February 23, 2011
Challenging the Reasonableness of your Opponent’s Attorney’s Fees May Place the Amount of Your Own Fees in Question
Challenging the Reasonableness of your Opponent’s Attorney’s Fees
May Place the Amount of Your Own Fees in Question
In contentious probate proceedings, the reasonableness of a fiduciary’s attorney’s fees in litigation are often challenged. In fact, the Second District Court of Appeal has held that a trustee’s excessive expenditure of attorney’s fees may warrant the suspension of the trustee’s powers. Schwartz v. Labow (2008) 164 Cal.App.4th 417, 427-430, 78 Cal.Rptr.3d 838 [trustee suspended for spending approximately $1.3 million in attorney’s fees to obtain a $700,000 judgment]. What may guide a fiduciary in spending attorney’s fees in litigation?
On February 24, 2010, the Fourth District Court of Appeal provided some guidance as to reasonableness of a fiduciary’s attorney’s fees in a published decision – Donahue v. Donahue (2010) 182 Cal.App.4th 259, 105 Cal.Rptr.3d 723. In Donahue, the Court said, among other things, “A comparative analysis of each side’s respective litigation costs may be a useful check on the reasonableness of any fee request.” Donahue, supra, at 272 (Emphasis added). The Court recognized that often times one side’s attorney’s fees are high because it is defending against scorched-earth litigation. Beneficiaries challenging a fiduciary’s attorney’s fees as unreasonable or too high may have directly caused exorbitant fees. Attorney’s fees incurred by the opponent may reveal just how reasonable or unreasonable the fiduciary’s fees truly are. Therefore, when a fiduciary’s attorney’s fees are questioned, the fiduciary should demand that the other side divulge the amount of its attorney’s fees for comparative purposes. See id.
But what happens if the other side refuses to divulge the amount of its attorney’s fees on the basis of privilege? The Second District Court of Appeal provided an answer in Steiny v. California Electric Supply Company (2000) 79 Cal.App.4th 285, 93 Cal.Rptr.2d 920. In Steiny, the Court held that when a party invokes privilege to withhold crucial evidence, the party must give up the privilege in order to maintain its claim. Id at 292. Accordingly, if a party questions a fiduciary’s attorney’s fees in litigation but refuses to divulge the amount of its own fees for a Donahue comparison based on an assertion of privilege, the party should be precluded from questioning the reasonableness of the fiduciary’s attorney’s fees. See id.
The Take Away: The reasonableness of a fiduciary’s attorney’s fees in litigation is best determined by performing a comparative analysis with the amount of the other side’s fees. Donahue, supra. Be careful because demanding your opponent’s attorney’s fees may backfire – a comparison can prove your fiduciary’s fees are unreasonable. But where your fiduciary is up against an overly litigious opponent, demand to see your opponent’s fees. A comparison may show your client’s fees are perfectly within the “norm” of this case. Where your opponent refuses to divulge its own attorney’s fees, seek an order precluding your opponent from questioning the fiduciary’s attorney’s fees. See Steiny, supra.