Views from a Former Member of a Grievance Committee: Hot Buttons for the Estate Planning, Probate, and Trust Attorney
I have had the great opportunity to serve on three grievance committees for a total of nine years. I would like to say my participation on the committee has been purely altruistic, but experience has taught me I am not often “purely altruistic.” When I opened my own practice in 1990, I realized that I needed to understand how The Florida Bar ethics rules1 affected my practice. I have had the good fortune to interact with attorneys in many different areas of practice and public members2 from all walks of life. I have had the opportunity to review situations where I think to myself in indignation, “I can’t believe he or she did that,” and those that made me think, “I have to go back and check my files to be sure I did not do that,” and everything in between. I have had the privilege to act as a chair of a committee and to preside over evidentiary hearings.
This article is written to share my thoughts and experiences as to certain hot buttons applicable to estate planning, probate, and trust attorneys and to make suggestions on how to avoid having a complaint filed against you. Although certain committee proceedings are public record, I have omitted names and exact circumstances because of confidentiality of the proceedings.3 The following are the opinions of the author, and do not represent the opinion of The Florida Bar, The Florida Bar Journal, or of the committee.
In my experience, clients do not generally file complaints in the drafting of the estate planning documents; instead, most complaints generally arise after the death of the client. Nevertheless, complaints in the estate planning area primarily involve communication,4 competence,5 fees,6 and conflict of interest.7
— Communication. Committee members (remember, at least one-third of the members are nonlawyers) are generally amazed when attorneys do not return phone calls. This complaint is easily avoided by having in place an office policy that every phone call must be returned within 24 hours. Documentation of your return phone calls also provides committee members with objective evidence that you or your staff actually called the complainant, particularly if the complainant states he or she has not heard from you in weeks or months. Clients can get angry at the attorney because they do not get the response they want, and may retaliate by filing a complaint alleging that you have not returned their calls when they are calling you 10 times a day. Documentation refutes those false complaints. If you are unavailable to return calls, train your assistant to return them. Some clients prefer e-mails to phone calls. When you respond to a client via e-mail, print and file the e-mail, or save it to a file on the computer. Some software programs, such as Amicus, automatically assign e-mails and telephone calls to the appropriate file. Some practitioners avoid the use of e-mails because e-mails are discoverable, and language in an e-mail is sometimes not as carefully thought out as in written correspondence.
— Competence. Clients complain when an attorney has advised the client that he or she can provide certain estate planning techniques that the attorney is not qualified to handle. Instead of turning down a potential client and referring him or her to a qualified attorney, the attorney signs a fee agreement with the client. The comment to the applicable rule8 provides that an attorney can perform legal work for which the attorney does not have experience, but the attorney must research and become qualified to handle such a matter. If the attorney realizes that he or she cannot adequately handle a matter that was unwisely taken on, he or she may react by avoiding the client (see Communication, above) because the client’s initial payment has already been spent (which is another issue). Unfortunately, the attorney’s inexperience or incompetence is often not discovered until after the death of the client. If an attorney determines that the attorney lacks the expertise or experience to handle a matter, the attorney should either advise the client and refund the client’s advance payment, or consult with a more experienced attorney and be willing to pay the experienced attorney for his or her time.
— Excessive Fees. Estate planners sometimes charge fixed fees for estate planning work, and the client may agree and willingly sign a fee agreement. A fee agreement by itself does not prevent a client from filing a grievance against an attorney for excessive fees. Committee members will review the fee agreement but if, for example, an attorney determines that a client needs a simple will and the attorney charges and collects an excessive fee, the committee members will not look favorably upon the fee agreement unless there is a valid explanation. The attorney’s assertion that “the client signed the fee agreement and therefore the fee is not excessive,” is not dispositive of the issue. If, however, the simple will is not “simple” and involves complex provisions, those factors will influence the outcome. Generally, committee members request time records even if a fixed fee agreement is signed. Committee members, especially non-attorney members, understand time records. Committee members will want to know how many hours the attorney spent on the matter. The attorney may have to defend the fee, and time records are the best defense.
— Conflict of Interest. Acomplaint alleging a conflict of interest in the estate planning context usually arises in the representation of multiple parties in connection with a family limited partnership or a limited liability company. When representing multiple family members, the attorney must have all clients sign conflict letters, and the attorney must advise the clients of the potential conflicts.
