JUNE 22, 2015 VOLUME 22 NUMBER 23
How much does it cost to establish a guardianship or conservatorship? Is there any limit on the possible legal costs? These are questions that we deal with on a regular basis.
The short answer, at least in Arizona, is that the attorneys and other professionals in a guardianship/conservatorship proceeding can only charge a "reasonable" fee, and that the Court almost always has the authority to review -- and, in appropriate cases, reduce -- the fees charged. But that doesn't help identify what a "reasonable" fee might be.
A recent case from the Washington Court of Appeals sheds a little light on attorneys' fees in guardianship cases. It also helps make clear that the court's review includes fees incurred -- and paid -- before any finding of incapacity was entered.
Kamiko Davis (not her real name) came to the attention of state officials because she had apparently been the victim of financial exploitation. She was an elderly woman who had, years before, immigrated from Japan, and she was more comfortable speaking Japanese. She was suspicious and uncooperative with authorities, and, after the financial exploitation she had suffered, she had an estate of about $700,000. When the investigating agency filed a petition asking for appointment of a guardian (of the person and the estate -- what we would call guardianship and conservatorship in Arizona), it was evident that she would benefit from having a lawyer who spoke at least some Japanese, and who would be familiar with Japanese culture and traditions.
That's how attorney Daniel Quick was appointed as Kamiko's attorney. In the initial appointment the judge ordered that Mr. Quick's fees should be limited to $250/hour for a maximum of 10 hours -- or about $2,500. Over the next few months, as it became apparent that Kamiko would strenuously object to the legal proceedings at every turn, the court increased the maximum number of hours that could be billed -- to a total of 50 hours.
Kamiko signed a durable power of attorney naming her attorney as her agent (for both medical and financial purposes), and a fee agreement with no limitation on the number of hours which might be billed. At some point the probate court decided that Kamiko had not had the capacity to sign the power of attorney, and eventually a limited guardian (of Kamiko's person and of her estate) was appointed.
The attorney then filed his request for approval of fees charged for his representation. The application showed that he had received $118,110.65 already, and requested an additional $17,137.50 in fees and costs.
The probate court declined to approve Mr. Quick's additional fees, and ordered that he return all but $30,000 of the fees he had already collected. The judge's reasoning: whether or not Mr. Quick legitimately put in all the time he claimed, the total amount of fees was simply unreasonable. The $30,000 approved worked out to about 120 hours of legal work (assuming the same $250/hour), and the judge was critical of the attorney's failure to limit litigation costs, even if his client was difficult to deal with and required special attention.
The Washington Court of Appeals upheld the limitation on attorney's fees. Even though Kamiko had not been adjudged incapacitated at the time she signed a fee agreement, she was ultimately found to need a limited guardian -- and a finding of incapacity was entered at that time. Besides, the appellate court noted, Mr. Quick had been ordered to limit his hours in earlier court rulings, and the amount ultimately approved actually exceeded those limitations.
The bottom line, according to the Court of Appeals: "The court, in overseeing guardianships, must weigh the competing concerns of individual autonomy and protection of incapacitated persons." That meant that the reduction in allowed fees, and the order for return of over $80,000 in fees already collected, were appropriate in the circumstances. Guardianship of Decker, June 16, 2015.
Would the same result be reached in an Arizona proceeding? Very likely (although, of course, very small changes in the fact pattern might yield very different results). Arizona's statutes expressly give the probate court the authority to review fees -- for attorneys and for other professionals -- in guardianship and conservatorship proceedings (Washington's statutes were held to give that authority, too, but not as clearly or explicitly as Arizona's laws).
Arizona also has an existing appellate decision which clearly enunciates some of what the Washington Court of Appeals articulated. In 2010, in Sleeth v. Sleeth, the Arizona Court of Appeals ruled that the litigants in guardianship and conservatorship proceedings must pay attention to whether legal fees are ultimately in proportion to the benefit enjoyed by the estate. The underlying facts are strikingly similar: the Arizona case involved assets of slightly more than those in the new Washington case, and legal fees that were larger by a similar proportion. One important difference: the lawyers whose fees were challenged in Arizona represented the guardian/conservator, not the subject of the proceeding.