Contingency Fee Agreement in Probate Matter
Client employed attorney regarding the probate of her grandfather’s estate, of which she was a beneficiary in the Will. The personal representative had informed the client she would “. . . be lucky to see $30,000 after the estate had been settled.” Client suspected the personal representative was mishandling the estate and agreed in writing to pay attorney a flat fee of $450 plus costs regarding “[a] determination on how to secure the maximum value of your share as beneficiary of the Will and a demand that the executor administers the Will according to its provisions.” (Emphasis in document.)
In addition, since the client was not a person of means, the attorney suggested a contingent fee as follows:
The proposed contingency amount is 30% of any amount in dispute, including any settlement amounts or court ordered awards. For the purposes of this agreement, the amount in dispute shall be the difference between what has been orally promised by the executor, $30,000, and any amount greater gained in settlement or award. [The committee understands the 30% fee applies to any recovery above $30,000.]
The concluding paragraph in the written agreement stated:
I have read this letter and consent to it. Furthermore, I grant and give my informed consent after [name redacted] has proposed the course of conduct, has communicated adequate information, and has explained all material risks of and reasonable alternatives to the proposed course of conduct.
After filing suit to produce the Will and enjoin the named personal representative to serve, a new personal representative was appointed and the administration of the estate was commenced.
The attorney asks whether a contingent fee is appropriate in representing a client to obtain property to which she is entitled under the Will.
RPC 1.5 states:
(a) A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses. The factors to be considered in determining the reasonableness of a fee include the following:
(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers performing the services;
(8) whether the fee is fixed or contingent; and
(9) the terms of the fee agreement between the lawyer and the client, including whether the fee agreement or confirming writing demonstrates that the client had received a reasonable and fair disclosure of material elements of the fee agreement and of the lawyer's billing practices. . . .
(c) A fee may be contingent on the outcome of the matter for which the service is rendered, except in a matter in which a contingent fee is prohibited by paragraph (d) or other law. If a fee is contingent on the outcome of a matter, a lawyer shall comply with the following
(1) A contingent fee agreement shall be in a writing and signed by the client;
(2) A contingent fee agreement shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal; litigation and other expenses to be deducted from the recovery; and whether such expenses are to be deducted before or after the contingent fee is calculated. The agreement must clearly notify the client of any expenses for which the client will be liable, whether or not the client is the prevailing party; . . .
(d) A lawyer shall not enter into an arrangement for, charge, or collect:
(1) any fee in a domestic relations matter, the payment or amount of which is contingent upon the securing of a dissolution or annulment of marriage or upon the amount of maintenance or support, or property settlement in lieu thereof; or
(2) a contingent fee for representing a defendant in a criminal case. . . .
Contingent fees are permissible in probate cases, but only if the fees are reasonable. Washington Advisory Opinion 1478 (1992) involving a will contest.
Reasonableness is ordinarily determined when the agreement between the client and the lawyer is made. In some circumstances, the reasonableness of a fee agreement must be re-evaluated because later unforeseen events may have changed the relationship between the lawyer and the client so that a fee agreement reasonable at the time it was made is no longer so. Cotton v. Kronenberg, 111 Wn. App. 258, 44 P.3d 878 (2002), review denied, 148 Wn.2d 1011 (2003); In re Disciplinary Proceeding Against Brothers, 149 Wn.2d 575, 70 P.3d 940 (2003); Holmes v. Loveless, 122 Wn. App. 470, 94 P.3d 338 (2004).
Reasonableness in the fee agreement is especially important because a lawyer owes fiduciary duties to the client and ambiguities in the agreement will be construed against the person who drafted it. Guy Stickney, Inc. v. Underwood, 67 Wn.2d 824, 410 P.2d 7 (1966); In re McGlothlen, 99 Wn.2d 515, 663 P.2d 1330 (1983) The contingent fee agreement will be subject to particular scrutiny, and the burden is upon the lawyer to demonstrate it is reasonable. Perez v. Pappas, 98 Wn.2d 835, 659 P.2d 475 (1983)
Unlike the issue here, a fee agreement based solely upon a percentage of the value of the estate to which the client is already entitled is not a contingent fee because the risk is nonexistent and therefore violates RPC 1.5(a) as excessive.
There is nothing prohibiting the inquiring lawyer from charging the client a reasonable contingent fee.