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Inter-state forum shopping in contested guardianship proceedings is a growing problem.  So knowing what to do in a case involving parallel guardianship proceedings in different states with concurrent jurisdiction is useful for Florida probate litigators.

Case Study

In re Guardianship of Morrison, — So.2d —-, 2007 WL 4180873 (Fla. 2d DCA Nov 28, 2007)

In the linked-to case a guardianship proceeding was first commenced in New Jersey by the ward’s girlfriend, then a parallel guardianship proceeding was commenced in Florida by his daughter.  Both courts had jurisdiction.  So the question became: which court should adjudicate the matter, and which should stay its proceeding?

Under Florida law the test is pretty simple: the court that first “exercises its jurisdiction” over the matter gets priority unless there are “special circumstances” justifying a denial of the stay.  So when in doubt, file first, ask questions later.  This approach is the exact opposite of how I generally do anything as a lawyer, but in this context the side who wins the race to a courthouse with jurisdiction definitely gains an advantage.

In this case the New Jersey action was filed first, that court thus first “exercised” its jurisdiction over the matter, and thus the Florida court should have stayed its proceeding. Here’s how the 2d DCA explained the basic rule in Florida, as enunciated by the Florida Supreme Court in Siegel v. Siegel, 575 So.2d 1267 (Fla.1991):

If courts in different states have concurrent jurisdiction over a matter, then the proper court is determined by either legislation or the principle of comity. Philip J. Padovano, Civil Practice § 1.7 (2007). In this case, there is no legislation governing the subject of concurrent jurisdiction over guardianship proceedings, so the principle of priority governs as a matter of comity.

In general, where courts within one sovereignty have concurrent jurisdiction, the court which first exercises its jurisdiction acquires exclusive jurisdiction to proceed with that case. This is called the “principle of priority.” Admittedly, this principle is not applicable between sovereign jurisdictions as a matter of duty. As a matter of comity, however, a court of one state may, in its discretion, stay a proceeding pending before it on the grounds that a case involving the same subject matter and parties is pending in the court of another state.

Siegel v. Siegel, 575 So.2d 1267, 1272 (Fla.1991) (quoting Bedingfield v. Bedingfield, 417 So.2d 1047, 1050 (Fla. 4th DCA 1982)). The purpose of applying the principle of priority as a matter of comity is to prevent “unnecessary and duplicitous lawsuits” that “would be oppressive to both parties.” Siegel, 575 So.2d at 1272 (quoting Bedingfield, 417 So.2d at 1050).

In a concurring opinion, Judge Altenbernd nailed the race-to-the-courthouse aspect of this rule (which is a bad thing), and offered an alternative test that focuses on domicile instead of timing. If you ever lose the courthouse race, this domicile argument may come in handy (especially if you frame it within the context of the “special circumstances” exception discussed below).  Here’s an excerpt from Judge Altenbernd’s concurrence:

I concur in this opinion, but write to explain that I would reverse this case even if the petition for guardianship in Florida had been filed first. The principle of priority can sometimes unreasonably reward the person who wins the race to a courthouse with jurisdiction.

*     *     *
In a state like Florida that has a large population of older people who are actually domiciled in other states, it would seem prudent to me to encourage trial courts to defer to the state of a ward’s domicile even when petitions for guardianship are first filed in Florida.

Exception to the Rule: “Special Circumstances Justifying Denial of the Stay”

There is (of course) an exception to the general principal-of-priority rule.  Court’s may deny a motion to stay – even if another court first exercised jurisdiction – if they enter an order containing findings of “special circumstances” justifying a denial of the stay.  Here’s how the 2d DCA made this point:

The most common example of such special circumstances is undue delay by the court with priority. See Siegel, 575 So.2d at 1272; Parker v. Estate of Bealer, 890 So.2d 508, 512 (Fla. 4th DCA 2005); Norris, 573 So.2d at 1086. At least one court has found special circumstances in a dissolution action when primary residences, property, business interests, and most of the parties’ children were in Florida. See Maraj v. Maraj, 642 So.2d 1103, 1104 (Fla. 4th DCA 1994).