An attorney can represent a client when there is a conflict of interest if the lawyer believes that he or she can competently and diligently represent the client. The representation is not prohibited by law if each affected client gives informed consent, confirmed in writing or on the record at a hearing.9 The Florida Supreme Court amended the conflict rules in 200610 and added, among other definitions, a definition of “informed consent” to mean “the agreement by a person to a proposed course of conduct after the lawyer has communicated adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of conduct.”11
Conflict of interest issues can also arise while advising clients in the drafting of durable powers of attorney and durable health care powers of attorney. When a client names the lawyer drafting the document as attorney-in-fact or agent, such documents are usually closely scrutinized by the committee. The fastest way to antagonize children and siblings is to draft such powers of attorney taking the children and siblings out as attorneys-in-fact and adding yourself in the document as attorney-in-fact. The best course of action is never to name yourself as attorney-in-fact unless there is no other way to help your client, and you have documented the reason for the appointment in the file and have obtained written consent to your appointment from the client after full disclosure.
— Determining Competence of the Client. While a lawyer is not a doctor, certain indicators of undue influence (i.e., Carpenter v. Carpenter, 253 So. 2d 697 (Fla. 1971)) may be apparent. This complaint can arise when the attorney drafts estate planning documents, perhaps omitting a natural beneficiary and replacing the natural beneficiary with someone else. In my experience the complaint arises because it is alleged that the attorney “should have known” that the client was not able to understand and change his or her documents because of diagnosed Alzheimer’s or some other form of dementia. If the attorney can document any doubtful cases and, more importantly, be cognizant of the facts at the time of the drafting, such documentation may enable the drafter to resist the complaint. On your initial questionnaire, you may ask about any recent medical diagnoses, and at the conference with the client make notes regarding the client’s appearance and demeanor.
Some attorneys videotape the signing of estate planning documents to evidence the competency of the client. If an attorney videotapes, open-ended questions should be asked. When committee members hear only yes or no answers, a suspicion can arise that the client is being instructed off camera as to what to say. A videotape can work against you if it is not done properly. I viewed a video in which the testator obviously looked coached, and answered only yes or no to questions for about a half hour. The committee members were not convinced that this testator was competent, and the committee found probable cause for the complaint because the client had been diagnosed with Alzheimer’s at the time the disputed will was prepared.
Probate and Trust Administration
In my experience, most complaints arise in probate and trust administration proceedings because beneficiaries are frustrated with how much they receive from the estate (less than they thought) and by when they get it (later than they thought). Thus, it is important to carefully document your clients’ wishes. The dynamics in a family go much further than money, and many times surviving children have deep-seated resentments that have been dormant while the parents are alive but become very much alive after the parents are gone.
— Diligence. This complaint is frequently lodged against probate attorneys. Some probate attorneys delay in administrating the estate and clients are not well informed of the status of the administration. Accordingly, every attorney who practices in this area should have a “tickler” system to remind the attorney to advise the client of the status of the probate. Document these reminders. Many attorneys who do not normally practice probate may probate a will for a relative or friend because it is “only a form.” Unfortunately, these attorneys find out too late that these forms are just the tip of the iceberg, and the applicable statutes and rules are as complicated as other areas of the law. Children and heirs will file a complaint even if you are a “nice person.” Further, while paralegals often prepare many, if not all, the probate pleadings (under the supervision of the attorney), an attorney’s phone call to a client will work wonders in deferring a complaint in this area. Keep the client informed. Even if you are delayed, let your client know so the client is not calling you first.
During my most recent service on the committee, several matters involved a misunderstanding of homestead by nonprobate attorneys. Florida homestead has been called a “legal chameleon,”12 and a recent court referred to homestead as “the leading cause of cerebral herniation” for probate lawyers and judges.13 Any time homestead is part of an estate or trust administration, a red alert should sound in your head and particular attention should be paid as to whether the homestead can be validly devised and, if so, to whom. Again, document your discussions with your clients.
In one situation, the personal representative sold the homestead, made specific bequests from the proceeds of the sale of the homestead and then distributed the balance of the proceeds to a relative who was an heir pursuant to the intestacy statute. The attorney never advised the personal representative that the homestead vested immediately in the beneficiary-heir, and that the specific bequests did not have to be satisfied. Recent case law14 has brought certainty to this area, but when the law is ambiguous, an attorney must advise a client of the risks of any action undertaken in the face of such ambiguity. In this case, no claims were filed by creditors, and the residuary beneficiary consented to the payments to the specific devisees (although not informed of the immediate vesting of the homestead), so there was no harm. The committee, however, recommended that the attorney, at the attorney’s own expense, take continuing education classes regarding homestead. The original complaint was forwarded to the committee as a diligence complaint, but led to a competence inquiry. Once the committee has a complaint and starts the investigation, if the investigating member (or any other committee member) finds another violation of the ethics rule, that violation can be added to the original violation.
