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Are Hourly Probate Fees Crazy?
Written by Jonathan Reed, Esq.
A Discussion of What Attorneys Can Charge for Probate and What We at Reed & Mansfield Charge
The Nevada Statute which addresses the fee a lawyer or attorney can charge for probating an estate is N.R.S. 150.060. Key provisions are:
N.R.S. 150.060(2)(a) allows for an hourly fee. N.R.S. 150.060(3) says, "If the attorney is requesting compensation based on the hourly rate of the attorney, he or she may include, as part of that compensation for ordinary services, a charge for legal services or paralegal services performed by a person under the direction and supervision of the attorney."
Some Nevada attorneys interpret this to mean that if their secretary writes up routine paperwork that the lawyer signs, the secretary's time in doing this "legal work" may be billed at the lawyer's hourly rate. Other firms will bill the secretary at a paralegal rate. Still other firms will bill some work at a lower associate's rate, but in such cases there can be a lot of duplication between what the high billing partner does and what his or her lower billing associates do. When a senior partner handed me my first probate case at the beginning of my legal career, he said, "Keep track of your hours and bill the higher of your hourly rate or the percentage fee." I thought this was pretty outrageous since I was naturally going to be slow on my first case. Perhaps that was the point. I once had another partner tell me at the beginning of my career on a non-probate case, "Bill the hell out of this file. If you are taking a shower and thinking about the case, bill it."
While it is true that many probate lawyers who bill by the hour work efficiently and honestly, I view the hourly rate as a sort of "honor bar" where there is very little supervision as to how many drinks someone actually takes. Some lawyers who bill by the hour and who are very knowledgable and therefore can work quickly may take the view that they should not be "penalized" for their skill and inflate their bills. Other experienced probate attorneys who can work quickly are honest in their hourly billing. However, probate involves a lot of picky, time-consuming paperwork and many law firms that bill on an hourly basis bill quite high hourly rates for this paperwork which requires some but not a great deal of skill.
If a client and lawyer get into an argument as to what was a reasonable hourly bill, many times it will be hard for the judge to know exactly how long something should have taken. Many judges will have an inclination to give the lawyer the benefit of the doubt unless the judge feels the lawyer has clearly tried to flim flam the client. Many Judges were once lawyers in private practice in the past, and don't begrudge lawyers high hourly fees.
N.R.S. 150.060(4) allows for "ordinary" services to be billed on a percentage rate of the estate with a 4% fee for the first $100,000 of the estate, a 3% fee for the second $100,000, a 2% rate for the next $800,000. This computes to a fee of $23,000 for the first million. For the next $9,000,000 the fee is 1%, for the next $15,000,000 the fee is ½% and for all amounts above $25,000,000, "a reasonable amount to be determined by the court."
N.R.S. 150.060(2)(d) allows for "any other method approved by the court pursuant to a request in the initial petition for appointment of the personal representative." This could include a contingency fee in the case of competing wills. (For example, Beautiful Young Woman and Adult Daughter each claim to have the authentic will of Old Man. In such a case it would be possible that the attorneys for each side would take the probate on a contingency fee basis. For example, Adult Daughter might claim that the earlier will leaving everything to her is the only valid will and that the later will leaving everything to Beautiful Young Woman was the result of undue influence or Old Man's dementia.)
Notice that N.R.S. 150.060 talks about "ordinary service." N.R.S. 150.061 allows extra fees for "extraordinary services." Examples of "extraordinary services" listed in N.R.S. 150.061(6) include, "without limitation," sale of real or personal property, operating a decedent's business, participating in litigation related to the estate, securing a loan for the estate, and estate tax work.
Under an hourly fee agreement there is no need to distinguish between "ordinary services" and "extraordinary service." There are very few Nevada cases defining what are "extraordinary services."
The Reed & Mansfield Probate Fee Practice:
We discuss our fees in detail on the webpage Probate. Except for the simple procedure for estates under $100,000 called, "Set Aside Without Administration," we charge the lower statutory executor or administrator fee which is set forth in N.R.S. 150.020 and is $3,150 for the first $100,000 of the estate and 2% of anything over that.
