Reasonableness of the Fee
July 23, 2019 § 1 Comment
Attorney Blackburn contracted with Burford in 2008 to provide legal services ” … in connection with his estate plan and the administration of his estate, including but not limited to preparation of estate planning documents, consultations, updates/revisions, and the formal administration of his estate upon his demise including assistance with Client’s revocable living trust.” The agreed fee was $265,000.
Six years after the contract was signed, Blackburn died. The following year Burford died.
Blackburn’s executor probated a claim against Burford’s estate for $265,000. Following a hearing, the chancellor ruled that the contract was one for personal services, and was therefore unenforceable due to Blackburn’s death. She allowed Blackburn’s estate to recover reasonable attorney’s fees based on quantum meruit. Blackburn’s estate appealed.
In Estate of Burford v Freeman, decided April 16, 2019, the COA affirmed. One issue raised by the appellant was that the legal services contract was invalid because the fee was unreasonable. The majority (by Judge McCarty) held that, because the contract ended with Blackburn’s death, it did not need to reach the issue.
Judge Jack Wilson wrote a concurring opinion that does address the reasonableness of the fee arrangement. Since it includes an enlightening analysis, I am providing part of it here:
¶31. Rule 1.5 of the Mississippi Rules of Professional Conduct clearly mandates that “[a] lawyer’s fee shall be reasonable.” M.R.P.C. 1.5(a). Section 34 of the Restatement (Third) of the Law Governing Lawyers (2000) likewise states that “[a] lawyer may not charge a fee larger than is reasonable under the circumstances.” This principle applies not only in disciplinary disputes but also in contract disputes between lawyers and clients. 1 Geoffrey C. Hazard et al., The Law of Lawyering § 9.06.1, at 9-18 (4th ed.) (“[I]n a variety of civil contests between lawyers and clients over fees, the client will prevail unless the lawyer’s fee is reasonable.”). Indeed, “courts are generally more likely to find a fee unreasonable in the sense that it is unenforceable against the client than they are to find the same fee so unreasonable as to warrant professional discipline.” Id. at 9-23. “[I]n fee disputes between lawyer and client, [an unreasonable] fee will not be approved . . . even though the parties had agreed to the fee.” Restatement, supra, § 34 cmt. a (emphasis added). In such cases, “[a] client-lawyer fee arrangement will be set aside when its provisions are unreasonable to the client.” Id. cmt. b (emphasis added); accord 1 Robert L. Rossi, Attorneys’ Fees § 1:18, at 1-56 (3d ed.) (“Courts may scrutinize fee agreements to determine the reasonableness of the fee, and have the inherent power to refuse to enforce contracts for excessive fees. Thus, the excessiveness of the fee may be asserted by the client as a contract defense in an action to recover an attorney’s fee.”). [Fn 4]
[Fn 4] “Although reasonableness is usually assessed as of the time the contract was entered into, later events might be relevant.” Restatement, supra, § 34 cmt. c. For instance, a large flat fee may be found unreasonable if it far exceeds the reasonable value of the services ultimately provided by the attorney. 1 Hazard et al., supra, § 9.06.2, at 9-24 to -25; Jeffrey Jackson & Donald Campbell, Professional Responsibility for Mississippi Lawyers § 22:7, at 22-9 (2010).
¶32. “Such a rule obviously encroaches upon the freedom of contract, but the limitation of reasonableness is a longstanding one.” 1 Hazard et al., supra, § 9.02, at 9-8. Moreover, the rule simply recognizes that “[l]awyers . . . owe their clients greater duties than are owed under the general law of contracts.” Restatement, supra, § 34 cmt. b; see also, e.g., In re A.H. Robins Co., 86 F.3d 364, 374 (4th Cir. 1996) (“An attorney has the burden of proof as to the reasonableness of his fee when he sues to recover from his client. This allocation of the burden of proof is premised on the relationship of trust owed by a lawyer to his client, with concomitant obligation to charge only a reasonable fee . . . . This approach is at the very heart of the special relationship between attorney and client.”) (quoting McKenzie Construction Inc. v. Maynard, 758 F.2d 97, 100 (3d Cir. 1985)). “Fee contracts between attorney and client are the subjects of special interest and concern to the courts, and are not to be enforced on the same basis as ordinary commercial contracts.” 1 Rossi, supra, § 1:13, at 1-42.
¶33. There are few reported Mississippi cases about contractual fee disputes between attorneys and clients. However, as stated above, our law is clear that a lawyer may not charge or attempt to collect an unreasonable or excessive fee. See M.R.P.C. 1.5(a); Miss. State Bar Ass’n v. A Miss. Atty., 489 So. 2d 1081 (Miss. 1986). Moreover, the Mississippi Supreme Court has held that a fee agreement “will be held invalid” if it provides for a fee that “is so excessive in proportion to the services to be rendered as to be in fact oppressive or extortionate.” Fitzpatrick v. Kellner, 187 Miss. 843, 850-51, 193 So. 911, 912-13 (1940); accord Ownby v. Prisock, 243 Miss. 203, 207-08, 138 So. 2d 279, 280 (1962).
¶34. The fee agreement at issue in this case is invalid and unenforceable because it purports to charge an unreasonable and excessive fee. The record shows that Blackburn drafted and later revised a relatively simple will and a few other documents. The other documents are not even in the record, but apparently none took much time for Archer to create. As noted above, the original drafts of the will and other documents and two rounds of later revisions all predated the fee agreement that Blackburn is attempting to enforce in this case. Blackburn implies that Burford’s estate was expected to be large or complicated, but there is no credible evidence in the record to show that. There was testimony suggesting that Burford was perhaps a difficult client who required some special attention; however, as discussed above, that testimony was also vague and internally contradictory. There was also vague testimony that Blackburn handled a “car wreck” and a “real estate closing” for Burford. But Blackburn presented absolutely no evidence as to what or how much time either matter involved. More important, neither matter related to the fee agreement that Blackburn seeks to enforce in this case, which covers only estate planning and administration.
¶35. In affirming the judgment of the chancery court, we also affirm the chancellor’s finding that “approximately 36 hours of work” was actually proven based on the testimony presented at trial in this case. That is a reasonable finding based on the “less-than-ideal evidence presented by the parties to the litigation.” Pruitt v. Pruitt, 144 So. 3d 1249, 1252-53 (¶11) (Miss. Ct. App. 2014) (emphasizing that a chancellor’s findings must be based on the evidence presented by the parties, even if that evidence is less than ideal). A fee of $265,000 for thirty-six hours of work is clearly unreasonable and excessive, and no other evidence was presented at trial that could possibly justify such a fee. Burford ultimately received a relatively simple will and a few other documents that, while not in the record, apparently were not complicated to create. For those services, $265,000 clearly is an unreasonable and excessive fee. This renders the fee agreement invalid and unenforceable. Fitzpatrick, 187 Miss. at 850-51, 193 So. at 912-13; Ownby, 243 Miss. at 207-08, 138 So. 2d at 280; Restatement, supra, § 34 cmt. a; Hazard et al., supra, § 9.06.1, at 9-18; Rossi, supra, § 1:18, at 1-56 (3d ed.). Therefore, the judgment of the chancery court could also be affirmed on this ground. [Fn omitted]
I have known some lawyers to charge huge fees in domestic litigation for what I considered average representation in run-of-the-mill cases. This case is a reminder that we have a professional responsibility to ensure that fees are reasonable.
It looks as if many of us haven’t been charging enough for our estate planning work. Now that we know we can get away with it, I guess we should up our fees substantially.