Minor’s Guardian Charged Too Much, Says New York Court

JULY 14, 1997 VOLUME 5, NUMBER 2

Adonis Penida was 11 months old in 1989 when a police car, in pursuit of a motorcyclist, rammed the car his mother was driving. Penida nearly lost his leg and suffered severe brain injuries in the crash.

Penida received a substantial settlement in the subsequent litigation. In addition to $700,000 in cash, he also was awarded annual payments of nearly $200,000 and a lump sum of $3.14 million when he turns 35. Penida’s mother received a settlement of her own claim, which provided her with about $35,000 per year and a lump sum of over $450,000 in twenty years.

Rebecca Rawson, a professional New York fiduciary, was appointed “guardian of the estate” for Penida. [Ed. note–in many states, including Arizona, the correct title would be “conservator of the estate.”] Rawson, an attorney, sought and obtained approval to charge her usual hourly rate of $225 for services as guardian, and also secured approval for her associate’s $110 hourly fee.

Shortly after the settlement, Penida’s mother had decided to return to her native Santo Domingo, and Penida of course went with her. Because of the severity of Penida’s handicaps, the size of his estate and the fact that he lives in Santo Domingo, the time spent by Rawson was substantial. When her bill was filed with the New York Supreme Court for the first six months of her service, it totaled more than $57,000.

Although Justice Robert Lippmann had previously approved Rawson’s fee schedule, based on the first billing he reconsidered that approval. Noting that the administrative fees were higher than the cost of his education, therapies and other services, Justice Lippmann expressed concern about the fact that the combined cost of care and guardianship fees consumed more than Penida’s income.

The judge expressly observed that the quality and scope of services required by Penida (and provided by Rawson) were not in question, but that the total fee was simply excessive. He reviewed the hourly rate charged by Rawson, the types of services provided and the cost of similar services provided by other (non-lawyer) professionals, and determined that the kinds of services provided by Rawson were frequently more like psychologists’ services than lawyers’.

New York has adopted a schedule of payments for guardians based on time actually spent (rather than a percentage formula). This, said Justice Lippmann, “more justly rewards guardians, who unlike trustees and fiduciaries, are called upon in their official capacity to perform a variety of services, often idiosyncratic in nature….” Unfortunately, he ruled, the hourly charge for Rawson’s work was set at the wrong level.

Considering the kind of work actually performed by Rawson, according to the Justice, she should sometimes be compensated at her legal billing rate, and sometimes at the much lower rate approved for psychologists, $90 per hour. Rawson was instructed to recompute her fee and resubmit it based on this changed billing rate. Matter of Adonis Penida, New York County Supreme Court, May 14, 1997.

[What does Adonis Penida’s case have to do with Elder Law? Although Penida is a minor, the legal issues are the same as those governing guardianship and conservatorship of incapacitated elders. As a result, most elder law attorneys (including Fleming & Curti) frequently work with minor conservatorships.]

At least two questions remain unanswered by Justice Lippmann’s decision. Why is Rawson not required to hire appropriate professionals to handle the non-lawyer part of her work? And who says trustees and other fiduciaries do not perform “idiosyncratic” work, “tailored to the individual and specific needs” of beneficiaries? Our experience is that staff case managers provide excellent care for our wards, at a much lower cost than attorneys’ billing rates.

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