Are Alternative Fee Arrangements the Future of Attorney’s Fees Arrangements in Orphans’ Court Litigation?

by McNees Wallace & Nurick LLC
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The 2016 amendments to the Pennsylvania Supreme Court Orphan’s Court Rules brought a slight shift in Orphan’s Court litigation. Aiming to provide a uniform standard of practice, the new Rules closely align with the Pennsylvania Rules of Civil Procedure. Whether you choose to identify the Rule amendments as a positive or negative standardization, it is worth noting that with any change comes opportunity.

One can presume that the Rule changes would bring an influx in contested matters and fee disputes. As more fee disputes arise, practitioners are left questioning what can be done to make the accumulation of fees more transparent and cost-effective. To begin this discussion, we are opening the door for conversation surrounding alternative fee arrangements; are they a move in the right direction for fiduciary litigation matters or are they a hindrance to fully and fairly litigating a matter?

The practice of law continues to evolve with more practice areas getting away from the billable hour. Tracking time in increments, especially in fiduciary litigation, adds up quickly. With various parties involved in Orphans’ Court matters (including fiduciaries, beneficiaries, and the judicial system) legal reserves can exceed budgets early in the matter, often due to factors outside the control of the fiduciary and its counsel. This leads to the inescapable client discussion concerning legal fees or the tried and true “no holds barred” litigation: doing what it takes, without reservation, to defend the fiduciary in court. One thing most of us can agree upon is that these conversations are not easy.

According to a recent Altman Weil ¹ survey, 73.8% of law firms reported that their use of alternative fee arrangements was primarily reactive in response to client requests. Perhaps a step in the right direction is to move closer to a budget that reflects various segments of the litigation versus the litigation as a whole? Creating alternative fee arrangements with the client’s stated goal(s) in mind ensures appropriate budgets based on the value of services rendered. More often than not, the thought of adopting an alternative fee arrangement comes to mind when legal fees have accumulated beyond the stated budget and without a clear path to resolution; perhaps this is too late. Having this discussion up front can help to preserve assets and the economy of time, while ensuring transparency with all parties involved. It is rare when counsel or corporate fiduciaries are able to predict the various twists and turns a contested matter may take. Budgeting at various junctures in the litigation allows both the fiduciary and its counsel to re-assess and plan for what lies ahead.

While clients and their counsel may strike alternative fee arrangements, courts are not bound to accept them. When evaluating the reasonableness of a fee in the fiduciary setting, courts apply certain factors and are accustomed to evaluating hourly rate and time spent. Indeed, the first thing the Office of Attorney General will seek is time records. Acceptance of alternative fee arrangements will necessarily involve the ultimate approval of our courts. It will be important to preserve and communicate the factors leading to an alternative fee arrangement.

As millennials now make up the largest generation in the United States workforce,² it is time to think about the shift the practice of law is taking, especially in the billable hour category. Approximately 92.9% of law firms are using non-hourly based billing.³ Notwithstanding, that number remains rivaled in the fiduciary litigation context. It seems forward-thinking practitioners are onto something with alternative fee arrangements. To avoid being last on the innovator train, it is time we begin thinking about how alternative fee arrangements may help to achieve stated goals while remaining transparent and preserving the maximum amount of trust assets.

McNees is experienced at implementing alternative fee arrangements and has professional staff, including a Legal Project Manager, engaged to work with clients on such matters. Should you wish to engage in conversation or offer any comments or thoughts concerning alternative fee arrangements in the fiduciary litigation context, please feel free to contact Kiandra Bair at kbair@mcneeslaw.com.


[1] Altman Weil, Law Firms in Transition: An Altman Weil Flash Survey, 2017, p. 68 (http://www.pewresearch.org/fact-tank/2015/05/11/millennials-surpass-gen-xers-as-the-largest-generation-in-u-s-labor-force/).

[2] Bureau of Labor Statistics: Labor Force Statistics from the Current Population Survey (https://www.bls.gov/cps/cpsaat11b.pdf); see also Pew Research Center, Millennials Surpass Gen Xers as the Largest Generation in U.S. Labor Force (http://www.pewresearch.org/fact-tank/2015/05/11/millennials-surpass-gen-xers-as-the-largest-generation-in-u-s-labor-force/).

[3] Id. Altman Weil, Law Firms in Transition: An Altman Weil Flash Survey, 2017, p. 67.


 

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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