The Standards for Attorney Fees revised April 25, 2011 were presented at the Probate Section of the Houston Bar Association meeting on Tuesday, April 26th. The new standards are now posted and go in effect on June 1, 2011. Please send any comments to email@example.com. Below are comments that have already been received:
1. Paragraph I.C.2 discusses “Personal Representative Compensation” and sets out an example (Appendix A) of how to separate Personal Representative Compensation (“PRC”) from compensation related to legal work as an attorney. However, most billing programs are not able to separate time based upon the nature of the work. Courts’ Response: Appendix A will be supplemented with another example of an invoice wherein the legal related time and the time spent as a personal representative are integrated into one, chronological billing report.
2. When, in the rules, it says that the courts want compensation to guardians of the person done on an annual basis, does that apply to attorneys who are guardian of the person (whether solely or with being guardian of the estate)? I ask only because I am guardian of the person and estate of an elderly gentleman who is very high maintenance. I segregate my time as guardian of the person from my time as guardian of the estate. I apply a reduced attorney fee rate to guardian of the estate work, and only charge $100 per hour for guardian of the person work. But because the ward is high maintenance, I spend a lot of time on guardian of the person work, thus taking me away from work on other clients that I could bill at a far higher rate. It would thus work a hardship on me, in this instance, to wait an entire year, or even quarterly, to submit my guardian of the person time and hope the court doesn't cut it, as is sometimes done. There are really two issues here. First, may an attorney who serves as the guardian of an estate be paid for fiduciary services based upon such attorney’s hourly rate, albeit a reduced attorney rate? Second, if submitting applications for fiduciary compensation on a quarterly basis works an undue hardship on the attorney serving as the guardian of the person, may applications for fiduciary compensation be submitted on a more frequent basis? With regard to the first issue, an attorney serving as the guardian of the person or estate, or both the person and estate, may not charge attorney rates (even if those rates are reduced) for non-legal tasks that are undertaken as a fiduciary only. In addition, the default compensation is set out in Section 665(b) and is equal to 5% of gross income and 5% of all money paid out of the estate. To be paid more than the default compensation, according to Section 665(c)(1) application must be made and it must be shown that the default compensation is unreasonably low considering the services rendered as guardian. With regard to the second issue, Section 665(c)(2) authorizes quarterly compensation upon a showing that delaying compensation until the filing of the annual accounting would create a hardship for the guardian. Unfortunately, even when the ward is high maintenance and requires a great deal of the guardian’s time and energy, the Code allows compensation on a quarterly basis; and the courts do not have the authority to award compensation on a more frequent basis. We understand the public policy concerns that the limitations regarding compensation of attorney guardians as set out in Section 665 raise. Specifically, the courts are concerned that qualified, experienced attorneys will shy away from serving as guardians considering the time they spend in a fiduciary capacity is compensated at a much lower rate as compared to their normal billing rate.
3. With regard to III (B), is the invoice with a time sheet needed if the fee amount is agreed on by all parties and the case is the estate is solvent? If the answer is yes, my sense is that it might be appropriate to insert that in the rules to avoid appointees not familiar with unwritten custom and practice calling court staff repeatedly to ask that question. The answer is yes. Any time an attorney is making application for his or her fees to the court, an invoice itemizing the time and expenses is required, even when the estate is solvent and the fee amount is agreed upon by all parties. We will add a statement in Section III(B) to clarify this as you have suggested. However, be aware that when an attorney ad litem is appointed by the Court in an heirship or guardianship matter and the attorney ad litem’s fee is agreed upon and totals less than $1000, an invoice is not required.