REDUCING ESTATE PLANNING LEGAL FEES AVOIDING HIGH LEGAL BILLS AND FEE DISPUTES by Layne T. Rushforth

Transcription

1 AVOIDING HIGH LEGAL BILLS AND FEE DISPUTES by Layne T. Rushforth 1. OVERVIEW 1.1 Overview: The Rushforth Firm, Ltd. ( the Firm or we ) bills for legal services in three different ways: (1) by the hour ; (2) a base document charge ; and (3) a base fee. These are explained in our Fee Policies Memo 1, which is mandatory reading for our clients. All work is billed by the hour unless we agree otherwise in writing. Any work requested beyond what is specifically included in a base document charge or base fee will be billed by the hour. Please ask questions about anything in the Fee Policies Memo that you do not understand. 1.2 Hourly Billing: Work that is billed by the hour always involves time that is beyond our control. Sometimes, the client can control much of the time involved, but, for court-related cases, especially disputed cases, the time required is often beyond the client s control as well. This memo focuses on things that you, as the client, can control. 2. CLIENT COMMUNICATION 2.1 Telephone Conference: Consider scheduling a telephone conference instead of coming to our office for a consultation. In practice, office consultations are often unnecessary and more time consuming than a telephone conference. We have a conference-call line and the ability to do video conferencing. 2.2 Out-of-Office Meetings: Use out-of-office meetings only when essential. Out-of-office meetings are expensive because they are always billed by the hour, starting from the time the attorney leaves the office until the attorney returns to the office. 2 Of course, this is in addition to the time to prepare for the meeting, the time to do a file memo after the meeting, and the time to do work that is triggered by the meeting. If an in-office consultation or a telephone conference will suffice, it will be more cost effective. 2.3 Limit Idle Chat: Avoid extended discussions about other things. We try to be friendly and conversational, but it is up to you to limit the discussion to your legal matter. 2.4 Consolidate Communication: We encourage you to consolidate your communication. By reducing the number of messages, phone conversations, and meetings, you can keep the bill lower. Even for work that is billed using a base fee, there is a limit to attorney consultation time. Once the limit has been reached, all additional time is billed by the hour. The attorney consultation time includes all types of communication. We encourage you to communicate with us using the method you find most convenient. Sometimes a quick is best, but in some situations a phone call is more effective than typing back and forth. 2.5 Provide Thorough Information; Avoid Giving Too Much: Provide completely any information we need, preferably in writing. Much of our time preparing documents is spent in getting needed information from the client. An interview with an attorney or paralegal to obtain information is much more time consuming than getting the same information through a completed questionnaire or in an message. When sending us documents, providing us only the pages that

2 Page 2 are pertinent to what we need will eliminate the need for us to charge you for our time to sort through and cull information from long documents. 3. CASE MANAGEMENT 3.1 Document Revisions: It is best to give us all your changes all at once, rather than asking for changes one at a time. If your engagement agreement with us states that a revision of legal documents is included in a base fee, it only includes the first revision. All other changes to documents will be billed by the hour. 3.2 Ripple Effect: Be aware that one change can trigger other changes. For example, a change of trustee in a revocable trust will trigger the need to update your will and the certification of trust. That will affect the fees we charge. 3.3 Additional Services: Limit additional services and changes. If you ask for additional services or if you change your mind about what we are doing for you, your legal fees will be higher. 4. ILLUSTRATIONS 4.1 Living Trust. Sarah and William have no estate plan, and they have children from prior relationships as well as a child together. They are interested in a living trust to avoid probate and guardianship proceedings in court. Sarah and William make an appointment for an initial estateplanning consultation. They are provided with a family questionnaire, asset checklist, and informational memos. They ultimately decide on a living trust that divides into a Trust A for the benefit of the surviving spouse and a Trust B for the benefit of the surviving spouse and the predeceased spouse s children. When the first spouse dies, the survivor has total control over Trust A and may receive distributions from Trust B if needed, but the survivor has no right to change the beneficiaries over Trust B. When both spouses are deceased, Trust A is distributed to the surviving spouse s family, and Trust B is distributed to the predeceased family s spouse, each having a separate distribution scheme. (a) Scenario One: Sarah and William do not read the memos or complete the questionnaire. When they come to the initial consultation, they have not decided or even discussed how they want to have their estate distributed or who should be appointed as the successor trustees of their trust, their guardians and health-care agent, or the guardians for their minor child. They do not prepare an asset list, and they require multiple consultations with the attorney and legal assistant to provide the information needed to prepare a trust. They change their minds several times and require multiple drafts. Their legal bill might include these charges: Initial consultation (1.0 hour)... Waived Base fee for A/B Trust with separate distribution schemes... $3,000 Consultation with legal assistant to discuss asset information (1.5 hours)... $225 Consultation with attorney to discuss possible distribution schemes (1.0 hours)... $450 Telephone consultation with attorney to discuss distribution schemes (0.4)... $180 Preparation of draft documents (included in base fee)... $0 Consultation with clients to discuss drafts (2.0 hours, included in base fee)... $0

