1975, December, Pg. 2457. Attorneys' Fees Under the Colorado Probate Code.

4 Colo.Law. 2457

Colorado Lawyer

1975.

1975, December, Pg. 2457.

Attorneys' Fees Under the Colorado Probate Code

2457Vol. 4, No. 12, Pg. 2457Attorneys' Fees Under the Colorado Probate CodeThis article deals with attorneys' fees and certain related matters under the Colorado Probate Code, which became effective on July 1, 1974. The article does not purport to be a compendium of a comprehensive study and analysis of what is being charged by probate attorneys on a statewide basis. Rather, it attempts to describe the methods and philosophy used and applied by a representative group of lawyers in computing their fees in estates of decedents. Certain attitudes and rules of the judiciary on these matters are the subject of limited comment.

Minimum fee schedules, formerly adopted by local bar associations, were considered advisory in nature and as guides to assist the attorney in evaluating his services in order to arrive at a reasonable fee. Such schedules have apparently fallen by the wayside because of Goldfarb v. Virginia State Bar(fn1) with its antitrust impact.

Before the CPC became effective on July 1, 1974, attorneys' fees were subject to the approval of and rested upon the judgment of the court supervising the estate, and the amount and allowance thereof, based largely upon minimum fee schedules, depended primarily upon the size and other facts and circumstances of the particular estate. This has been changed by the CPC, which provides for judicial review only in cases of supervised administration or upon petition by an interested party.

The Personal Representative

The CPC grants a personal representative, acting reasonably for the benefit of interested persons, administrative powers which may be exercised without court order except as restricted by provisions in the will or by an order in a formal proceeding.(fn2) These administrative powers, which include the right to employ attorneys, are those enumerated in the Colorado Fiduciaries' Powers Act, which also recites a standard of reasonableness.(fn3) The only requirement imposed by the CPC with respect to attorneys' fees is that they be reasonable.

The authorization contained in the CPC for the personal representative to fix not only his own compensation but the fees of the attorney for the estate is an important and marked departure from the practice previously followed in Colorado, by which the court determined fees upon petition which almost invariably requested a stated fee. In order to provide safeguards and protection for interested persons of the estate

2458as a result of this liberalized legislative policy, there is a provision in the CPC for the judicial review of the propriety of employment of any person by a personal representative, including any attorney, the reasonableness of the compensation of any person so employed, and the reasonableness of the compensation determined by the personal representative for his own services. This review is after notice to all interested persons either on the petition of an interested person or on appropriate motion if the administration of the estate is supervised. The CPC further provides that the court may order that refunds be made by the persons who received excessive compensation from an estate for services rendered.(fn4)

Another attorney interviewed stated that, after ascertaining the number of hours spent and applying the appropriate hourly rates, he then decides what other factors are involved (these being the standards of DR 2-106 and the identical guides found in the CPC) and should be considered in arriving at a fee. Once the amount of the fee has been fixed in this manner, he compares it with the amount of the fee as though it had been computed on the basis of the old Denver Bar Association Advisory Fee Schedule, as well as on the basis of the more recent Denver Bar Association Relative Value of Legal Services Schedule. These schedules are used only as a guide, and the attorney interviewed emphasized that such a comparison never results in an adjustment of the fee to conform to the fee produced by such schedules. These comparisons, he noted, indicate that almost invariably the fee arrived at by using an objective time factor, coupled with subjective factors such as responsibility, is less than the fee that would result from an application of the percentage fee schedule. He also observed that in most cases the application of the unit value schedule results in a higher and what might be considered an excessive fee, a fact attributable in large part to the increased hourly rates now being charged by attorneys. This same conclusion relating to an excessive fee had been reached by other lawyers interviewed.

The North Dakota statutes,(fn5) like Colorado's, provide for refunds of excessive compensation paid to personal representatives and anyone employed by them, including attorneys. It has been urged by a practicing attorney in that state that, instead of merely allowing a refund of excessive compensation, a penalty should be imposed which, for example, would require the recipient of such excessive compensation to repay two or three times the amount of the excess,(fn6) and that the attorneys' fees of the interested person who raises the question of excessive compensation, whether it be for the personal...