Law Office of John S. Palmer Attorney at Law

Guardianship Legal Fees-Part II

Posted Friday, December 27, 2013 by John S. Palmer

In August the Washington Court of Appeals upheld a trial court’s decision to award $380,592 to an adult daughter for legal expenses incurred petitioning for the appointment of a guardian for her elderly father, a successful and wealthy Seattle businessman. The father contested the guardianship, and after a six-day trial, the lower court found him to be incapacitated, appointed a guardian of his estate, and entered a judgment for the daughter’s legal fees against “the guardianship estate and/or any other asset/entity” in which the father had an interest. (Over the years he had established at least 3 trusts, a limited partnership, and other entities.)

In its decision upholding the fee award (Guardianship of Hays, decided 8/26/2013) the Court of Appeals noted that Washington applies a two-part standard of review in this situation; first, the appellate court looks at whether a fee award is authorized by law; then, “we review a discretionary decision to award or deny attorney fees and the reasonableness of any attorney fee award for an abuse of discretion.”

The father conceded that RCW 11.96A.150 authorized the fee award but argued that the amount awarded was unreasonable, in part because the trial court did not state how the factors set forth in Rule 1.5 of the Washington Rules of Professional Conduct affected its decision. RPC 1.5 lists several factors to determine whether a fee charged by a lawyer is reasonable, including:

• The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
• The fee customarily charged in the locality for similar legal services;
• The amount involved and the results obtained; and
• The experience, reputation, and ability of the lawyer or lawyers performing the services.

The father argued that the judgment entered against him would have been lower if the trial court had properly applied these factors. But the Court of Appeals said RCW 11.96A.150 gives the court the broad discretion “to consider any and all factors it deems to be relevant and appropriate”; this may include the criteria listed in RPC 1.5, but because the rule governs attorney-client relationships its use is optional when assessing fees against another party.

The standard method for calculating a fee award in Washington is the “lodestar method” which is based on the number of hours reasonably expended, multiplied by a reasonable hourly rate. According to the 1998 Court of Appeals decision in McGreevy v. Oregon Mutual Insurance:

In order to determine if the number of hours expended is reasonable, “the attorneys must provide reasonable documentation of the work performed.” That documentation must include, at a minimum, (1) the number of hours worked; (2) the type of work performed; and (3) the category of attorney who performed the work.” An explicit hour-by-hour analysis of each lawyer’s time sheets is unnecessary as long as the award is made with a consideration of the relevant factors and reasons sufficient for review are given for the amount of the awarded.” The awarding court should take into account the hours spent on unsuccessful claims, duplicated effort, or otherwise unproductive time.

Citing McGreevy as well as the 1983 State Supreme Court decision in Bowers v. Transamerica Title, the Hays decision adds:

As the second step in the lodestar method, the court determines if the hourly fee charged was reasonable. The court computes the reasonable hourly rate for each attorney. The attorney’s usual fee is not conclusively reasonable but may require an adjustment. The court may also consider “the level of skill required by the litigation, time limitations imposed on the litigation, the amount of the potential recovery, the attorney’s reputation, and the undesirability of the case.” As a third step, the court multiplies those two numbers to produce the lodestar fee.

Finally, the court may adjust the lodestar amount up or down to reflect factors not already considered. The party proposing a deviation from the lodestar amount bears the burden of justifying it.

The Court of Appeals concluded that the trial court had properly applied the lodestar method in calculating the amount of the judgment, and was not obligated to “make a written finding stating its rationale for approving each specific item in the fee petition.” Rather, the trial court’s conclusions that “the billing statements were sufficient” and “do not reflect any significant redundancy, waste or unnecessary services” were sufficient to demonstrate that there was no abuse of discretion by the trial judge.

The court also found no fault with the trial court’s decision allowing the guardian to allocate the fees and costs between the father and his various trusts and business entities; although these entities were not officially parties to the case, they benefited from the appointment of a guardian.

The daughter was also awarded the fees and costs she incurred in the appeal, on the grounds that she was the prevailing party; she filed the petition in good faith, not for financial gain; and the guardianship benefitted her father.

Some aspects of the case may be atypical, such as the size of the judgment (which is no doubt at least partially attributable to the fact that, according to the Court of Appeals, the father “vigorously challenged” his daughter at each stage of the proceedings.) However, it should be noted that both the trial and appellate courts used their discretionary authority under RCW 11.96A.150 to ensure that the daughter did not suffer any financial loss for acting as a Good Samaritan to protect her father.

If you have any questions or would like to schedule an appointment, please call us at (425) 455-5513, toll free at (877) 455-5513, or info@palmerlegal.com.