Bud Newman of the Daily Business Review reported here on the details of a settlement deal ending the high-profile battle over the multi-million dollar estate of Seth Tobias, a wealthy hedge fund manager who died last Labor Day weekend with cocaine, the prescription sleep aid Ambien and alcohol in his system. His brothers claimed in court papers that he was killed by his wife. An autopsy concluded he drowned, and Palm Beach prosecutors filed no criminal charges. I’ve written about this case before, click here.
The value of the estate was not disclosed but was estimated in several news reports to be $25 million to $35 million.
As best as I could make out from the linked-to news report, here are the specific settlement deal terms:
- The Tobias brothers will withdraw the claim in their court filing that Filomena Tobias killed her husband.
- Filomena Tobias will become the administrator of the estate after a temporary curator is discharged.
- Each side agrees to place $400,000 into an escrow account pending final resolution of a claim involving an unresolved lawsuit against the estate.
- Seth Tobias’ brothers, Sam and Spence Tobias, will receive all of the estate’s stock and interest in Tobias Brothers Inc., in which Seth Tobias was a partner. The value of this stock was not disclosed.
- The estate will set aside a $3.6 million fund to be split among Seth Tobias’ relatives, friends, charities and their attorneys in the following order of priority:
- First a Pennsylvania high school scholarship fund and a Philadelphia rehabilitation center will split $400,000. The remaining $3.2 million (3.6 – .4 = 3.2) is split as follows:
- Attorneys are next in line for an unspecified amount “equal to the reasonable attorneys’ fees of counsel for the Tobias brothers.” In other words, the parties agreed to set aside a fund for attorney’s fees and allow the court to make the final call on who gets what. According to the linked-to news report, the brothers were represented by West Palm Beach attorney Jamie Pressly of Pressly & Pressly, who declined to say what he will charge in attorney fees.
- After paying attorney’s fees, whatever’s left over will be split as follows: 11% to Seth Tobias’ mother, Esther Chakov, 11% to Seth Tobias’ father, Sidney Tobias, 18% to each of Seth Tobias’ four brothers (Scott Tobias, Sam and Spence Tobias, and Joshua Goldberg), 3% to Seth Tobias’ friend, Patrick Bransome, and 3% to Seth Tobias’ friend, Anthony Parker.
Lesson learned? Manage Expectations
What is striking about this settlement is the apparently low figure the brothers settled for. Out of an estate worth from $25 million to $35 million, the widow basically gave up only $3.6 million (14.4% to 10.3% of the estate), and the $3.6 million share of the estate she is giving up will have to be split among a slew of parties – net of attorney’s fees. That is not to say that this was a bad deal for the brothers. In fact, this was probably a great deal for the brothers (if they’d gone to trial and lost, which is likely, they would have got NOTHING).
This case provides a reality check for future litigants (and their attorneys). Managing expectations is 99% of the game when working with families in contested probate matters (the other 1% is probably all the stuff they teach you in 3 years of law school). One of Florida’s most experienced and best known probate litigators, Jamie Pressly, advised his clients to settle for between 14.4% to 10.3% of the estate vs. rolling the dice on a winner-take-all trial. If at the very beginning of the engagement someone sat down with the Tobias brothers and told them to assume their chances of winning at trial were not good (say less than 10%), then a last-minute deal in the 14.4% to 10.3% range was a big “win” and every penny in legal fees paid was well worth it. If no one ever had this conversation with them or, even worse, if someone told them their case was a “slam dunk,” then a last-minute deal in the 14.4% to 10.3% range probably felt like a dumbfounding “loss” to these clients. Win or lose, big case or small case, wild facts (gay murder conspiracy) or mundane facts (who gets dad’s WWII lighter), managing expectations is the key to happy clients.