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Estate and Elder Law

The Ethics of Attorneys Fees under New York’s SCPA 2110

By: Jennifer F. Hillman*

The determination of what constitutes a reasonable attorney's fee is a matter within the sound discretion of the Surrogate's Court, which is in the best position to assess and consider the necessary factors in fixing and determining an attorney's fee.  However, contingency fee arrangements sometimes present a particular challenge to the court as demonstrated in a recent decision by the Second Department in Matter of Talbot, 84 A.D.3d 967, 922 N.Y.S.2d 552 (2d Dep't 2011) [enhanced version available to subscribers / unenhanced version available from lexisONE Free Case Law].

In Matter of Talbot, the client retained an attorney to represent her in a contested probate proceeding.  Because the client was unable to pay any fees to the attorney other than a $5,000 retainer, they entered into a written retainer agreement on a contingent fee basis.  Just four weeks later, the probate proceeding was settled pursuant to a settlement agreement placed on the record in open court. 

Pursuant to the written retainer agreement, this speedy result would have resulted in a $585,000 contingency fee to the attorney for his services.  The client sought to fix and determine the fees pursuant to Surrogate's Court Procedure Act (SCPA) 2110, and the attorney cross-moved for summary judgment dismissing the petition.  The Surrogate's Court denied the petition and granted the attorney's cross-motion.

On appeal, the Second Department reiterated that the determination of a reasonable attorney's fee lies with the sound discretion of the Surrogate's Court regardless of the existence of a retainer agreement or whether all interested parties consented to the amount of fees presented; but the Court also discussed the various factors to be considered in determining a reasonable fee including (i) time and labor expended; (ii) difficulty of questions involved; (iii) required skill to handle the problems presented; (iv) the attorney's experience, ability and reputation; (v) the amount involved; (vi) the customary fee charged for such services; and (vii) the results obtained.

In looking at the contingency fee and retainer agreement at issue, the Appellate Court noted that although contingency fees are not per se improper in matters involving the administration of estates, agreements entered into between attorneys and clients as a matter of public policy, are of special concern to courts.  The burden of proving that the retainer agreement was reasonable rests with the attorney.

The Second Department determined that although the Surrogate's Court properly considered whether the contingency fee retainer agreement was fraudulently or otherwise wrongfully procured, it nevertheless erred when it granted the attorney summary judgment without first determining the reasonableness of his fee under the retainer agreement, or otherwise fixing and determining his fee.  The Court further decreed that the petition to fix and determine the fee should have been granted, the cross motion should have been denied, and the Surrogate's Court should fix and determine the attorney's fee after consideration of the relevant factors and an evaluation of the reasonableness of the retainer agreement.

Contingency fee arrangements are a gamble by their very nature.  However, this case highlights some additional factors that an attorney should consider before entering into a contingency fee arrangement, and when they are faced with a SCPA 2110 proceeding.   

[*] Jennifer F. Hillman is an attorney at Ruskin, Moscou Faltischek, P.C., Uniondale, New York where her practice focuses in the area of trust and estate litigation.

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