Risk vs Reward

We often receive inquiries about whether we will represent parties in California trust and will contests on a contingency basis.  In contingency representation, the lawyer does not collect a fee unless the client obtains a favorable settlement or court judgment.  Contingency fees usually are structured on a percentage basis, with the lawyer receiving perhaps 25-40 percent of the value of the assets collected as specified in the fee agreement.

Generally we decline requests for contingency fee representation, choosing instead to represent contestants who can pay us on an hourly basis.  Why do we take this approach?  It’s tough, before litigation begins, to evaluate the risk and reward.

How Much Is Really at Stake?

Prospective contestants approach us with claims that they are entitled to all or a share of an estate worth many millions.  In reality, however, the would-be contestant usually has sparse information about the value of the estate.  If Johnny has been out of touch with Mom and Dad in recent years, he is unlikely to know what remains in their brokerage and bank accounts.  Real estate is easier to evaluate if the address is known, given that basic factual information about a property is a matter of public record along with mortgages that diminish the equity.

Without a credible valuation of the underlying estate, counsel will not be able to calculate the upside of contingency representation.

Mental Incapacity and Undue Influence Are Not Easy to Prove

As we have written in prior posts, it is not easy to invalidate a trust and/or a will in California on the theory of mental incapacity.  The prospective contestant may have anecdotal information about Mom’s health, such as incidents of forgetfulness or confusion, but is unlikely to have her medical records.  Such records can be obtained by subpoena once the litigation gets rolling.

Undue influence is also challenging to prove.  Usually, the circumstances surrounding the execution of the trust or will are unknown before the inception of litigation.  Was the child who Mom favored in the trust amendment the driving force behind that amendment?  If so, it may be possible to shift the burden of proof to that favored child, increasing the possibility of a successful contest.

It is hard to predict how the evidence will come together.  For example, did the lawyer who prepared the trust amendment disfavoring Johnny document Mom’s rationale and clarity of thinking?  Did the lawyer know that Mom was being treated for dementia, and if so how did the lawyer evaluate her mental capacity?  After the contest is filed, the contestant’s attorney can obtain the file and deposition testimony of the drafting attorney.

The Period in Which to File a Trust Contest Is Short

Trust contests generally must be filed within 120 days of transmittal of a notice of trust administration under California Probate Code section 16061.7.  This is one of the shortest statutes of limitations in California law.  If Johnny waits a few months before seeking counsel, he is less likely to find a lawyer with sufficient time to evaluate and file a contest within the 120-day period.

The Defender of the Trust May Have a War Chest

The better-funded army often wins the war.  In trust contest litigation, for example, money is needed to depose witnesses and hire expert witnesses.

If (as is often the case) the trust instrument expressly authorizes the trustee to defend any contest of the trust, the trustee presumptively will be able to use the trust assets as a war chest to fight off any contest even if the trustee is favored as a beneficiary in the questionable amendment.  In contrast, if the instrument is silent, the trustee may be unable to use trust funds to defend the contest.

Hence, any lawyer who considers taking on a contest will parse through the language of the original trust instrument and any amendments in search of authorization to defend language.

Takeaways

Overall, it is much harder for a lawyer to evaluate potential contingency fee representation in a trust and/or will contest than in a personal injury case.  If Johnny was hospitalized with major, career-ending injuries when another driver ran a red light, he should have little difficulty finding a lawyer who will represent him on a contingency fee basis.  On the other hand, if Johnny’s mother omitted him as a beneficiary in a trust amendment, he may not find any lawyer willing to take on the business risk associated with contingency fee representation.

If you are seeking an attorney on a contingency basis to handle a will or trust contest, you should start your search as promptly as possible rather than waiting until the eve of any filing deadline.  Also, you should consider hiring a lawyer on an hourly basis to help you evaluate your claim so that you can make an informed decision about whether to proceed with litigation.  While it’s hard to predict the course (and cost) of litigation, you may come out ahead by paying counsel on an hourly basis as opposed to contingency, even if you can locate a lawyer who will offer you the latter option.

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Photo of Jeffrey S. Galvin Jeffrey S. Galvin

Jeff Galvin represents clients in trust and estate litigation throughout Northern California. He advises trustees and executors who find themselves in conflict with beneficiaries, and he helps beneficiaries assert their rights in trust and probate estates.

He prosecutes and defends trust contests and will contests, which often raise issues of mental capacity, undue influence, and elder financial abuse.  For example, he successfully defended a trust contest in a 25-day trial in Calaveras County, and then defended the judgment on appeal. Jeff also helps clients resolve disputes in the administration of estates, litigating such issues as trustee removal, accounting disputes, and distribution disputes. Jeff also practices in Northern Nevada. (Read more…)