Reasonable fees are determined bymultiplying the number of hours worked bythe attorney’s hourly rate. See City ofHouston v. Levingston, 221 S.W.3d 204(Tex. App.—Houston [1st Dist.] 2006, nopet). Both components of the calculation,the hours worked and the hourly ratecharged, must be reasonable. Guity v. C.C.I.Enter. Co., 54 S.W.3d 526, 528 (Tex.App.—Houston [1st Dist.] 2001, no pet.).B.Fee SharingRule 1.04 of the Texas DisciplinaryRules of Professional Conduct provide thatdivision or arrangement for division of a feebetween lawyers who are not in the samefirm may be made only if: the division is in proportion to theprofessional services performed byeach lawyer, or made betweenlawyerswhoassumejointresponsibility for the representation;and the client consents in writing to theterms of the arrangement prior to thetime of the association or referralPage 3

proposed, including: the identity ofall lawyers or law firms who willparticipate in the fee-sharingagreement; whether fees will bedivided based on the proportion ofservices performed or by lawyersagreeingtoassumejointresponsibility for the representation;and the share of the fee that eachlawyer or law firm will receive or, ifthe division is based on theproportion of services performed, thebasis on which the division will bemade; andtheaggregatefeeisnotunconscionable.Id.If a part or all of the fees are subjectto court approval, the attorneys shoulddisclose as part of the application for feesthe terms of the arrangement or provide acopy of fee agreement to the court. Thecourt will require evidence to support afinding that the fee agreement comports withRule 1.04 of the Texas Disciplinary Rules ofProfessional Conduct.C.Reasonable Fees inContext of Probate1.Approved HourlyRatesIt is the court’s duty to ensure thatestates of decedents pay only for―reasonable and necessary‖ attorney’s feesand expenses. See TEX. PROB. CODE ANN.§242 (Vernon 2010). Many courts, includingthe Harris County Probate Courts, haveadopted a written policy regarding attorneyfees. With regard to attorneys who representfiduciaries in probate court, the probatecourts in Harris County have developed arange within which attorney fees will beconsidered reasonable. Below is a tablesetting out the range of permissible rates forattorneys representing fiduciaries basedAttorney and Appointee Feesupon the attorney’s tenure in the practice ofprobate law:YearsPracticingProbate0-23-56-1011 Court ApprovedRateup to 165/hour 165 to 195 195 to 250 250 to 350See Harris County Probate Courts’Standards for Court Approval of AttorneyFee Applications, attached as Appendix A.In addition to the length of time in which theattorney has been in the practice of probatelaw, the courts consider the extent of theattorney’s experience, including professionaland board certifications.2.Defending a WillSection 243 of the Texas ProbateCode provides that the reasonable attorneyfees associated with the good faith efforts ofa person interested in the will to defend orprosecute proceedings to seek the admissionof the will to probate will be paid from theassets of the estate, irrespective of thesuccess or failure of such efforts.When any person designated asexecutor in a will or an alleged will, oras administrator with the will oralleged will annexed, defends it orprosecutes any proceeding in goodfaith, and with just cause, for thepurpose of having the will or allegedwill admitted to probate, whethersuccessful or not, he shall be allowedout of the estate his necessaryexpenses and disbursements, includingreasonable attorney's fees, in suchproceedings.When any persondesignated as a devisee, legatee, orbeneficiary in a will or an alleged will,or as administrator with the will oralleged will annexed, defends it orprosecutes any proceeding in goodPage 4

faith, and with just cause, for thepurpose of having the will or allegedwill admitted to probate, whethersuccessful or not, he may be allowedout of the estate his necessaryexpenses and disbursements, includingreasonable attorney's fees, in suchproceedings.TEX. PROB. CODE ANN. §243 (Vernon2010).In contrast, heirs who would take inthe event of the decedent’s intestacy are notentitled to attorney fees associated with thecontest of a purported will. Estate of Huff,15 S.W.3d 301 (Tex. App.—Texarkana2000, no writ).3.DeclaratoryJudgment ActionsSometimes, probate matters involvedeclaratory judgment actions broughtforward pursuant to Section 37 of the TexasCivil Practice and Remedies Code.Common examples include, among otherthings, petitions for judicial discharge,construction of wills and trusts, andpartitions.If a probate matter involves adeclaratory judgment action, the trial courthas more flexibility with regard to theapportionment of attorney fees, asreasonable and necessary attorney feesrelating to declaratory judgments may beapportioned as equitable and just among theparties. See TEX. CIV. PRAC. & REM. CODEANN. §37.009 (Vernon 1986).Attorney fees in a declaratoryjudgment action must be reasonable andnecessary. Though the court may not awardunreasonable attorney fees which are justand equitable, the court may decline toaward reasonable and necessary fees whichare neither equitable nor just. See Ridge OilCompany, Inc. v. Guinn Investments, Inc.,148 S.W.3d 143, 161 (Tex. 2004).Attorney and Appointee FeesIII.Fee ArrangementsA.Hourly Fees1.DefinedThe hourly fee is an objective,measurable method to calculate and explainthe fees being charged to the client. If therate is appropriate, it enables the attorney togain a fair return on the project whileproviding the client with a transparentaccount of the work undertaken to pursuethe client’s objectives. It is simple toadminister, especially with the advent ofcomputer programs like Time Matters andother timekeeping programs.On the down side, the hourly feedoes not necessarily reflect the valuereceived by the client. Further, it requiresthe attorney and his or her staff to maintaincopious time records.2.NonrefundableRetainersMany lawyers require the deposit bya client of an advance fee sizable enough tosecure the attorney for at least the first phaseof the legal undertaking. In the past, somelawyers have asked that clients agree thatsuch advance fee is ―nonrefundable.‖The court in Cluck v. Comm'n forLawyer Discipline, 214 S.W.3d 736, 739(Tex. App.—Austin 2007, no pet.)distinguished the concept of ―advance fee‖from ―nonrefundable retainer‖ noting thatretainers are not payment for servicesrendered, rather retainers are designed tocompensate the attorney being engaged forlosing the opportunity to seek otherengagement. See Tex. Comm. on Prof'lEthics, Op. 431, 49 TEX. B.J. 1084 (1986).Consequently, so long as the retainer isreasonable and the attorney substantiates theclaim that he must forego other employmentif engaged by the client, the retainer isdeemed earned when received. Cluck at740.Page 5

