MAY 23, 2016 VOLUME 23 NUMBER 20
It will come as no surprise to anyone who has been involved in guardianship and conservatorship proceedings: the legal fees and related costs can often spiral out of control. Though most guardianship proceedings do not cost tens of thousands of dollars, some do. In fact, the battle can sometimes be about the attorneys’ fees, rather than the need for a guardianship.
A recent case in North Carolina illustrated this problem. It involved a woman we’re going to refer to as Connie, who was estranged from her brother Fred, her closest relative.
Connie knew that she was slipping, and that she was losing her ability to handle her own finances and personal decisions. She consulted a long-time friend, Harriet Hopkins. Ms. Hopkins was a lawyer practicing in the community, and she prepared the documents Connie needed — including a durable financial power of attorney. Because she had no one else to name, Connie chose to make Ms. Hopkins the agent under her power of attorney.
Some time later brother Fred learned that his sister was failing, that her attorney was managing her affairs and (most concerning to Fred) that the power of attorney included a provision that would have allowed Ms. Hopkins to make gifts to herself from Connie’s assets and income. Fred decided that he needed to file a court proceeding to get himself — or someone independent — appointed to take care of Connie’s finances and medical decisions. He hired lawyer James West to pursue the guardianship for him.
As in some other states, in North Carolina initiation of a guardianship automatically results in appointment of a lawyer as “guardian ad litem” for the subject of the proceedings. A local lawyer, Lynn Andrews, was appointed; she immediately reported that she was close friends with Ms. Hopkins and should not be appointed. The local court appointed another attorney as Connie’s guardian ad litem, and Fred’s lawyer began to discuss the case with her.
Very shortly after the case began, however, attorney Andrews let the other two lawyers know that Connie had hired Ms. Andrews as her personal lawyer. She vigorously objected to the proceedings on Connie’s behalf, and filed a motion to dismiss the guardianship altogether. Her argument: there was no doubt that Connie’s capacity was in decline, but no guardian was necessary because Connie had taken appropriate steps to assure her care was supervised and her finances taken care of.
In the course of the controversy, and in order to make sure there were no concerns, Connie signed a new power of attorney. The new document still named Ms. Hopkins as her agent, but removed the authority to make gifts. Everyone agreed that no gifts had actually been made while Ms. Hopkins held that power.
Fred’s petition for guardianship was dismissed within about a month of its initial filing. There were some further skirmishes about the precise terms of the dismissal, but Connie was no longer at any risk of having the court appoint a guardian — Fred or anyone else. And that might have been the end of things.
After the dismissal was finalized, Ms. Andrews filed a new petition with the guardianship court. She alleged that Fred and Mr. West, his lawyer, had behaved improperly by filing a guardianship petition without any basis. She sought an order requiring, as a penalty, payment of Connie’s legal fees by both Fred and his lawyer.
Mr. West responded by filing a petition against Ms. Andrews, asking that she be sanctioned, and ordered to pay his attorney’s fees and costs. His argument: by filing the request for personal sanctions against him (and his client) for allegedly abusive legal proceedings, Ms. Andrews had herself abused the legal system.
After a three-day hearing (which, it is worth repeating, was not about Connie’s capacity or her possible need for a guardian), the trial judge decided that sanctions against Ms. Andrews were appropriate. He first ordered that she would be personally responsible for Fred’s legal fees; later, the judge found that the total fees and costs of $122,987.72 should be assessed against her.
The North Carolina Court of Appeals considered the judge’s order, and decided (by a 2-1 vote, incidentally) that the case did not warrant any punishment against Ms. Andrews. The attorney’s fee award was reversed, and each side ended up paying their own legal fees (though Fred was ordered to pay the cost of a multidisciplinary evaluation of Connie that had been conducted for the proceedings below). Matter of Cranor, May 17, 2016.
What does Connie’s case tell us about guardianship and conservatorship in Arizona? While the proceedings can be different from state to state, some rules do apply across most states. One of those is that the parties — and their lawyers — have a duty not to let the proceedings run up giant legal bills.
A leading Arizona case addresses somewhat similar facts, but with a slightly different result. In the Arizona case, our Court of Appeals ultimately ruled that the lawyer for a guardian and conservator has a duty to constantly recalibrate one question: is the legal representation justifiable considering the cost and possible benefit to the ward?