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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 lexis.com 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
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.
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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