Pre-Approval Required

The Mississippi Supreme Court affirmed a reduced award of attorneys fees sought in an estate matter

To collect attorney’s fees from an estate, court approval is required.  So if an attorney is paid from an estate without court approval, he “takes the fee subject to the peril of having it disapproved later by the chancellor.”  That is what happened here. Obert Law Group collected more than $180,000 in attorney’s fees from Dr. Edwin Holt’s estate. But it did so without first seeking court approval. After a two-day hearing, the chancellor determined only $96,951 of the attorney’s fees in the estate matter were reasonable. So he ordered Obert Law Group reimburse the estate $84,945.

The story

At the time of his death, Dr. Holt was finalizing a divorce in Texas and seeking to have his dental license reinstated in Mississippi. Dr. Holt had hired first-year attorney Joshua Stretch to represent him in the dental-licensure matter. Due to his inexperience, Stretch associated more seasoned attorneys at Obert Law Group, Keith Obert and William Brown. When Dr. Holt died, Stretch still held $73,000 as a yet-to-be-earned retainer on the licensure issue.

Dr. Holt died tragically by his own hand at age forty-five. He left five minor children. Stretch drove Dr. Holt’s mother, Janet Holt, to the funeral. According to Janet, on the way back from the funeral, Stretch approached her “about the estate.” Two days later, Stretch emailed Janet, who became the estate’s executrix. He told her he wanted to handle the matter but he would need to bring in Obert for his expertise in estate matters. Stretch, Obert, and occasionally Brown began working immediately on estate matters. Their efforts included locating and protecting estate assets and dealing with Dr. Holt’s ex-wife, who strenuously asserted the divorce was never finalized so she was Dr. Holt’s heir and not her five minor children.

Stretch did not return the remainder of the prior dental-licensure retainer to Dr. Holt’s estate. Instead, he submitted this money to Obert Law Group, which in turn used this money to pay its first $73,000 in bills to the estate. After exhausting this money, Obert Law Group billed the executrix. The attorneys did not seek prior court approval of their attorney’s fees. Nor did they advise the executrix the bills should be court-approved before she paid them. Instead, because Janet believed she had no reason to question the invoices, she simply wrote checks from the estate to pay the invoices submitted to her—totaling $110,800. In seventeen months of representing the estate, Obert Law Group collected $181,896 in attorney’s fees.

Their representation of the estate ended when Janet petitioned the court to replace Stretch, Obert, and Brown with new counsel. At this point, their motion for final accounting and attorney’s fees had yet to be approved by the court. And before approval, the trustee of the revocable trust established by Dr. Holt, to which he had bequeathed the residuary of his estate for the benefit of his family, petitioned the court for the return of all the fees they had collected. The trustee asserted Obert Law Group had never sought preapproval of its attorney’s fees and had never advised Janet of her duty to first seek court approval before paying Obert Law Group with estate assets. The trustee also alleged Obert Law Group padded its bills and mismanaged the estate.

The court found that the trial court had fairly evaluated the reasonableness of the fees under Rule 1.5.

The chancellor entered a detailed order in which he considered the factors set forth in Mississippi Rule of Professional Conduct 1.5 for reasonable attorney’s fees.

Advice

Had Obert Law Group’s bills been submitted to the court for prior approval, this fight would have without question been largely tempered. The lawyers would have discovered quickly that the chancellor took a much more frugal view as to the time and labor required and the reasonableness of the charged fees than the attorneys did.

Dissent

Because I find the chancellor has not made this award with clarity and consistency with the lodestar method, I respectfully dissent. The chancellor’s order should clearly set forth and allow this Court to discern the chancellor’s rationale that $96,951 was a reasonable amount for attorneys’ fees and that $84,945 was unreasonable. It did not.

(Mike Frisch)