In this case, the Florida court did not make any findings of special circumstances to explain its decision not to apply the principle of priority as a matter of comity. Instead, the court found that the New Jersey judgment on jurisdiction has no impact on the Florida court’s jurisdiction over the matter. However, the parties do not dispute that the Florida and New Jersey courts have concurrent jurisdiction. Instead, the question is whether the Florida court abused its discretion in refusing to stay the Florida guardianship proceedings while the New Jersey guardianship proceedings went forward.

Although the Florida court had the discretion to decline to stay the Florida proceedings as a matter of comity, it abused its discretion in doing so absent a finding of special circumstances.

An article written by Anthony Lin of the New York Law Journal entitled N.Y. Court Suspends Lawyer Accused of Taking Money From Judge’s Estate underscores the wisdom of building systemic, structural safeguards against malfeasance into ALL guardianship proceedings.  In Miami-Dade and Broward counties probate judges require the liquid funds of ALL probate or guardianship estates to be immediately deposited into a "restricted depository account" governed by F.S. 69.031.

Although some grouse about the minor expense and delay caused by a blanket policy requiring restricted depository accounts for ALL estates, those "costs" are far outweighed by the obvious advantage of eliminating the "moral hazards" inherent to attorneys (often solo practitioners) holding estate funds in their own firms’ escrow accounts and paying themselves from these funds without having to justify such payments to any third party in advance.

The following excerpts from the linked-to New York Law Journal article prove – again – why systemic, structural safeguards, such as Florida’s restricted depository account regime, are a good idea.

Emani P. Taylor has been the subject of disciplinary proceeding over her alleged withdrawal without authorization of $327,100 from accounts of John L. Phillips, a onetime Civil Court judge who was ruled mentally incompetent in 2002. Taylor, who served as Phillips’ guardian from 2003 to 2006, has acknowledged withdrawing some money but claims she did so properly to pay both herself and others for services rendered.

*     *     *     *     *
Citing Taylor’s lack of cooperation, the court said it would accept as uncontested an accounting prepared by a court-appointed examiner of the period during which Taylor acted as Phillips’ guardian. According to this accounting, Taylor wrote $200,000 in checks to herself from guardianship accounts for supposed retainers and legal fees. Another $69,000 was paid to herself or to "cash" for supposed expenses, and another $57,000 was withdrawn in cash.

*     *     *     *     *
"While [Taylor] was entitled to be compensated for the work she performed for three years, self-help to guardianship funds is not the way to proceed," the court said.

The court also said it was "very disturbing" that Taylor had applied to the court for $853,100 in legal fees relating to her guardianship but did not disclose that she had already withdrawn from the guardianship account more than $327,000 for her own use.

In re Commitment of Reilly, — So.2d —-, 2007 WL 4270584 (Fla. 2d DCA Dec 07, 2007)

As I’ve written about before [click here], an adjudication of incompetency must be based upon current evidence.  Evidence that is months old by the time a judge gets around to ruling is of little value – and will probably end up getting you reversed on appeal.  In this case the defendant was adjudicated incompetent under the following criminal-procedure rule:

On March 5, 2007, counsel for Reilly and counsel for the State stipulated to the “findings and the treatment recommendations of the October 25, 2006[sic] forensic competency evaluation provided to the Court by Dr. Paul S. Kling.” This stipulation was entered pursuant to section 916.12(2), Florida Statutes (2006), which permits the trial court to adjudicate a person incompetent if the parties stipulate to a finding of incompetence by one mental health expert. Subsequently, on May 4, 2007, the trial court held a hearing at which it accepted the parties’ stipulation, adjudicated Reilly incompetent, and committed him for treatment. Reilly was present at the hearing and objected to the stipulation and the finding of incompetence. Reilly now seeks review of this adjudication and commitment by petition for writ of certiorari.

6-Month Old Report = Reversal on Appeal:

For probate practitioners, the interesting point in this case is the role played by a stale, 6-month old report in the incompetency adjudication.  This report was the basis of both the trial court’s ruling and the 2d DCA’s reversal.

In this case, the trial court based its May 4, 2007, determination that Reilly was incompetent on a report dated October 31, 2006. However, this six-month-old report did not, and could not, speak to Reilly’s present ability to consult with his lawyer with a reasonable degree of rational understanding or his present rational and factual understanding of the proceedings against him. Accordingly, it did not provide competent, substantial evidence to support the trial court’s finding that Reilly was presently incompetent to proceed. While we recognize that section 916.12(2) permits the trial court to adjudicate a defendant incompetent based on the stipulation of the parties to one mental health expert’s findings, we do not believe that section 916.12(2) permits the court to rely on a stipulation to an expert’s report that is so stale that it no longer speaks to the defendant’s present competence.