For estates over $1,150,000 the statutory attorney fee can be lower so we charge that if the estate is over $1,150,000. Of great importance is that the statutory executor or administrator's fee is based on the value of real estate and vehicle MINUS any mortgage owed. In contrast the statute allowing for attorneys' fees to be a certain percentage makes no allowance for mortgages against the property. If the estate consisted only of a house worth $300,000 with a $200,000 mortgage, the statutory administrator's or executor's fee would be $3,150 (based on $100,000) but the statutory attorney's fee would be $9,000 (based on $300,000).
Before agreeing to such a fee we carefully question our prospective clients about the estate so we can anticipate any time consuming problems that may arise. In almost all case we then agree to probate the estate at the fee described above with the added provision that if there is any contested matter we will also charge an hourly fee for the contested matter. If for one reason or another the estate takes more time to probate than expected that is not our clients' problem because we have already agreed to a rate.
We are Las Vegas, Nevada lawyers and attorneys who offer affordable, discounted legal fees for uncontested probates, and fair legal fees for contested probates.
Specific Examples of Why Hourly Billings Create Problems:
1) Sometimes it becomes necessary to spend time on something that could not be predicted. For example, I had two cases where the Court Clerk issued Letters Testamentary in two different probates, file-stamped the Letters, certified the Letters and forgot to keep a copy in the Court's records and therefore the dockets sheets in these cases didn't show Letters being issued. When I filed to close both probates, the probate court clerks made me resolve this issue with the main court clerks. This took time. But, how would it look if I billed my clients extra time to fix the Court's own error?
2) Banks employ a lot of people who don't know much and are afraid to act. For example, I had a probate in which the man died in Germany. Germany issued a death certificate in 14 languages including, of course, English. The Probate Court accepted the German death certificate just like it would accept a Nevada or New Jersey death certificate. After the man's son was appointed Executor and tried to collect his father's Wells Fargo bank account, Wells Fargo demanded a certification from the German embassy or consulate that the German death certificate was authentic. This the German consulate in LA and the German embassy in Washington, D.C., refused to do. So I had to petition the Probate Court for an Order telling Wells Fargo to accept the Probate Court's determination that the man had died and that his son was the lawful executor and pay the son the money. Now if I had been billing at an hourly rate of $300/hr., I could have billed $1800-$2400 or so for all of this nonsense. Would my client have liked me if I explained that it cost my client a couple of grand extra because someone at Wells Fargo was being a jerk? Or would the client have wondered if I was in cahoots with the jerk at Wells Fargo?
3) If a lawyer is billing by the hour, travel time to and from the Court and waiting time at the Court are all billable. Should the client's fee depend on whether the lawyer is driving to court from a suburban office or walking across the street from his office to the courthouse? If the judge has a big pile of cases all set to be heard at the same time and the lawyer had to sit in court waiting for his case to come up, should the lawyer bill the client if he has to wait one and half hours, even if the lawyer is doing his e-mail while waiting?
4) Paying by the hour rewards ignorance and inefficiency rather than competence and experience. Given the experience I just recited with Wells Fargo and the German death certificate, in the future if I get a probate with a non-US death certificate, I will put in the initiating Petition that all banks and other financial institutions are to accept without qualifications the same death certificate that the Probate Court accepted. I would then mail a copy of the initiating Petition to the Nevada resident agents of all banks or other financial institutions holding the Decedent's money (and they would be named in the Petition) and then I would get a Court Order avoiding the nonsense I had with Wells Fargo. This second time around with a foreign death certificate would add about 15 minutes extra work instead of a few hours extra work.
5) If the lawyer fails to appreciate a time-consuming aspect of the case and under-estimates the time it will take him to resolve the case, should the lawyer, who is billing by the hour, be able to bill over the estimate because it actually and honestly took more time than estimated?