Sleeth v. Sleeth (CA1 12/9/10)

This opinion is published as a major statement on the standards for awarding attorneys fees in guardian/conservatorship cases.

Son, through counsel, petitioned to be appointed his rich father’s guardian and conservator and also trustee of Father’s living trust. The petition was granted. Son had conflicts with Father’s live-in girlfriend; she, joined by Father’s lawyer, eventually sought to remove Son as guardian/conservator/trustee. The trial court found that neither Son nor Girlfriend had acted entirely in Father’s best interests and replaced Son with a private fiduciary.

Son then moved for an award of costs and fees from the estate, despite having done things so badly that he got kicked off of it. Father’s lawyer also sought fees. As usual in theses cases the fee requests were astonishingly large, at top-dollar hourly rates. The court granted them in full. That of Father’s lawyer wasn’t opposed but Father and his new wife opposed Son’s, and appealed.

The Court of Appeals reversed, pointing out this:

“[T]ime expended should not be the exclusive criterion for determining fees . . . [and] should not warrant an award of fees in excess of the worth of the services performed.” “[T]he court must be guided by what is in the best interest of the ward.”  “Both counsel and the fiduciary have a duty to undertake a cost-benefit analysis at the outset and throughout their representation to ensure that they provide needed services that further the protected person’s best interests and do not waste funds or engage in excessive or unproductive activities.”

If this seems intuitive to you, keep in mind that if it were intuitive to the probate/conservatorship people then this opinion would probably not have been published. In that world, the cost-benefit analysis is a mythical beast. In fact, Son and his lawyer argued explicitly that “none of the statutes require that the protected person or his estate derive any benefit from the legal fees incurred.” This opinion is written to try to reverse that mindset. “[W]hether the services provided any benefit or attempted to advance the protected person’s best interests are important factors for the superior court to consider when evaluating a fee request.” The opinion goes so far as to suggest that “[i]f frequent ongoing scrutiny by the superior court appears necessary, the court should require frequent updates so it can monitor and restrain unwarranted charges.” “[B]etween Arizona Probate Rule 33 and the National Probate Standard, superior courts will find adequate support for close examination of fees and costs that ultimately may be borne by a protected person.”

The same is true for costs charged by trustees. The cottage industry of private fiduciaries should take note of this.

(Although that is the thrust of the case, the court also notes the nature of the lawyer’s bills. He billed only in increments of one-half and one hour. He also used “block-billing,” i.e., grouping tasks rather than report the time spent on each one. This area of the profession is apparently being brought up to modern times. The issue of arbitrary increments came up fifteen or more years ago; block-billing-phobia is more recent but hardly new. In this the courts adopt the practices of federal courts, which adopted the practices of major corporations and insurance companies, which took them from consultants of the sort who make a lot of money telling other people how to save money (yes, big corporations fall for them, too). Any biller worth his salt knows how to use flexible increments and detailed billing to make more money, not less. Eventually the courts will catch on to this but it may take another generation. Then they will adopt whatever the latest fad then is for solving the problems of hourly billing – which will never be solved since hourly billing is a cause of excessive fees, not a solution to them.)

These sagas rarely have a happy ending, by the way. On remand the trial court will award merely two or three times as much as anybody deserves rather than five or six. But the legal profession won’t cry long. After Son was no longer his guardian, Father moved back into his house and married Girlfriend. So, when the time comes, probate litigation will threaten what’s left of his estate and trust.

(link to opinion)