Because Dr. Kling’s report in this case was too stale to be relevant to Reilly’s present competence, the trial court departed from the essential requirements of the law in relying upon it despite the parties’ stipulation. Accordingly, we grant the petition and remand for further proceedings.

Lesson learned?

When it comes to incompetency adjudications, where is the dividing line between "too stale to be relevant" and non-contemporaneous, but still valid evidence?  Who knows, but based on this case, 6 months is definitely on the WRONG side of that line.

Griem v. Becker, — So.2d —-, 2007 WL 4482171 (Fla. 3d DCA Dec 26, 2007)

In the linked-to case the trial court first entered an order in favor of one side on a petition to determine heirs because the opposition failed to file a timely response.  When opposing counsel asked the court to reconsider its order, it completely reversed itself and entered an order that went way beyond simply setting aside its original ruling.  Here’s how the 3d DCA framed the issue and its ruling:

Pursuant to appellee’s motion, the court set aside the Original Order and issued the Order on Appeal which stated in pertinent part:

1. The Motion to Set Aside Order Determining Heirs is hereby GRANTED.

2. The Order Determining Heirs dated October 10, 2006, is hereby set aside and shall have no legal effect. INGRID DIANA GRIEM and DEBORAH GRIEM POSADA are not the beneficiaries of the Estate of Ronald Griem.

3. The marriage between the decedent, RONALD GRIEM, and ANITA BECKER is declared to be in full force and effect since its inception as recognized by the State of Florida.

(Emphasis added.)

It appears that the court endeavored to simply negate the language in the Original Order, but exceeded its intended result. However, while the circuit court attempted to set aside the prior determination as to the heirs, it confusingly stated that Griem’s Daughters “are not beneficiaries.” The language used by the court in the Order on Appeal can be interpreted as making a final determination as to whether Griem’s Daughters are beneficiaries of Decedent’s estate. Likewise, the court specifically “declared” the marriage between the Decedent and appellee “to be in full force and effect since its inception,” despite the fact that the validity of the marriage is being contested in appellant’s petition to determine heirs.

Florida Probate Rule 5.385(c) provides that following the filing of a petition to determine heirs, “[a]fter formal notice and hearing, the court shall enter an order determining the beneficiaries or the shares and amounts they are entitled to receive, or both.” Here, there is no indication in the record that a hearing was held on either the determination of heirs or on the validity of Decedent’s marriage to appellee.

Accordingly, we affirm Paragraph 1 of the Order on Appeal and Paragraph 2, to the extent that it reads “[t]he Order Determining Heirs dated October 10, 2006, is hereby set aside and shall have no legal effect,” and reverse as to all remaining portions.


Lesson learned?

This case underscores the need for counsel to jealously preserve their client’s due process rights in contested probate proceedings.  As I’ve written about before [click here, here], all too often these proceedings are determined in the absence of valid evidentiary findings or by ignoring existing procedural safeguards.  Don’t let this happen to you or your clients.

UPDATE:

This is to follow up to my blog post below regarding the case filed against The Salvation Army claiming that under Florida’s POD statute [F.S. 655.82] a charity is not a “person” and therefore not a permissible POD beneficiary.  The court has granted The Salvation Army’s Motion to Dismiss [click here], holding that F.S. 655.82 does not define the word person and that the context requires that the definition in F.S. 1.01(3) must be used. Therefore, a person for purposes of Florida’s POD statute includes corporate charities such as The Salvation Army.

Special thanks to Miami attorney Kevin E. Packman of Holland & Knight for bringing the dismissal order to my attention.

ORIGINAL POST:

Pay on death or “POD” accountants are familiar territory to Florida probate counsel. As my partner Michele “Mickey” Maracini commented in Salvation Army Accused of Draining Dead Man’s Funds by Jordana Mishory of the Daily Business Review, POD accounts are often used as probate-avoidance devices:

Attorney Michele Maracini at Stokes McMillan Antúnez of Miami, who is not involved with the case, said people frequently use this type of account. She said by leaving an account in trust for a specific person, the recipient is able to bypass the probate process.

