Contingency Fees and Probate

New clients recently referred to me by their trusted advisor told me they couldn’t afford to pay probate fees to handle their case. They raised the option of my working on their behalf on a contingency so that they could pay me only out of the money or other property they might receive from the estate.

I had never handled a California probate case on a contingency. I always wanted my fees paid as provided by the law – guaranteed. But I also wanted to find a way to help my new clients whose claim in the estate seemed solid. So, I agreed to accept this particular probate on a contingency basis for the reasons you’ll read about further in this article.

Generally, contingency fees cannot be paid to an attorney in a probate matter. The reason is because the law provides for only two types of fees that a lawyer can earn: either statutory fees or extraordinary fees.

California probate is expensive. Probate fees payable to your attorney are mandated by law under California Probate Code Section 10810. Under the Probate Code, statutory fees are prescribed under a 4-3-2-1 system as follows:

  • 4% of the first $100,000 of property value
  • 3% of the next $100,000 of property value
  • 2% of the next $800,000 of property value
  • 1% of the next $9 million of property value

So, when you do the math, if the property in the probate case, like a house, has a market value at the time the owner died of $500,000, the probate fee is $13,000 (4% of $100,000 is $4,000, 3% of $100,000 is $3,000 and 2% of the next $300,000 is $6,000).

On top of this amount, your attorney may also earn extraordinary fees. The court may allow additional compensation for extraordinary services by the attorney for the personal representative in an amount the court determines is just and reasonable. This is explained in California Probate Code Section 10811.

My new clients were beneficiaries of an estate left by their aunt who died without a will. Dying without a will is called an intestate estate. Under the rules of intestate succession, my clients were the heirs because their deceased aunt presumably had no other heirs. But just as they were about to receive their aunt’s money, another person filed an objection to the proposed distribution claiming to be the sister of the deceased. The rules of intestacy give a deceased person’s sister a higher priority to receive property than what is given to nieces. The attorney handling the probate case could not represent the nieces since he was already representing the estate itself. As a result of that attorney’s conflict of interest, the nieces hired me.

As the attorney for the nieces, I was not handling a probate case subject to the California Probate Code. The Code sections sited above regarding statutory and extraordinary fees applied only to the other attorney who was engaged to deal with the probate. That meant I was free to take the matter on a contingency basis to be paid from the amount the nieces actually received at the end of the probate. If the nieces received nothing from their aunt, then I would earn nothing and the nieces would not have spent any money to get the benefit of my services.

We entered into negotiations: it was me against the attorney for the deceased aunt’s sister. One likely outcome would have been to split the estate in half with the sister getting her half while the nieces got the other half to be split so they get one-fourth each. But because of my involvement and understanding of the facts of that case, I successfully argued against the sister’s attorney that a one-third split among all of them was more appropriate. As a result, my clients received one-third of the estate instead of one-fourth – a 75% increase for each of my clients.

To spare you the cost of paying your attorney up front, contingency fees in probate are possible. Under the right circumstances, such as a creditor’s claim or a claim as an heir when the person dies without a will, you can retain a lawyer on a contingency basis

BOTTOM LINE: Let’s talk about whether your probate case can be handled on a contingency fee basis. You may end up better off all around.