Another homestead issue created problems for the drafting attorney after the death of the decedent. Boyfriend (who had a child from a past relationship) and girlfriend were represented by the same attorney. Attorney drafted a revocable trust for boyfriend, and boyfriend transferred his homestead into such trust. The trust provided that the homestead would be distributed to his girlfriend at a certain age. Boyfriend and girlfriend later married and returned to the same attorney to inquire whether anything needed to be changed or amended in light of their marriage. Attorney said no. When husband died, the probate attorney discovered that the homestead distribution in trust was invalid. Pursuant to Florida law,15 the surviving spouse (the former girlfriend) received a life estate in the homestead with the remainder to husband’s daughter, the stepdaughter of wife. Remember, even if the issue can be resolved (such as purchasing stepdaughter’s interest) the complainant can always file a complaint.
— Excessive Fees. Percentage fees for estate and initial post-mortem trust administration are presumed reasonable and allowable under Florida law.16 It is important to understand that even if the client and the beneficiaries sign such a percentage fee agreement, it does not mean the client and the beneficiaries cannot complain. For example, assume you represent a personal representative of an estate worth a million dollars. The statutory rate allowed is $30,000 and you spend 20 hours on the matter and your paralegal spends 50 hours on the matter. The client complains because the estate consisted of a homestead and one stock account. Client talks to another attorney who said that it should cost at the most $10,000 – $15,000. The client then files a complaint. Even though the statute permits the statutory percentage as a presumptively reasonable amount, you should have time records to show the committee. The attorney must remember that committee members are not always probate attorneys and even though the statute provides a statutory rate, the fee must be reasonable under the rules.17 The fee agreement signed by the client and the beneficiaries will weigh in the attorney’s favor; however, you must have good records to substantiate your work to be able to resist an excessive fee argument.
In one complaint, an attorney completed a summary administration and the fees were calculated on the total amount of the probate estate including homestead. Of course, an attorney can be compensated for work on homestead issues,18 but protected homestead is not an asset of the probate estate.19 The provisions for fees for homestead should be clearly documented and agreed to in advance by those who bear the burden of the attorneys’ fees.
— Prepaid Legal Fees. A proposal to amend the Rules Regulating The Florida Bar regarding fees and costs (Rule 4-1.5) has been approved by the Board of Governors and is pending approval by the Supreme Court of Florida. There has been much confusion between the term “advance fees,” “flat fees,” and “retainers.” The comments to the proposed amendment to the rule state that an advanced fee is a sum of money paid to the lawyer against which the lawyer bills the client as legal services are provided. An advance fee is the client’s property and must be placed in the lawyer’s trust account. A flat fee is a sum of money paid to a lawyer for all legal services to be provided in the representation, such a fee is the property of the lawyer and the funds should be placed in the lawyer’s account and not in a trust account. A retainer is a sum of money paid to a lawyer to guarantee the lawyer’s future availability and is neither a payment for past legal services nor for future services. A retainer is property of the lawyer, and the funds should be placed in the lawyer’s account and not in a trust account. This amendment also clarifies that the test of reasonableness applies to all fees, and that a nonrefundable fee must be clarified in writing, together with the intent of the parties as to the nature and amount of the nonrefundable fee. This amendment is not in effect as of the time of the writing of this article.
— Responsibilities of Supervisory Attorney. To handle probate cases that an attorney may not otherwise be able to handle, an attorney may engage an outside attorney to help prepare the probate pleadings. In a recent case, the attorney for a proposed personal representative of the estate of the deceased brought a personal injury action and a personal representative had to be appointed for the estate. Instead of referring the matter, the personal injury attorney hired an attorney who had worked periodically with other probate attorneys. While the client believed that the personal injury attorney was handling everything, the “outside” attorney was handling the probate, ostensibly under the supervision of the primary attorney. In a hearing related to the personal injury case, the primary attorney opined to the judge that the personal representative had been appointed. Unfortunately, because of lack of communication between the primary attorney and the hired attorney, the primary attorney did not know that letters of administration had not been issued to the personal representative. Opposing counsel filed a grievance that the primary attorney had misled the court and, therefore, violated the rule against candor toward a tribunal.20 While the issue was legally resolved, the committee member investigated the relationship between the primary attorney and the subordinate attorney, and found that the ethics rule applying to supervising attorneys had been violated.21
Trust Account Violations
Without a doubt, these complaints are usually the most egregious of the complaints filed with the committee. Committee members do not tolerate stealing from trust accounts, no matter how the attorney attempts to define his or her conduct. It is critical to remember that any money placed in a trust account on behalf of a client belongs to the client, and writing a check for the attorney’s personal expenses or for another client is stealing from that client. A refusal to account for and deliver trust fund money upon demand is deemed a conversion.22 The Florida Supreme Court generally imposes the harshest discipline for conversion and theft of trust funds.