POD Account Litigation: Florida Charities Beware!

POD accounts, like any other form of jointly-titled bank account, are not immune from disputes . . . many of which end up getting litigated in court.  I recently wrote about one such case [click here]. The two Florida statutes principally at play in these cases are 655.82 and 655.825.

Due to a quirk in the statute charities may be legally disqualified from being designated as beneficiaries of POD accounts.  That’s the focus of the litigation reported on in Salvation Army Accused of Draining Dead Man’s Funds:

A lawsuit in U.S. District Court alleges the Salvation Army improperly took more than $120,000 from a dead man’s bank accounts — even though the man had left $106,000 of that amount in the charity’s name.

Filed by the estate of Richard Jose Belanger of West Palm Beach, Fla., the Oct. 5 lawsuit claims the Salvation Army improperly took the money left for it in Belanger’s payable-on-death bank account. The suit, filed on behalf of Richard Jason Belanger, a son who is serving as personal representative, claims only a person may be left money in these types of accounts. The suit alleges the account his father left for the charity is invalid.

Family attorney John Cooney said the Florida Legislature did not intend for the 1995 statute that allows for the establishment of pay-on-death accounts to apply to entities or organizations. He drew his analysis from a portion of the statute that requires proof that the beneficiary is alive on the date of the account holder’s death.

“When you have a statute that changes the way the law used to be, you need to interpret it narrowly and strictly,” said Cooney, a partner at Arnstein & Lehr in Fort Lauderdale. “It doesn’t matter what the decedent intended. If the decedent wanted to leave money for charity, that’s why we have wills.”

The lawsuit is the first legal challenge to the statute in Florida, according to the complaint. An Ohio appellate court found that a similar statute in that state allowed for only people to receive money from these types of accounts.

If Belanger’s estate is successful in its case against the Salvation Army, the case could affect money left for charities across the state.

Lateral Thinking?

By the way, I think this case is yet another example of creative, lateral thinking in the probate litigation context.  Rather then challenge the Salvation Army gift on undue influence or lack-of-capacity grounds, which as litigation goes is always expensive and always full of uncertainty, plaintiff’s counsel took a left turn, read the POD statute and “viola,” he developed a low-cost, high probability-of-success litigation strategy where, as plaintiff’s counsel states, “It doesn’t matter what the decedent intended.”  The case now becomes an exercise in statutory construction, which is a relatively inexpensive and quick case to litigate. Win or lose, plaintiff’s counsel gets an “A” for lateral thinking.

  1. 2d DCA: In re Guardianship of Morrison, — So.2d —-, 2007 WL 4180873 (Fla. 2d DCA Nov 28, 2007) (Contested Guardianship Proceeding)
  2. 2d DCA: In re Commitment of Reilly, — So.2d —-, 2007 WL 4270584 (Fla. 2d DCA Dec 07, 2007) (Contested Guardianship Adjudication)
  3. FL SCT: Chames v. DeMayo, — So.2d —-, 2007 WL 4440212 (Fla. Dec 20, 2007) (Homestead Litigation)
  4. 3d DCA: Griem v. Becker, — So.2d —-, 2007 WL 4482171(Fla. 3d DCA Dec 26, 2007) (Petition to Determine Heirs)

Gurfinkel v. Josi, — So.2d —-, 2007 WL 4322156 (Fla. 3d DCA Dec 12, 2007)

Probate litigation involving powers of attorney seem to always revolve around whether the attorney in fact acted outside the scope of authority granted by the instrument [click here, here for past examples].  This case is yet another variation on the same theme.  Here the issue was whether the attorney in fact was authorized to amend the settlor’s revocable trust effectively disinheriting two of the settlor’s three children.  The trial court said "yes," the 3d DCA said "no way."

Simply figuring out what to focus on in any type of litigation – including contested probate proceedings – is half the battle.  In probate litigation involving powers of attorney, focus is everything.

