What Are Reasonable Attorney Fees in Estate Administration?

In Ohio, as in other states, attorneys who assist a personal representative in the administration of an estate are entitled to have their reasonable fees paid out of the estate. Attorney fees are governed not only by ethical guidelines established by attorneys' Rules of Professional Conduct, but by other Ohio rules and statutes. As such, attorney fees in estate administration are perhaps some of the most strictly regulated. Although attorney fees are paid out of the estate, Ohio case law has established that it is the personal representative, rather than the estate itself, who is the attorney's client.

What is a reasonable attorney fee for estate administration, and how is it determined? Essential guidance comes from Rule of Professional Conduct 1.5 (Rule 1.5), which states that a "lawyer shall not make an agreement for, charge, or collect an illegal or clearly excessive fee." A fee would be illegal if it violated a statute or some administrative regulation. A fee would be considered "clearly excessive" if an attorney of ordinary prudence would be left with a "definite and firm conviction" that the fee was excessive.

Factors in Determining Whether an Attorney Fee is Reasonable

Rule 1.5 includes eight factors to be considered in evaluating the reasonableness of an attorney fee. They are:

• The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly.
• The likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer.
• The fee customarily charged in the locality for similar legal services.
• The amount involved and the results obtained.
• The time limitations imposed by the client or by the circumstances.
• The nature and length of the professional relationship with the client.
• The experience, reputation, and ability of the lawyer or lawyers performing the services.
• Whether the fee is fixed or contingent.

The attorney's viewpoint is not the only one that matters with regard to the reasonableness of fees. The fees, per Ohio case law, must also be reasonable for the standpoint of the estate. Attorney fees for services performed in the management or distribution of non-probate property (such as gifts outside a will) would probably not be considered "reasonable" such that the estate would pay them.

How Do Reasonable Attorney Fees in Estate Administration Get Paid?

In Ohio, the procedure for payment of attorney fees in estate administration is set forth by Sup. Rule 71, which states, "[a]ttorney fees may be allowed if there is a written application that sets forth the amount requested and will be awarded only after proper hearing, unless otherwise modified by local rule." Many county probate courts have, in fact, established local rules that do not require a hearing under most circumstances. Typically, no hearing is required if the fee falls within certain guidelines and all estate beneficiaries consent to the fee, or if the personal representative of the estate is also its sole beneficiary. Of course, if there is a debate as to whether a fee is reasonable, a hearing is required.

The timing of attorney fee payment is also covered by Sup. Rule 71.  As a general rule, attorney fees in the administration of an estate are not to be paid until the final account is prepared for filing. If the personal representative is delinquent in filing accounts, attorney fees for their counsel may even be denied.

Under certain circumstances, the probate court may permit fees to be paid earlier than provided for in the rules.  Typically, there must be good cause for earlier payment of attorney's fees, such as a tax deduction that might be available in the current year if attorney fees are paid early. In a probate case that is extended, such that it might be unfair to expect an attorney to wait until its conclusion to be paid, it may also be possible to get the court to approve an early payment. Different counties have different local rules, so it is important to work with an attorney who is familiar with the local rules.

As a practical matter, the best way to ensure that fees are reasonable and paid appropriately is to communicate with your attorney. Do not hesitate to ask questions if you don't understand a fee or think it is unreasonable.  Understand, too, that you are paying not just for the attorney's time, but his or her expertise and judgment. A qualified Ohio estate administration will be not only able, but willing, to answer your questions about reasonable attorney fees.

You may also be interested in:

• First Time Executors: What You Should Know
• Eight Things NOT to Do as the Personal Representative of an Estate
• How Online Tools for Executors Can Help With Administering an Estate
• When a Personal Representative Breaches Their Duty