Cases have appeared before the committee in which attorneys use a client’s trust account as a personal checkbook. The reason given by one attorney was that he or she did not have time or did not want to open another account. When a trust account check bounces, bankers automatically notify The Florida Bar. Sometimes recognition of trust account violations arise from the investigation of other complaints. For example, if a fee is excessive and the committee members look at the invoice and there is payment from a trust account, a committee member may want to see the trust account records. If an attorney does not have those records, an auditor from The Florida Bar may be notified to perform an audit of the trust accounts.
Every attorney must represent, with a mark on The Florida Bar dues statement, compliance with the trust accounting rules.23 If an attorney represents that the attorney’s trust account is maintained in compliance with the ethics rules and the trust records are not in compliance, then that representation is false and is a violation of the ethics rules.24 Committee members look very closely at trust account violations.
In my experience, attorneys who have trouble with trust accounts have overextended themselves financially and/or may have gambling, drug, or alcohol problems. These problems are mitigating factors if the attorney gets help with Florida Lawyers Assistance Program. The abuse problem does not excuse the violation, but may affect the outcome of the committee’s decision. Committee members are very open to attorneys who are getting help. Committee members want to prevent an attorney who has an abuse problem from practicing and harming the public, thus, obtaining help is looked upon favorably by the committee. Even so, restitution still must be made and the ethics violations still must be dealt with.
This article has been written to help attorneys identify certain ethical issues particular to the estate planning, probate, and trust practice. Owing to space limitations, I can only touch upon my most memorable experiences on the committee regarding the probate and estate planning practice. I hope these experiences will benefit attorneys practicing in these areas.
Most attorneys, especially those reading this article, are professional and have the utmost integrity. Unfortunately, a few attorneys give our profession a bad name. I strongly recommend that attorneys practicing in these areas volunteer to participate on a grievance committee. Participation helps The Florida Bar continue its excellence; the attorney learns the ethics rules and the application to real life situations; and participation on the committee helps you become a better attorney and counselor to your clients. If you are interested in volunteering to participate on a committee or if you know of potential public members, contact the chief branch discipline counsel in your nearest branch office or express your interest through the committee appointment process held from December 1 through January 15 each year. (For the branch discipline office nearest to your geographic location, go to www.floridabar.org.)
I also suggest that attorneys practicing in these areas become active in The Florida Bar Real Property, Probate and Trust Law Section (www.rpptl.org). In committee meetings and general sessions, you will interact with top attorneys across the state, learn about and draft proposed legislation, find a great network of friends, and obtain advice about practice issues. Substantive committees in the RPPTL section are included on the Web site, and committee chairs are always looking for active members.
1 Rules of Professional Conduct.
2 Rules Regulating The Florida Bar 3-3.4(c) provides that at least one third are nonlawyers.
3 Rules Regulating The Florida Bar 3-7.1.
4 Rules Regulating The Florida Bar 4-1.4.
5 Rules Regulating The Florida Bar 4-1.1.
6 Rules Regulating The Florida Bar 4-1.5.
7 Rules Regulating The Florida Bar 4-1.7.
8 Comment, Rules Regulating The Florida Bar 4-1.1.
9 Rules Regulating The Florida Bar 4- 1.7(b)
10 See In re: Amendments to the Rules Regulating The Florida Bar, SC04-2246 (Fla. 6/29/2006) Fla. 2006.
11 Rules Regulating The Florida Bar 4-1.7(b)
12 See J. Maines & D. Maines, Our Legal Chameleon Revisited: Florida’s Homestead Exemption, 30 Fla. L. Rev.227, 276 (1978).
13 Cutler v. Cutler, 32 Fla. L. Weekly D583 (Fla. 3d Cir. Ct. Feb. 28, 2007).
14 McKean v. Warburton, 919 So. 2d 341 (Fla. 2005).
15 Fla. Stat. §732.401(2008); Fla. Const. art. X, §4(c).
16 Fla. Stat. §733.6171(2008).
17 Rules Regulating The Florida Bar 4-1.5
18 Fla. Stat. §733.6171(4)(i) (2008).
19 See Fla. Stat. §733.607 (2008).
20 Rules Regulating The Florida Bar 4-3.3.
21 Rules Regulating The Florida Bar 4-5.1 and 4-5.2.
22 Rules Regulating The Florida Bar 5-1.1(b).
23 Rules Regulating The Florida Bar 5-1.2(c) (5).
24 Rules Regulating The Florida Bar 4-8.4 (c).