1.  POA v. Revocable Trust: Focus on the Trust Agreement:

If the dispute revolves around the use of a POA to amend or revoke a trust agreement, don’t let yourself get sucked into a battle over whether or not the POA is valid, the product of undue influence, lack of capacity, blah, blah, blah.  Stay focused on the trust agreement!  In this case, the trial court ruled that a POA could be used to amend a trust agreement . . . even though the express language of the trust agreement said that was a definite "no-no."  Here’s how the 3d DCA explained its reversal of the trial court on this point:

In this case, the Trust expressly reserves the right to amend or withdraw assets from the Trust to the grantor. Article VI, Paragraph E, further prohibits any “conservator,” “guardian,” or “any other person” from exercising these rights during the lifetime of the grantor. (Emphasis added.) The language of the reservation and prohibition in this case are very similar to those considered by the First District Court of Appeal in Mann v. Cooke, 624 So.2d 785, 786-87 (Fla. 1st DCA 1993). Although the prohibition in Mann also included an “attorney-in-fact” among those prohibited from exercising the rights of the grantor during his lifetime,[FN1] we find that to be a distinction without a difference. As in Mann, we conclude the prohibition in this case “unambiguously provides that the holder of a durable power of attorney cannot withdraw trust funds.” Id. at 787.

[FN1.] The prohibition treated in Mann reads: “Neither a conservator, attorney in fact, nor a guardian of the Grantor, nor any person other than Grantor may exercise any of the rights reserved to Grantor by the provisions of this Article.” Mann, 624 So.2d at 787 (emphasis added).

2.  ANY contested POA: Focus on F.S. 709.08:

What is often overlooked in litigation involving POAs is that under F.S. 709.08 the authority granted by a POA is very narrow.  In other words, under F.S. 709.08 an attorney is usually NOT authorized to take action (such as amending a revocable trust) unless the POA expressly says you CAN do it [click here for prior example of same point].  So if the POA is being challenged, focusing on the F.S. 709.08 makes sense.  Here’s on the 3d DCA made this point in the linked-to case:

Josi argues that Paragraph 16 of the Durable Power of Attorney condones his father’s attempt to amend the Trust. We disagree. Just as the power to revoke or amend a trust must be exercised in strict conformity with the terms expressed in the instrument, see MacFarlane, 203 So.2d at 60, authorizations conferred through powers of attorney likewise must strictly conform. See § 709.08(7)(b)(5), Fla. Stat. (1999) (providing that an attorney-in-fact acting under a Durable Power of Attorney may not “[c]reate, amend, modify, or revoke any document or other disposition effective at the principal’s death or transfer assets to an existing trust created by the principal unless expressly authorized by the power of attorney ….”) (emphasis added); James v. James, 843 So.2d 304, 308 (Fla. 5th DCA 2003) (“In general, an agent cannot make gifts of his principal’s property to himself or others unless it is expressly authorized in the power .”) (emphasis added); Vaughn v. Batchelder, 633 So.2d 526, 528 (Fla. 2d DCA 1994); Kotsch v. Kotsch, 608 So.2d 879, 880 (Fla. 2d DCA 1992); De Bueno v. Alejandro Bueno Castro, A.B.P., Inc., 543 So.2d 393, 394 (Fla. 4th DCA 1989); Bloom v. Weiser, 348 So.2d 651, 653 (Fla. 3d DCA 1977) (“[T]he instrument will be held to grant only those powers which are specified.”).

Liberty Life Assur. Co. of Boston v. Miller, 2007 WL 4233547 (S.D.Fla. Nov 29, 2007)

This case is helpful because it provides an example of a power-of-attorney (POA) that authorized the attorney in fact to change the named beneficiary of an insurance policy.  All of the Florida cases I’ve written about lately involved POAs being used to take action NOT authorized by the instrument [click here, here, here, here].

So what does the POA have to say to authorize the attorney in fact to change an insurance policy beneficiary designation form?  Glad you asked.  Here’s your answer:

Construction of a durable power of attorney is a matter of law. Spoerr v. Manhattan Natl. Life Ins. Co., 2007 WL 128815 (S.D.Fla.2007). In construing a power of attorney the court must look at the language of the instrument in order to ascertain its object and purpose. Id. However, power of attorneys are strictly construed. Id. And, only the principal’s intent is considered when construing the power of attorney, not the agent’s intent. Kotsch v. Kotsch, 608 So.2d 879 (Fla.App. 2 Dist.1992).

