The Florida Bar ethics rules governing contingent fee agreements are found in Rule 4-1.5(f). Other than in divorce and criminal-defense cases [Rule 4-1.5(f)(3)], contingent fees are acceptable in any form of litigation, including contested probate proceedings. Another point to keep in mind is that the percentage ceilings applicable to personal injury and medical malpractice cases, do NOT apply to probate cases [Rule 4-1.5(f)(4)]. In my experience, a straight 40% seems to be the norm for non-PI contingent fee agreements.
There’s not a lot of Florida case law out there addressing contingent fees in probate cases. The one Florida appellate opinion addressing this specific issue I am aware of is Brooks v. Degler, 712 So.2d 419 (Fla. 5th DCA 1998). In Brooks the 5th DCA reversed a trial-court order enforcing a contingent fee in a contested probate matter because the contingent-fee agreement was poorly drafted, NOT because contingent fee arrangements are per se invalid. Brooks provides solid guidance on how NOT to draft a contingent fee agreement for a probate case.
Late 40 Percent Retainer Pact Survives Widow’s Dismissal Bid: Lawyers Seek $42 Million Fee
A recent NY Law Journal article entitled Late 40 Percent Retainer Pact Survives Widow’s Dismissal Bid, reports on a NY case in which a 40% contingency in a contested probate matter resulting in a $42 million payday for the lawyers was challenged as being "unconscionable on its face." The WSJ Law Blog also reported on this case here [the comments to the WSJ blog post are a fun read]. For a more colorful take on the case the NY Post delivers – as always – with: WAR OVER $40 MIL LEGAL BILL.
I previously wrote about this case here.
The NY appellate opinion in this case is worth noting by Florida probate litigators. If someone ever tries to get out of your probate/contingency fee agreement, the arguments played out in this NY case just may surface in yours. The following excerpt from the linked-to NY Law Journal article should give you a sense of the operative facts and law at play in this case:
A 40 percent contingent-fee agreement between New York law firm Graubard Miller and Alice Lawrence, the 83-year-old widow of real estate developer Sylvan Lawrence, was not unconscionable on its face, an appellate court said Tuesday, even though the agreement was executed in the final months of a decades-long estate litigation in which the firm had already received $18 million in hourly fees and three partners had further requested and received $5 million in "gifts."
In Lawrence v. Graubard Miller et al., a 4-1 majority of the New York Appellate Division, 1st Department denied Ms. Lawrence’s motion to dismiss Graubard Miller’s petition to compel payment of the contingent fee and said further proceedings would be needed to determine the propriety of the arrangement.
"[W]hile at first blush such agreement might arguably seem excessive and invite skepticism, before any determination regarding unconscionability can be made, the circumstances underlying the agreement must be fully developed, including any discussions leading to the agreement, as well as the prospects at that time of successfully concluding the litigation in favor of Mrs. Lawrence," Justice Richard T. Andrias wrote for a majority that included Justices David Friedman, George D. Marlow and Eugene Nardelli.
But in a blistering dissent, Justice James M. Catterson said he would not only have found the fee agreement invalid on its face but would also have referred the Graubard Miller lawyers to the Departmental Disciplinary Committee.
"Regardless of the procedural aspects of the parties’ negotiations, no court can condone such an exorbitant fee," Catterson wrote.
Ms. Lawrence first retained the law firm, then known as Graubard Moskovitz McGoldrick Dannett & Horowitz in 1983, to represent her in a suit against Seymour Cohn, her late husband’s brother, business partner and executor.
At the time of Mr. Lawrence’s death in 1981, the brothers held a 12-million-square-foot real estate portfolio that included the former Port Authority building at 111 Eighth Ave. and a number of Wall Street office towers. It was estimated to be worth over $1 billion. Ms. Lawrence, who inherited 75 percent of her husband’s interest, sought the portfolio’s sale, but Cohn, who died in 2003, long opposed her.
Over the next 20 years, some $350 million was distributed from the estate, but the litigation dragged on until a final settlement was reached in May 2005 by which Cohn’s estate would pay Ms. Lawrence and her children $105 million. Graubard Miller is seeking 40 percent of this amount, or around $42 million. Ms. Lawrence has sought rescission of the agreement as well as the return of all previous fees on the grounds of unjust enrichment and breach of fiduciary duty.
Though contingent fees of such magnitude are not uncommon in personal injury cases, they are rarer in estate cases. Moreover, such deals normally date from the beginning of the litigation and are in lieu of hourly fees, meaning a law firm bringing a case on a contingent-fee basis normally faces a risk of nonrecovery.
But Graubard Miller’s contingent-fee deal was signed in January 2005, only months before the settlement. The 1983 retainer agreement in effect prior to that only specified hourly billing. In his dissent, Justice Catterson said the contingent fee might have been reasonable if agreed upon at the beginning of the case or if the firm had agreed to refund its previous fees.