Paying the lawyers from the grave
April 26, 2024 8:17 AM Subscribe
Have a question about a clause in an engagement letter, namely whether it's something like standard in the industry/my state
You might or might not be a lawyer, but you are almost certainly not my lawyer, and I would not try to hold accountable anyone kind enough to offer their expertise on this should real-life events not follow their script.
Met with a lawyer for estate planning in Connecticut -- wills and trusts for me and the missus. There's a clause that says we agree the firm will be compensated for time and other costs should it need to respond, testify, be deposed, or produce documents for legal proceedings. This agreement is said to bind us, our heirs and beneficiaries, and anyone managing our financial affairs, which will end up including the firm itself, if I'm construing that right. So pretty sure they'll get away with it.
Can anyone weigh in on whether this is standard in such an engagement? From where I sit, which admittedly is nowhere near a framed diploma from a law school, I wouldn't anticipate our situation to have any such plot twists, but if nothing else I'm realistic about all that I don't know, so would like to make sure we're not signing something we maybe shouldn't.
You might or might not be a lawyer, but you are almost certainly not my lawyer, and I would not try to hold accountable anyone kind enough to offer their expertise on this should real-life events not follow their script.
Met with a lawyer for estate planning in Connecticut -- wills and trusts for me and the missus. There's a clause that says we agree the firm will be compensated for time and other costs should it need to respond, testify, be deposed, or produce documents for legal proceedings. This agreement is said to bind us, our heirs and beneficiaries, and anyone managing our financial affairs, which will end up including the firm itself, if I'm construing that right. So pretty sure they'll get away with it.
Can anyone weigh in on whether this is standard in such an engagement? From where I sit, which admittedly is nowhere near a framed diploma from a law school, I wouldn't anticipate our situation to have any such plot twists, but if nothing else I'm realistic about all that I don't know, so would like to make sure we're not signing something we maybe shouldn't.
Yes, I don't know if this clause is standard, but it's not ridiculous. Please note: not your lawyer, not a CT lawyer. If you are worried about your children being on the hook for infinite costs after your deaths, you or your wife, by yourselves or even together, should not be able to bind independent third parties to do anything, including your kids and most especially including some random wealth manager at Chase. You can bind your estate. So unless there is some odd quirk of CT law (not impossible), after your deaths the firm will only be able to look to your estate for payment, not your kids.
I suspect another reason for this (beyond the general and most important one about the likely post-mortem quality of their services) is that it may discourage frivolous litigation about the will, since the costs will eat away at the inheritance.
posted by praemunire at 9:24 AM on April 26 [3 favorites]
I suspect another reason for this (beyond the general and most important one about the likely post-mortem quality of their services) is that it may discourage frivolous litigation about the will, since the costs will eat away at the inheritance.
posted by praemunire at 9:24 AM on April 26 [3 favorites]
Is it even possible for a legal agreement that you sign to bind your heirs? Not a lawyer, but that seems like a big stretch. My personal guess is that it applies to people so far as they engage with your estate, such as serving as executor or suing to contest the will. In the latter case, the law firm would have to provide services, and they understandably want it to be clear that such services are not provided for free. But that's just my guess. I wouldn't personally have a problem with it.
posted by wnissen at 1:28 PM on April 26
posted by wnissen at 1:28 PM on April 26
You generally cannot bind a third party to a contract that the third party does not sign. So, best guess, this is enforceable against you and whoever is signing, and your estate before it is distributed. But this wouldn’t be enforceable against your heirs or others who are not signing. Probably what the firm is thinking is that, if they are drawn into legal proceedings, they can get compensated by you or the estate you leave behind, before it is distributed to your heirs. That would probably cover most situations in which they are drawn into legal proceedings.
posted by Mid at 4:58 PM on April 26 [1 favorite]
posted by Mid at 4:58 PM on April 26 [1 favorite]
This only touches your estate, really. T&E attorneys often make a significant amount of their income after their clients die, and they are usually paid out of the estate.