First, the Decedent intended to give broad powers to Mrs. Miller as his attorney-in-fact. Under paragraph 4 of the power of attorney, labeled “No Limitation on Attorney-In-Fact’s Powers,” the Decedent states that he “intend [s] to give [his] Attorney-in-Fact the fullest powers possible, including all powers set forth in Florida Statute Section 709.08 as now in effect or hereafter enacted, and [he] [does] not intend, by the enumeration of [his] Attorney-in-Fact’s powers to limit or reduce them in any fashion.” (Durable Power of Att’y ¶ 4.) Here, the Decedent expressed his desire to relay to Mrs. Miller all the powers that he could possibly give her. ( Id.)

The Decedent specifically states that he intends to give her the full extent of powers under available pursuant to 709.08. ( Id.) Among the powers available pursuant to 709.08, is the power to “amend or modify any document or other disposition effective at the principal’s death.” § 709.08(7)(a). This power is only available if the decedent expressly authorized his attorney in fact, Mrs. Miller, to use that power. See § 709.08(7)(a). Therefore, the powers are available because he expressly states that he intends to give Mrs. Miller the full powers available under 709.08, (Durable Power of Att’y ¶ 4.), and the power to change beneficiaries under his insurance policy is one of the powers available under 709.08. § 709.08(7)(a).

Furthermore, under the section entitled “Management and Contracting Powers,” the Decedent expressly authorizes Mrs. Miller to alter, insure, and in any manner deal with any real or personal property tangible or intangible and any interest therein. (Durable Power of Att’y ¶ E.) He further authorized Mrs. Miller under this same section to improve, manage and insure intangible property that he owns “upon such terms and conditions as the Attorney in Fact shall deem proper.” ( Id.) And, under section P, “Special,” the Decedent declares that he gives his attorney in fact the full power of substitution, in other words, the full power to do and perform every act necessary and convenient to be done as if he were still personally present. (Durable Power of Att’y ¶ P.)

The Decedent clearly intended to give his attorney-in-fact, Mrs. Miller, the full extent of the powers that he could give her. The Decedent granted Mrs. Miller the “fullest powers possible” pursuant to Florida Statute Section 709.08, which he did not intend to limit by enumerating further power. Therefore, his intent was clear, and strictly construing this contract, we must conclude that the Decedent intended to authorize Mrs. Miller to be able to change the named beneficiary on the insurance policy. Because there is no genuine issue of material fact and the law indicates that Mrs. Miller was authorized to change the named beneficiary on the Decedent’s insurance policy, summary judgment shall be granted in favor of Mrs. Miller and the Estate of the Decedent is entitled to the proceeds of the Decedent’s insurance policy.

This is a follow-up to a case I previously wrote about here.  The focus of my prior blog post was whether the attorney who drafted the contested will, Alan Watson, had violated Florida Bar Ethics Rule 4-1.8(c), which prohibits an attorney from preparing a will giving the attorney or a person "related" to the attorney any substantial gift from a client unless the client is related to the proposed donee.  Watson drafted a will that disinherited the decedent’s children in favor of Watson’s niece and her boyfriend.  Based on a strict reading of Rule 4-1.8(c) my conclusion was that Watson’s niece did not fall within the definition of "related person" for purposes of the rule and thus there was no violation; the Florida Bar seems to have agreed with my conclusion (reluctantly I’m sure).

Florida Supreme Court Ethics Ruling:

As documented in the Referee’s Report [click here] and the corresponding Florida Supreme Court Order [click here], although Watson was NOT found guilty of violating Rule 4-1.8(c), he did eventually plead guilty to other ethics violations arising out of his involvement with the decedent and was suspended from the practice of law for fifteen days.  After reading the Referee’s Report my impression of the case is that the facts smelled sooo bad to the Florida Bar’s investigators that they were determined to nail Watson for something . . . and succeeded.

Lesson learned: Play with fire and you’re going to get burned.

Whether the product of negligence, malfeasance, good intentions or some combination of all of the above, any attorney who puts himself in the position that Watson did in this case is looking for trouble.  If you dabble in estate planning/probate, this case is a warning to be careful.  When that little voice in your head tells you that maybe something isn’t right – STOP and listen to it!  If estate planning/probate is your niche, this case is a good example of what NOT to do when an elderly client with a substantial estate asks you to draft to a will that is bound to be challenged in the future.  Forewarned is forearmed.

Special thanks to Tampa attorney and frequent contributor to this blog, Russell R. Winer, for bringing the suspension order to my attention.

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.