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By: Thomas P. Gressette, Jr., Richardson, Patrick, Westbrook & Brickman, LLC
Trial attorneys involved in mass tort litigation often represent clients from all over the United States. Even if many of these lawyers are licensed to practice in multiple jurisdictions, their areas of expertise rarely extend to the specialized field of probate law. These attorneys must choose whether they will familiarize themselves with local probate codes or if they prefer to locate and retain local probate counsel. Generally, the latter option is more attractive as it should lessen the burden on the trial lawyer, ensure the client has adequate probate representation, and protect both the trial attorney and the client from potential liability for noncompliance with the local probate court’s procedural or disbursement requirements. However, without a personal relationship or a reference from another attorney, trial lawyers are often left with no choice but to randomly select local probate counsel and hope for the best.
Trial lawyers seeking reliable local probate counsel now have the option of hiring a “probate coordinating service” to assist them in locating and retaining probate counsel. For a set fee, a probate coordinating service acts on behalf of a tort lawyer to identify local probate counsel in a given jurisdiction. The fee for connecting a trial lawyer with a local probate lawyer typically ranges from $500 to $1,000 and is charged in addition to the local probate counsel’s fees.
Outsourcing the coordination of probate matters to a local probate counsel is very attractive to trial lawyers who want to focus all their resources on the core litigation. But, is the additional cost of using an outside probate coordination firm a necessary expense that can be properly passed on to the client? Or, is such a cost more properly classified as overhead which must be paid from litigation counsel’s contingent fee?
Although the Model Rules of Professional Conduct do not address these specific questions, there is ample support for the conclusion that when litigation counsel pays a probate coordinator’s fees for assistance in locating probate counsel, those charges can be classified as a necessary expense and passed on to the client. The starting point for this analysis is the contract between the trial lawyer and the client.
All contingent fee agreements must “be in writing … and shall state the method by which the fee is to be determined, including … litigation and other expenses to be deducted from the recovery; and whether such expenses are to be deducted before or after the contingent fee is calculated.” MODEL RULES OF PROF’L CONDUCT R. 1.5(c). Typical contingent fee agreements provide that the attorney’s contingent fee will be calculated to include overhead costs, and it will provide that the client, if successful, should expect to be charged for certain disbursements and expenses. However, all such disbursements and expenses must be “reasonable.” See MODEL RULES OF PROF’L CONDUCT R. 1.5 cmt. 1.
The American Bar Association, interpreting the Model Rules, has admitted that the “Rules provide no specific guidance on the issue of how much a lawyer may charge a client for costs incurred over and above her own fee […].” ABA Comm. on Ethics and Prof’l Responsibility, Formal Op. 379 (1993). However, the ABA has concluded that the “reasonableness” standard of Rule 1.5 does apply to this type of cost. See id. Opinion 379 further instructs that an attorney’s general overhead costs, such as “maintaining a library, securing malpractice insurance, renting of office space, purchasing utilities, and the like” are not to be charged in addition to the lawyer’s fee. Id. However, costs incurred on behalf of the client, such as deposition costs or travel costs, can be properly passed to the client, as long as the client is reasonably notified at the outset that he will be billed for these expenses. Under this analysis, probate coordination fees seem to be more fairly characterized as disbursements or costs rather than as general overhead.
Furthermore, Model Rule 1.8 does not prohibit an attorney from “lending a client court costs and litigation expenses, including … the costs of obtaining and presenting evidence, because these advances … help ensure access to the courts.” MODEL RULES OF PROF’L CONDUCT R. 1.8 cmt. 10. Because probate coordination fees help attorneys obtain valuable evidence such as medical records and because it makes financial sense for a trial lawyer to advance these costs against any recovery, coordination fees can reasonably be viewed as a litigation expense in the context of complex litigation. It is also important to note that in a contingency fee situation, the client is insulated from any loss from the advancement of the probate coordination fee because the advancing trial lawyer will be responsible for all such costs if the tort claim is not successful. Trial lawyers retained on a contingency basis, then, have an incentive not to frivolously outsource their files to probate coordinators as it is the lawyer himself who ultimately bears the risk of incurring the expense.
One might argue that if probate coordination is being handled by a law firm then the coordination fee is more properly classified as an expense for outside legal services. While the classification of probate coordination fees as legal services may be reasonable in a given circumstance, the distinction does not alter the conclusion.
The ABA Committee on Ethics and Professional Responsibility has stated that when outside legal services are employed, they may be properly billed as an expense or as a cost, provided that the client is “charged only the cost directly associated with the services, including expenses incurred by the billing lawyer to obtain and provide the benefit of the contract lawyer’s services.” ABA Comm. on Ethics and Prof’l Responsibility, Formal Op. 420 (2000). (See Opinion for analysis.) Thus, even if probate coordination services provided by a law firm are defined as legal services, the fees are clearly expenses incurred to obtain the benefit of the probate counsel’s assistance and may still be properly billed as an expense, as long as the billing attorney does not charge extra for these services. See id. (“If the costs associated with contracting [outside] counsel’s services are billed as an expense, they should not be greater than the actual cost incurred, plus those costs that are associated directly with the provision of services.”).
Although it appears that costs incurred to obtain and secure outside counsel’s assistance, such as probate coordination fees, can be properly billed as a reasonable expense, especially in the context of complex litigation, it is important to remember that client communication will always be a key consideration to a court in any “reasonable” fee determination. See MODEL RULES OF PROF’L CONDUCT R. 1.4 (“A lawyer shall . . . reasonably consult with the client about the means by which the client’s objectives are to be accomplished.”) Accordingly, even if it is not required that a fee agreement explicitly address the use of a probate coordinator, it would be wise to forewarn the client about this potential expense in circumstances where it appears local probate assistance will be necessary. After all, a properly drafted fee agreement at the onset of a case can go a long way in circumventing potential fee disputes at the conclusion of a case.
Probate coordination services save trial attorneys involved in mass tort litigation both time and money by securing local specialized assistance that is necessary for the prompt and competent representation of the client’s best interests. As such, it appears probate coordination fees may be properly billed as expenses under the “reasonableness” framework of the Model Rules. Finally, while advance notice to clients in the written fee agreement is advisable, it does not appear that the absence of specific notice absolutely prohibits engaging a probate coordinator if the need arises unexpectedly.
About the Author
Thomas P. Gressette, Jr. is a partner at Richardson, Patrick, Westbrook & Brickman, LLC in Mount Pleasant, South Carolina. Prior to joining RPWB, Mr. Gressette served as a law clerk to United States District Court Judge C. Weston Houck and as an Assistant Federal Public Defender for the District of South Carolina. He is also an Adjunct Professor of Law at the Charleston School of Law and has recently published articles in the Drake Law Review and the Valparaiso Law Review.
Posted with Permission from South Carolina Association for Justice, September 2010
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