Contingency Fee Agreement Permitted Only If Fee Is Reasonable

MARCH 31, 2003 VOLUME 10, NUMBER 39

Contingency fee agreements are common in personal injury cases and many other types of litigation. In some kinds of lawsuits (for example, divorce or criminal cases) contingency fee arrangements are banned as being against public policy. Are contingency fees permissible in probate cases, and particularly will contests? According to a recent Louisiana case, the answer is yes—but only if the fees calculated on a contingency basis are “reasonable.”

After Betty Kinchen Bankston died in 2000 her heirs found a document that appeared to be her last will. Local attorney Keith Rowe, representing one of the estate’s beneficiaries, filed the will with the probate court and secured initial orders recognizing its validity. Then, as he was required by state probate law to do, he gave notice to the persons who would take Ms. Bankston’s estate if the will was not valid.

About two-thirds of those heirs (thirty-four individuals in all) hired attorney Joseph Simpson to challenge the document as a forgery. Their fee agreement provided that Mr. Simpson would receive one-third of their share of the estate if he was successful. Mr. Simpson then filed a challenge to the will.

After reviewing the evidence, Mr. Rowe (the lawyer who originally filed the probate proceeding) and his client agreed that the will was invalid. They withdrew their request for probate.

As it turned out, Ms. Bankston’s estate was worth over $2,400,000, and Mr. Simpson’s percentage fee was about $600,000. One of his clients objected that the fee was excessive and should not be allowed.

Mr. Simpson pointed out that he had a validly executed fee agreement, and argued that he was entitled to the whole fee. The trial judge ordered distribution of the entire contingency fee to Mr. Simpson’s law firm.

The Louisiana Court of Appeal disagreed. The appellate judges agreed that there is no prohibition against contingency fee agreements in probate cases, but noted that any lawyer’s fee is subject to a requirement that it be “reasonable.” In this case, the judges pointed out, Mr. Simpson’s billing records indicated that he performed no more than thirty hours of work, and he even limited his risk by including a provision that he could dismiss the challenge if a handwriting expert did not support the will challenge. On top of all that, Mr. Rowe’s firm had done most of the work involved in administering the estate. The appellate court directed the trial court to determine a reasonable fee for Mr. Simpson.

What elements will determine the “reasonableness” of Mr. Simpson’s fee when the case returns to the trial court? The law on attorneys’ fees is fairly clear. The judge will be looking for the total amount of time spent by Mr. Simpson and his firm, the necessity for the work that was done, the prevailing rate for attorneys’ work in the community and in the type of case involved, the complexity of the case, the experience and reputation of Mr. Simpson and other relevant factors. After reviewing all of that, the judge might approve the fee as requested, or reduce it. Succession of Bankston, February 14, 2003.

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