If you have ever been involved in probate or estate litigation in South Florida you probably are aware of your attorney’s right to seek fees from the trust of estate funds. Unlike personal injury or employment matters these fees are not “contingent” or based on success in the underlying matter. The US Supreme Court has now agreed to decide the question ofwhether or not lawyers make such “fee applications” are entitled to be paid for the time and effort spent pursuing these fees. In other words are lawyers entitled to fees for fees?
- Late this February the Supreme Court heard oral arguments in the case of Baker Botts LLP v. ASARCO LLC. The case arises in a bankruptcy context but it has the potential to effect a variety of areas of litigation including probate and trusts.
- The respondent here was a reorganized debtor who did not contest the lawfirm’s entitlement under the Bankruptcy Code but did dispute that they should not be responsible for the cost of litigating the reasonableness of certain fees.
- The Court is now being asked to determine if the law firm under the code can seek fees for pursuing their fees. The question is whether the statutes that allow for fees apply or if the standard American Rule applies whereby each party has to stomach their own costs of litigation in the fee disputes.
- Statutes in Florida (and most other states) provide for payment of counsel fees when they provide services for trusts and estates (See Fla. Stat. 733.6171 and others which entitle an attorney to “reasonable compensation” for their work).
- Courts have been wary of “fees for fees” in the probate and fiduciary context but it remains a hotly contested issue between fiduciaries who retain counsel and the affected beneficiaries who have to pay for that counsel. On the one hand you have a beneficiary who wants the most money possible on the other hand you have a fiduciary who could be liable and they should have a right to seek counsel.
- The ultimate touchstone here is the difference between actions done for the fiduciary (or another client) and those done for the attorneys own benefit.
- It is expected that when the Supreme Court hands down its decision later this term it will set out the narrow restrictions for fees in pursuit of fees, assuming it allows such fees in the first place, at all.