When it comes to watching out for incapacitated adults, California courts fall short of what other states do to protect their vulnerable residents’ life savings.
The Golden State is among the most permissive in allowing attorneys to tap into the estates of elderly and disabled adults who already feel they are being overcharged for court-appointed help, according to some legal experts and a review of higher court rulings.
Now, state lawmakers and a task force launched by Santa Clara County’s top judges are considering ways to change that after the newspaper published “Loss of Trust,” an investigation that exposed the Catch-22 faced by a disabled San Jose man and others like him. A judge here ruled last month that under California law he had no choice but to require that Danny Reed’s trust pay almost $150,000 to a Los Gatos attorney who fought Reed’s claim that a $108,000 bill for 4½ months work from his court-appointed trustee was excessive.
That likely wouldn’t happen in many other states, such as Washington, Idaho, Kansas, New York, Missouri, Connecticut and Indiana, the newspaper found.
In California probate disputes, “it appears to be the general rule that attorneys are entitled to recover fees from litigating fees,” said University of Missouri professor David English, who chairs the American Bar Association’s Commission on Law and Aging. “The starting point in these other states is: The answer is no, unless you can find a category where it will fit.”
In a dispute over executor fees in Washington state, for example, the Supreme Court denied attorneys fees, noting that such work “served only their interests and in no way worked to benefit the estate.” The justices said awarding such fees “violates public policy by penalizing victimized parties from legitimately challenging attorney fee requests.”
And in a Colorado case strikingly similar to Reed’s, an appeals court overturned a lower court’s award of more than $200,000 to a trustee’s legal team that was fighting to defend $65,000 in charges.
Reed, 37, and Matthew Keenan, 47 of Colorado Springs, shared similarly tragic stories: Both men suffered debilitating injuries and emerged from comas with brain damage. Both won personal injury settlements to ensure their future care. And both recovered enough to fight for control of their money from court-appointed trustees.
Keenan’s effort to get a new wheelchair from his trustee, Colorado State Bank and Trust, led to a bitter dispute and a $65,000 charge that later tripled in size when he battled the original fee. When the trial court reheard the case, it cut the attorney fees in half.
“It just didn’t make any sense having to pay them to fight me,” Keenan said. “It’s like paying al-Qaida to shoot me or to try and steal things from me.”
Julie Reiskin, executive director of the advocacy group Colorado Cross-Disability Coalition, said both Keenan and Reed faced a “ludicrous” predicament.
“These people are put in place to protect the people and not to exploit them and their resources,” she said of the men’s court-appointed estate managers. “You don’t use someone’s money to fight them.”
California law has allowed Reed’s former trustee, Thomas Thorpe, and Thorpe’s attorney Michael Desmarais to do just that, with a Santa Clara County judge declaring it acceptable under a 1989 state Supreme Court ruling.
Yet in a rare concession, Judge Franklin Bondonno implored a higher authority to revisit his July 27 ruling, stating: “This court hopes that its present decision will be appealed,” or be taken up by the Legislature to “develop a new and more workable rule for fees-on-fees cases.”
On Tuesday, Reed’s lawyers took that advice and filed an appeal notice. The pro bono legal team now includes attorney Bruce Ross, of the global law firm Holland & Knight, a firm that includes the largest group of trust and estate lawyers in the country. Ross — the attorney for Hollywood legend Mickey Rooney in his battle with a relative he claims plundered his estate — has launched a nationwide project fighting financial abuse of the elderly and disabled.
Reed’s case has also inspired new local court rules expected to take effect in January, as well as two state lawmakers now pursuing ways to correct the burden of “fees-on-fees” through the Legislature and court administrator’s office.
Yet some legal experts say estate and care managers must be able to defend themselves at the expense of the estate they are administering. Their work is by nature controversial — including selling off people’s homes and sorting out the claims of warring relatives.
Without legal support when challenges arise, few will be willing to do the job, argues Florida and New York attorney Howard Krooks, president-elect of the National Association of Elder Law Attorneys.
“At the drop of a hat if you say something someone didn’t like and someone says I’m going to make an objection then I’m going to have to spend countless hours going to multiple hearings,” Krooks said. In a dispute over fees “there’s an enormous amount of time spent in defending that the work you did was reasonable and that the fees were reasonable.”
Attorney Spencer Crona, who represented the Colorado trustee in Keenan’s case, emphasized that — as in Reed’s case — no professional misconduct was proved, so the trustee’s legal fees were justified. “It’s a hard reality but if you think about it, a fair one under the law,” he said.
In Reed’s case, however, the court cut back on the original charges, throwing out more than half of the original bill.
Crona acknowledges financial abuse of vulnerable adults is “an appalling social problem.” But he said public policy should not steer professional managers away due to the legal risks, especially given the aging population. “The question is, how do we facilitate that and yet assure that there are sufficient protections against exploitation?”
California more permissible than many states on allowing attorneys to tap into elders’ estates
Karen de Sá
August 18, 2012
Santa Cruz Sentinel