3 Page 3 Preparation of revised documents (included in base fee)... $0 Consultation with clients regarding second draft (.8)... $360 Second revision of documents (1.5 hours)... $675 Meeting with clients to sign documents (included in base fee)... $0 Preparation of deed and certification for recording (included in base fee)... 0 Recording fees and runner charges... $45 TOTAL CHARGES... $4,935 (b) Scenario Two: Sarah and William read the memos and complete the questionnaire, including the names of the successor trustees, guardians and health-care agents, and the guardian of their minor child. When they come to the initial consultation, they also bring a typewritten memo about how they want their assets distributed after they are deceased. In this scenario, their legal bill would include only the $3,000 base fee and $45 for the recording fees and runner charges. (c) prepared. The same work product will cost less for the clients who are organized and 4.2 Trust Amendment. Jon and Jayne have a living trust and want to change their successor trustees. They also want to update their trust schedules to show all of their current assets. For the examples below, the attorney s billing rate is $350/hour, and the paralegal s billing rate is $150/hour. (i) following: Scenario One: The legal fees are $1,080 for this simple project, based on the (1) Jon and Jayne schedule and appointment with an attorney and spend an hour explaining all of their changes. ($350) (2) The paralegal spends an hour getting the details on the assets that are to be on the schedule. ($150). (3) The paralegal takes 90 minutes to prepare a first draft of an amendment, a new will for each spouse, a new certification of trust, and an updated trust schedule. ($225) ($105) (4) The attorney reviews and revises the documents in about 15 minutes. (5) Jon and Jayne review the documents, and minor corrections are made. (6) Jon and Jayne meet with the attorney to sign the documents in duplicate, which requires half an hour of attorney time ($175) and paralegal time ($75). One set of originals is retained in our office and one is taken by the clients for (b) Scenario Two: The legal fees are $400, based on the following:

4 Page 4 (1) Jon and Jayne send an message explaining all of their changes and providing their asset information to update trust schedules. The attorney reviews this in five minutes and gives instructions to the paralegal. ($70) (2) The paralegal takes 90 minutes to prepare a first draft of an amendment, a new will for each spouse, a new certification of trust, and an updated trust schedule. ($225) ($105) (3) The attorney reviews and revises the documents in about 15 minutes. (4) Jon and Jayne review the documents, and minor corrections are made. (5) Jon and Jayne sign the documents in duplicate on their own and have them notarized. One set of originals is sent back to our office and one is retained for (c) Scenario Three: The legal fees are $290, based on the following: (1) Jon and Jayne send an message explaining the change of trustees. The attorney reviews this in five minutes and gives instructions to the paralegal. ($70) (2) The paralegal takes 60 minutes to prepare a first draft of an amendment, a new will for each spouse, and a new certification of trust. ($150.) (3) The clients use a blank supplemental trust schedule form to update their asset list themselves. (4) The attorney reviews and revises the trust amendment and certification in about 10 minutes. ($70) (5) Jon and Jayne review the documents, and minor corrections are made. (6) Jon and Jayne sign the documents in duplicate on their own and have them notarized. One set of originals is sent back to our office and one is retained for (d) For the same result, the fees can range from $290 to $1,080. Avoiding the office consultations can save over $600, and preparing your own trust schedules can save even more. (e) Cautionary Note: Even though you want your fees to be reasonable, it is possible to be penny wise and pound foolish. Frequently, efforts to reduce fees can ultimately create more problems or may result in existing problems going undetected.

5 Page 5 5. CONCLUSION (1) Example 1: A client created documents in another state, but chose not to hire a Nevada attorney to review them. The family finds out that they were poorly drafted for use in Nevada only after a death has occurred. (There is a difference between a document that is legal in Nevada and a document that is effective in Nevada.) (2) Example 2: A client prepares a trust amendment to omit a child as a trustee and to reduce that child s share because of the child s inability to manage money. The client neglects to update the will, and the child is left as executor and is in charge of the assets that are inadvertently left out of the trust. (3) Example 3: A client without children who is estranged from his siblings purchases software to prepare a living trust that provides for all of his assets to go to two charities. He does not do anything to name the trust as the owner or beneficiary of his assets, and he does not prepare a pour-over will that leaves his probate estate to his trust. When he dies, the trust is without assets and has no legal value, and his asset pass by intestate succession to his siblings. If you want to keep fees to a minimum, you can help by being through at providing needed information and by controlling the time that we need to spend to accomplish your objectives. On the other hand, some efforts to reduce costs can result in unintended and undesirable consequences. NOTES: 1. The Rushforth Firm, Ltd. PO Box Las Vegas, NV Receptionist: or Fax: or 855.RUSH-FAX office@rushforth.net The Fee Policies Memo explains special rules that apply to out-of-town meetings. [END: Version of October 14, 2014]