Contents. 1 Ethics Issues Arising in Fee Agreements 1 Sylvia E. Stevens. 2 Billing Costs 9 Thomas A. Balmer Sara L. Tait

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1 Contents 1 Ethics Issues Arising in Fee Agreements 1 Sylvia E. Stevens 2 Billing Costs 9 Thomas A. Balmer Sara L. Tait 3 The Truth in Lending Act and Attorney Fee Retainers 27 Richard A. Slottee 4 OSB Fee Arbitration Program 49 Sylvia E. Stevens 5 Drafting Tips for Fee Agreements 55 Barbara S. Fishleder 6 Retained or Not Retained You May Need to Prove It 59 Barbara S. Fishleder 7 IOLTA in Relation to Fee Agreements 83 John Paul Graff 8 Contingent Fee Agreement 87 Daniel F. Kellington 9 Hourly Fee Agreement 93 John E. Pollino 10 Limited Representation Fee Agreement 99 Russell Lipetzky 11 Fixed-Fee Agreement 105 Bradley F. Tellam 12 Referral Agreement Between Lawyers 111 Michael A. Greene viii

2 CONTENTS (CONTINUED) 13 Domestic Relations Fee Agreement 119 Paul J. DeBast 14 Independent Adoption Fee Agreement 137 Sandra L. Hodgson 15 Probate Fee Agreement 147 Penny Serrurier 16 Criminal Law Fee Agreement 157 Paul Ferder 17 Incorporation Fee Agreement 165 Roland A. Johnson 18 Workers Compensation Fee Agreement 171 David W. Hittle 19 Social Security Fee Agreement 177 David W. Hittle 20 Third-Party Personal Injury Fee Agreement 181 David W. Hittle 21 Bankruptcy Fee Agreement 185 Kent V. Snyder ix

3 CHAPTER 15 Probate Fee Agreement Penny Serrurier* Lawyers should be aware that, in formal probate, receipt of attorney fees without court approval is considered the collection of an illegal fee and is unethical under DR 2-106(A). In re Altstatt, 321 Or 324, 333, 897 P2d 1164 (1995). A personal representative may petition the court, however, for an order allowing a partial payment of attorney fees before the estate is settled. OSB Legal Ethics Op No The personal representative is allowed reasonable attorney fees in the settlement of his or her final account. ORS The probate court must review and approve all attorney fees incurred in a probate matter. Court approval is based on the following factors: customary fees in the community for similar services; time spent by counsel; counsel s experience in such matters; skill displayed by counsel; excellence of the result obtained; the terms of any fee agreement between the personal representative and his or her counsel; responsibility assumed by counsel considering the total value of the estate; and other relevant factors. See ORS (1). Penny Serrurier, B.A. (cum laude), Middlebury College (1986); J.D. (cum laude), Cornell University (1991); member of the Oregon State Bar since 1991; partner, Stoel Rives LLP, Portland. *The author gratefully acknowledges Donald K. Denman, who wrote the prior edition of this chapter. 147

4 CHAPTER 15 / PROBATE FEE AGREEMENT Thus, an agreement between the lawyer and the personal representative is not conclusive regarding the fee that the lawyer may charge in the probate of the estate. Moreover, attorney fees requested under ORS must be supported by an affidavit detailing the services performed and why the amount requested is appropriate, taking into consideration all the factors set forth in ORS UTCR 9.090(2). A fee collected in a probate matter cannot be excessive. DR 2-106(B); In re Stauffer, 327 Or 44, 64 65, 956 P2d 967 (1998) (lawyer billed estate $101,967; initial value of estate was $132,000). Excessive fees should not be a problem in a formal probate when the fee is approved by the probate court. For a small estate, however, when payment of the fee is not subject to court approval, the amount of the fee should be carefully established to avoid a challenge that it is excessive and unethical. See, e.g., OSB Legal Ethics Op No The sample engagement letters included in this chapter explain the work that the lawyer expects to do in performing his or her services in probating the estate and set forth the hourly rates charged. There are two sample forms for a probate estate (the first in letter form and the second in memo form to be signed and returned by the client). There is also a sample fee agreement for matters involving a smallestate affidavit. PRACTICE TIP: When the work performed is well documented and the client understands the billing, court approval of attorney fees at the conclusion of a probate is usually a speedy and uncomplicated matter. 148

5 PROBATE FEE AGREEMENT / CHAPTER 15 ENGAGEMENT LETTER PROBATE [Date] [address] Re: Estate of, Deceased Dear : Thank you [again] for selecting us to represent you in your capacity as personal representative for [your s estate/the estate of ]. This letter summarizes your duties as personal representative and explains the basis on which we have agreed to represent you. [Insert description of probate process and duties of personal representative] Personal Representative s Fee Oregon law provides a statutory fee for your services as a personal representative. This fee is computed on the value of the property of the estate subject to the jurisdiction of the court, including income and realized gains. The amount of the fee is $1,630 on the first $50,000 of value, plus 2% of the value that exceeds $50,000. There is an additional 1% fee for assets not included in the probate estate but reportable for federal estate tax purposes, excluding the proceeds of life insurance policies. [OPTION: The amount of the fee is taxable income to you and is deductible by the estate for either income tax or estate tax purposes. Because you will be receiving distribution of a substantial portion of the estate, we should discuss whether it would be better from a tax standpoint for you to waive the fee.] Attorney Fees and Expenses There is no statutory fee for lawyers. Under Oregon law, the fee for our services is based on the reasonable value of the work we perform for you. The fee must be approved by the court before you are authorized to pay it. In determining a reasonable fee, the court is guided by the statute that provides, among other things, that the fee 149

6 CHAPTER 15 / PROBATE FEE AGREEMENT must be comparable to fees customarily charged for similar services rendered in the community and must take into account the amount of time required in rendering these services, our experience in dealing with the kinds of issues that may arise, and any agreement regarding fees that we may have with you. Additional factors may include the amount of responsibility that we assume, considering the total value of the estate and any other relevant factors. We have agreed that we will bill you for our services on an hourly basis. My current guideline hourly rate is $, and my current specialist hourly rate is $. The current guideline hourly rate for the paralegal who will be working with me on the estate is $, and [his/her] specialist hourly rate is $. These rates are reviewed and may be adjusted at least once a year. We will bill the estate for our legal services after the Final Account has been filed and the court has approved the requested fee. 150