Trust & Estate Attorney Contingency Fees | Real Estate Distributions

Lawyers and clients often use a contingency fee arrangement in trust and estate litigation. The arrangement only works where money and/or other valuable personal or real property is being claimed. The client agrees to the lawyer’s share when the mutual agreement is signed. Arrangements are also made as to what, if any, costs the lawyer will “advance” in the lawsuit.

Expert fees, filing fees, depositions and travel add up. This makes the lawyer quite conscious of costs.

Contingency fees under California law are negotiable. California Business and Professions Code Section 6147 clearly states that such fees are not set by law but are negotiable between the attorney and client. This must be disclosed in writing to the client. The lawyer does not collect the fee unless the client obtains a favorable settlement or judgment. The attorney’s negotiated share usually ranges between 35% to 40%. While there are no supporting statistics our anecdotal experience is that most estate and trust lawyers will decline requests for contingency fee representation. They favor hourly fees.

A trust lawyer, Jeff Galvin, explains this approach well:

“Overall, it is much harder for a lawyer to evaluate potential contingency fee representation in a trust and/or will contest than in a personal injury case.  If Johnny was hospitalized with major, career-ending injuries when another driver ran a red light, he should have little difficulty finding a lawyer who will represent him on a contingency fee basis.  On the other hand, if Johnny’s mother omitted him as a beneficiary in a trust amendment, he may not find any lawyer willing to take on the business risk associated with contingency fee representation.”

An additional risk is the nonliquidity of an estate or trust. Even if a favorable result is attained the client and lawyer must often wait for the estate or trust property to be sold. A way to handle this eventuality is to mutually agree in the fee agreement that if recovery is in the form of real or personal property, the attorney’s contingency fee shall be paid directly out of funds from the sale (or sometimes) refinance of the personal or real property. Of course, the parties can mutually agree to an alternative. First payment rights to such funds can be a part of the fee contract.

Contingency fee arrangements often include attorney lien rights. The State Bar of California’s MCLE Self Study course on the “Ethical Enforcement of Attorney’s Liens – Avoiding Traps for the Unwary” provides a nice summary of some of the elements of an attorney’s lien:

“An attorney’s lien (also known as a “charging” lien) is a lien that secures an attorney’s compensation against the funds or judgment recovered by the attorney for the client… An attorney’s lien is not automatically created upon the lawyer’s provision of legal services to a client, but requires a contract for its creation… Once created, an attorney’s lien grants the attorney a security interest in the proceeds of the litigation in which he represented the client…

With hourly fee agreements, a valid attorney’s lien is created only if the attorney complies with California Rules of Professional Conduct, Rule 3-300… Rule 3-300 requires the attorney to “explain the transaction fully, to offer fair and reasonable terms, to provide a copy of the agreement, to give the client an opportunity to seek independent legal advice [and to advise the client in writing that he may do so], and to secure the client’s written consent… Rule 3-300. Compliance with Rule 3-300, however, is not required in a contingent fee arrangement, because the lien “is an equitable corollary to, and thus inherent in, a contingency fee contract.” Cal. Form. Opn. 2006-170 (emphasis in original). In a contingent fee arrangement, a written contingent fee agreement in compliance with Business and Professions Code § 6147 and which expressly provides for a lien against the client’s recovery is generally sufficient to create a valid attorney’s lien. A lien may also be implied where the retainer agreement requires the attorney to look to the proceeds of the litigation for payment… Though not required to perfect the lien, an attorney may also file a notice of lien in the case against which he asserts the lien….”

Some law firms use language like that quoted below to explain the lien.

“LIEN. All Attorney’s fees earned and costs or expenses advanced by Attorneys shall be a lien on any settlement or judgment or gross recovery made or secured on behalf of Client.

Attorney will have a lien for Attorney’s fee and costs advanced on all claims and causes of action that are the subject of Attorney’s representation of Client under this Agreement and on all proceeds of any recovery obtained (whether by settlement, arbitration award, court judgment, or otherwise). The lien will be for any sums owing to Attorney at the conclusion of services performed. The lien will attach to any recovery Client may obtain, whether arbitration award, judgment, settlement, or otherwise. The effect of such a lien is that Attorney may be able to compel payment of fees and costs from any such funds recovered on behalf of Client, even if Attorney has been discharged before the end of the case.

In the event Attorney and Client discontinue the relationship outlined in this agreement for any reason, the quantum meruit for Attorney’s services shall be the applicable contingency fee applied to the offer made most recently before the relationship is ended, or the applicable contingency fee applied to the value of the case that was developed through the course of litigation up to the point when the relationship ended, or Attorneys’ reasonable hourly rates multiplied by the time spent on the case, whichever is greatest.

Client is aware, and acknowledge, that this lien may significantly impair Client’s interest because Attorney’s lien may delay payment of any recovery or settlement funds to Client until any dispute with Attorney, about unpaid attorney fees and costs advanced, has been resolved. Because a lien may affect Client’s property rights, Client is encouraged to seek the advice of an independent lawyer of Client’s choice before agreeing to such a lien. By initialing this paragraph, Client represents and agrees that Client has had a reasonable opportunity to consult such an independent lawyer and, whether or not Client has chosen to consult such an independent lawyer, Client agrees that Attorney will have a lien as specified above. (Client initials ___and Attorney initials).”

Hackard Law is striving to be the leading plaintiffs’ trust and estate contingency fee law firm in California. This is no small task. Our state has terrific lawyers and law firms committed to the ethical and competent representation of vulnerable abused trust and estate beneficiaries. Many of the attorneys regularly prosecute civil elder financial abuse cases against well-funded defendants. Setting specific and ambitious goals – like seeking preeminence in a field – leads to a higher level of performance than easy or general goals. It is with this in mind and in the spirit of “if you care, you share,” that I’ve written this article about contingency fees and estate and trust real and personal property distributions.

Hackard Law represents foreign, out of state and California clients in California’s Superior Court system, both civil and probate, in substantial matters where we think that we can make a significant difference and there is a party who can be made financially responsible for their wrongdoing or breach of duty. We focus our geographic practice in California’s largest urban areas, including Los Angeles, Orange, Santa Clara, San Mateo, Alameda, Contra Costa and Sacramento counties. If you would like to speak to us about your case and whether it may qualify for a contingency fee, call us at Hackard Law (916) 313-3030.