Probate Fee Dispute Leads to Additional Attorney’s Fees

APRIL 12, 2004 VOLUME 11, NUMBER 41

Kathryn Gordon’s will named her sister, Nancy Molet, to handle her estate. Based on that will Ms. Molet was appointed as personal representative. Like most individuals in such circumstances, Ms. Molet hired an attorney to help her get through the probate process.

Eventually Phoenix attorney Harvey Finks billed the estate $25,710 for his representation of Ms. Molet. She, in turn, billed the estate $10,885.50 for her work as personal representative.

The ultimate beneficiaries of Ms. Gordon’s estate were her daughter June Pierce and Ms. Pierce’s five children. The beneficiaries objected to the size of the legal fees and the Ms. Molet’s fee, and they filed a formal objection with the court.

Attorney Finks pointed out to Ms. Molet that he would likely be called as a witness during the trial on his fees, and so she retained another attorney—Phoenix lawyer Paul Blunt—to represent her for the fee dispute.

Eventually Ms. Molet, Mr. Finks and the estate beneficiaries agreed that it made sense to submit the dispute to binding arbitration. In that type of proceeding, both sides would make abbreviated arguments and put on their cases more informally. They both agreed to be bound by the arbitrator’s decision.

The arbitrator approved most—but not all—of the requested fees. He reduced Mr. Finks’ fee by $2,510 to $23,200, and he lowered Ms. Molet’s fee by almost $5,000, to $6150. Then Ms. Molet submitted Mr. Blunt’s fees for payment by the estate, arguing that she had hired him in her capacity as personal representative.

The Phoenix probate judge decided that Ms. Molet would have to pay her own attorney’s fees. Judge Jane Bayham-Lesselyong decided that “it would be inappropriate” for the estate to pay the cost of defending the fees themselves.

The Arizona Court of Appeals disagreed. In the appellate court’s view, the question was really only whether Ms. Molet acted in good faith when she hired counsel to defend her fees. The heirs argued that Mr. Blunt’s representation benefited only Ms. Molet and not the estate. The appellate court agreed that it is relevant to consider whether the estate or the heirs received any benefit from the representation, but decided that the inquiry should be made as a part of the determination of whether Ms. Molet acted in good faith. Estate of Gordon, March 30, 2004.

The reported decision does not indicate how much the estate paid in legal fees and costs to defend Ms. Molet and Mr. Finks. It seems likely, however, that it was more than the reduction in the original fees ordered by the arbitrator.

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