The way this potentially can affect your heirs, beneficiaries, etc. has to do with how the T&E attorney gets paid if not by the estate. The usual fees will be paid out of the estate. But if there is some sort of dispute—let’s say one beneficiary thinks they should get a larger piece of the pie—the question is who pays for what. If the T&E attorney has to be deposed as to some aspect of the decedent’s will, or take/defend a deposition, etc. those fees have to be paid. They can be paid out of the estate, but that would reduce the amount of the estate and that might be a point of contention among the parties. So, if it’s not the estate, who pays and how? That would be up to the parties to work out among themselves, but the terms of the engagement letter say that the T&E attorney gets paid for services either by the estate or by the parties. In a worst case scenario the T&E attorney could sue the estate and the parties for fees in connection with those services. They ain’t doing it for free, that’s for sure. Could this potentially lead to a Bleak House scenario? Sure.
posted by slkinsey at 6:06 AM on April 27 [1 favorite]
The way this potentially can affect your heirs, beneficiaries, etc. has to do with how the T&E attorney gets paid if not by the estate. The usual fees will be paid out of the estate. But if there is some sort of dispute—let’s say one beneficiary thinks they should get a larger piece of the pie—the question is who pays for what. If the T&E attorney has to be deposed as to some aspect of the decedent’s will, or take/defend a deposition, etc. those fees have to be paid. They can be paid out of the estate, but that would reduce the amount of the estate and that might be a point of contention among the parties. So, if it’s not the estate, who pays and how? That would be up to the parties to work out among themselves, but the terms of the engagement letter say that the T&E attorney gets paid for services either by the estate or by the parties. In a worst case scenario the T&E attorney could sue the estate and the parties for fees in connection with those services. They ain’t doing it for free, that’s for sure. Could this potentially lead to a Bleak House scenario? Sure.
posted by slkinsey at 6:06 AM on April 27 [1 favorite]
In a worst case scenario the T&E attorney could sue the estate and the parties for fees in connection with those services.
Genuinely interested: are you aware of cases in which heirs were found individually liable for such services with having previously consented? If the will was actually challenged, I would expect the parties to the dispute to retain their own attorneys, anyway--it's poor practice to be counsel in a case in which you know in advance you're probably going to be a witness, as you are highly likely to be disqualified--in which case they'd pay them according to their own retainer agreement. So the main issue would be the costs involved with actually being a witness; the party taking a deposition of counsel would have to pay the standard fee, which of course doesn't come close to the costs of actual witness prep, but ordinarily witnesses are expected to eat those costs, and those of document production. It's fine for the decedent to agree in advance to pay those costs out of the estate, but I don't see how the decedent could bind their heirs to do so individually.
posted by praemunire at 10:09 AM on April 27
Genuinely interested: are you aware of cases in which heirs were found individually liable for such services with having previously consented? If the will was actually challenged, I would expect the parties to the dispute to retain their own attorneys, anyway--it's poor practice to be counsel in a case in which you know in advance you're probably going to be a witness, as you are highly likely to be disqualified--in which case they'd pay them according to their own retainer agreement. So the main issue would be the costs involved with actually being a witness; the party taking a deposition of counsel would have to pay the standard fee, which of course doesn't come close to the costs of actual witness prep, but ordinarily witnesses are expected to eat those costs, and those of document production. It's fine for the decedent to agree in advance to pay those costs out of the estate, but I don't see how the decedent could bind their heirs to do so individually.
posted by praemunire at 10:09 AM on April 27
It's fine for the decedent to agree in advance to pay those costs out of the estate, but I don't see how the decedent could bind their heirs to do so individually.
I started to work out how you could do this with conditional future interests where the condition is 'you have to pay the lawyer' and then realized I would rather hit my hand with a hammer than go back to future interests before I have to study for the bar next year. But I would think that's how you would do that - condition the receipt of any inheritance on accepting the agreement. Kind of similar to those 'if you dispute the will, you get only $10' clauses.
posted by corb at 6:55 PM on April 27
I started to work out how you could do this with conditional future interests where the condition is 'you have to pay the lawyer' and then realized I would rather hit my hand with a hammer than go back to future interests before I have to study for the bar next year. But I would think that's how you would do that - condition the receipt of any inheritance on accepting the agreement. Kind of similar to those 'if you dispute the will, you get only $10' clauses.
posted by corb at 6:55 PM on April 27
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That said, their business is writing documents for dead people, and their work product can only be meaningfully examined or used post mortem. I’m not surprised that they arrange payment for services on engagement. I would agree to this arrangement.
posted by shock muppet at 8:29 AM on April 26 [2 favorites]