The court in Cluck determined thatthe ―nonrefundable retainer‖ collected bythe attorney was not a retainer at all, rather itwas an advance fee. The court explainedthat the funds advanced by a client as aprepayment of a fee belong to the client untilthe services are rendered and must be held ina trust account. Tex. Disciplinary R. Prof'lConduct 1.14 cmt. 2 reprinted in TEX.GOV'T CODE ANN., tit. 2, subtit. G app. A(Vernon 2005). As a result, the attorney wasrequired to return the unused portion of theadvance fee to the client.B.Contingency Fees1.DefinedSection 35 of the Restatement(Third) of the Law Governing Lawyersprovides that "when a lawyer has contractedfor a contingent fee, the lawyer is entitled toreceive the specified fee only when and tothe extent the client receives payment." Rule1.04 of the Texas Disciplinary Rules ofProfessional Conduct codifies and expandsupon the Restatement’s general concept ofcontingency fees, such rule providing asfollows:A fee may be contingent on theoutcome of the matter for which theservice is rendered, except in a matterin which a contingent fee is prohibitedby . . . law. A contingent feeagreement shall be in writing and shallstate the method by which the fee is tobe determined. If there is to be adifferentiation in the percentage orpercentages that shall accrue to thelawyer in the event of settlement, trialor appeal, the percentage for eachshall be stated. The agreement shallstate the litigation and other expensesto be deducted from the recovery, andwhether such expenses are to bededucted before or after the contingentfee is calculated. Upon conclusion of acontingent fee matter, the lawyer shallAttorney and Appointee Feesprovide the client with a writtenstatement describing the outcome ofthe matter and, if there is a recovery,showing the remittance to the clientand the method of its determination.Tex. Disciplinary R. Prof'l Conduct 1.04reprinted in TEX. GOV'T CODE ANN., tit.2, subtit. G app. A (Vernon 2005).2.Requirements andLimitations of Probate Courta.Limitations onContingency PercentageWhen the personal representative ofan estate seeks to recover assets on behalf ofthe estate and hires an attorney, on acontingency fee basis, for such purpose, thecourt must approve such contract andSection 233(b) of the Texas Probate Codegoverns the contract between the personalrepresentative and the attorney:[A] personal representative may enterinto a contract to convey, or mayconvey, a contingent interest in anyproperty sought to be recovered, notexceeding one-third thereof, forservices of attorneys, subject only toapproval of the court in which theestate is being administered.See TEX. PROB. CODE ANN. §233(Vernon 2010).Subsection (c) of Section 233 ofthe Texas Probate Code provides that acontingency fee in excess of one-thirdmay be allowed if the court approves ofsuch increased fee. The courts considerthe following factors when asked toapprove such increased fee: time and labor involved; novelty and difficulty of issues to beresolved; skill required; fees customarily charged; value of property sought and benefitsto the estate that the attorney seeks tosecure; andPage 6

experience and ability of attorney.See Id.b. No ReasonableFees for Unsuccessful Litigant withContingency ContractIf the non-prevailing party in aprobate matter entered into a contingencyfee agreement with their attorney, they arenot entitled to reasonable attorney fees. In1975, the Texas Supreme Court addressedthe issue of whether the reasonableattorney’s fees for an unsuccessful willproponent who had a contingency feeagreement with her attorneys should be paid.In Russell v. Moeling, 526 S.W.2d 533 (Tex.1975), the Court concluded that, underSection 243 of the Texas Probate Code, theestate could not be held liable for such fees.The instant case involved an executrixnamed in a prior will which was notadmitted who sought to collect attorney feesand expenses following her unsuccessfulcontest to the probate of decedent’s laterwill. The unsuccessful contestant had acontingency fee agreement with herattorneys.In determining whether the attorneysfor the unsuccessful will proponent whoacted in good faith were entitled toreasonable attorney fees, the Court carefullyreviewed the language of Section 243 of theProbate Code. Citing Thomas’ Estate v.Fullen, 172 S.W.2d 118 (Tex. Civ. App—Beaumont 1943, writ ref’d w.o.m.), theCourt determined that the purpose of Section243 is to pay the costs of attorney’s fees thatare owed by the executor or administrator,and the allowance is not to that attorney, butto the administrator.In Russell, theunsuccessful will proponent had anagreement with her attorneys that if the willshe submitted was admitted to probate, theattorneys would receive a percentage of allmoneys they recovered.Since thecontestant was unsuccessful, she did notAttorney and Appointee Feesincur any expenses associated with the legal

Attorney and Appointee Fees Page 2 C. Attorney Fees in Other Jurisdictions Missouri, Montana, and Nebraska codify 1. Outside the State of Texas The California Probate Code sets the maximum statutory fees that attorneys can charge for a probate. The fees are calculated on the value of the gross probate estate and

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