A Boston estate planning attorney recently received a public reprimand from the Board of Bar Overseers (BBO) for overcharging an estate and stretching out its administration for more than seven years. In 2003, Kenneth L. Harvey, an attorney with Holland & Knight in Boston, met with an elderly client and two of her sons. The client executed a will and a trust naming Attorney Harvey as trustee and executor. She passed away later that year.
Before she passed away, Attorney Harvey sold her home and deposited the proceeds of approximately $678,000 into the trust. He placed her personal belongings into storage. It's not clear from the BBO report what other assets the trust or the woman's estate contained. In any event, after her death, Attorney Harvey was appointed executor. The will provided that her five children would have six months to agree among themselves how to distribute the woman's personal belongings and if they are unable to do so the executor was to do so using his discretion. In April 2004, Attorney Harvey sent the children a letter asking them to let him know what items they would like. By the end of the year, three of the five children had responded, but Attorney Harvey took no steps to distribute the property.
In April 2004, Attorney Harvey distributed $25,000 to each beneficiary and in April 2005 another $50,000 each. Then apparently nothing happened for four years, though the beneficiaries sent a series of letters requesting accountings and a breakdown of the legal fees—more on that later.
In April 2009, Attorney Harvey sent the beneficiaries a letter with a proposed distribution of their mother's personal belongings and demanded unanimous consent before he distributed anything. Four of the children agreed, but one did not sign the agreement. So, in May, Attorney Harvey filed a complaint in probate court for a declaratory judgment confirming his proposed property distribution. Two of the children objected. Ultimately the proposed plan was approved by the court, but that didn't end things. The lawyer for the estate asked the beneficiaries to sign a release and indemnification form before the final distribution of the trust assets. When only two of them did so, Attorney Harvey went back to court in September 2010 seeking approval of his final distribution. Two of the children objected and counterclaimed objecting to the legal fees and storage costs for the personal belongings.
Attorney Harvey had retained his firm, Holland & Knight, to represent him as legal counsel. Over the course of the various proceedings, Holland & Knight billed almost $500,000 in legal fees and expenses. On March 24, 2014, the probate court found that Attorney Harvey had in bad faith incurred unreasonable and exorbitant fees and ordered him to reimburse all but $50,000. Holland & Knight reimbursed the trust $407,077.14. The BBO found that Attorney Harvey had violated a number of the rules of professional responsibility including not acting with reasonable diligence, charging excessive fees, and failing to keep the beneficiaries reasonably informed, resulting in his public reprimand.
So, what went wrong here?
- The client chose to name an attorney as her trustee and executor. This is not necessarily wrong since in most cases attorneys carry out these tasks with diligence and due speed. But it does mean that the family gives up control. This can be good or bad depending on the family's situation. With five children, it may have been difficult for the client in this case to choose one or two and if there was any family discord she may not have wanted to place any of her children in the uncomfortable role of arbitrator. But when appointing a professional, whether an attorney or trust company, the more the client can learn about them the better. It can also be important for the family to have a mechanism in the trust documents to replace the trustee without going to court. Of course, that can be difficult too since the children would have to be in agreement and in this case it appeared that Mr. Harvey and Holland & Knight were not forthcoming when family members asked them about their fees.
- The client chose an attorney at a large international law firm. Holland & Knight, according to its website, has more than 1,100 attorneys in 23 offices in the United States and Latin America. Most attorneys at large firms are skilled and have been well vetted by their peers. However, large law firms are not appropriate places for all clients and all estates. They tend to represent wealthier clients and to administer larger estates. They practice in ways that may be less efficient but are more careful and more expensive. In this case, the BBO faults Attorney Harvey for continuing to go back to court to get its prior approval to take steps he was already empowered to do in the estate documents. Bigger firms are more apt to do this than smaller ones since they make absolutely sure to dot every "i" and cross every "t". Smaller firms are more likely to value efficiency. These, of course, are not universal rules, but the fact is that most national and international law firms are dropping their estate planning departments because they're not as profitable as other lines of legal practice. Those lawyers in these fields that still practice in large firms may feel pressure to keep their billings up as high as attorneys at those firms in other practice areas that have large corporate clients and can be more profitable. In short, if you have a large estate or complex tax issues, by all means go to a large firm. But if your estate is more moderate in size it makes sense to consider a smaller firm that has a different style of practice.
- Attorney Harvey let the matter drag on. At one point it appears that four years passed with no activity after Attorney Harvey had distributed $375,000. We know there was at least another $500,000, since that's what was paid to Holland & Knight. In general, the longer a matter takes, the higher the legal costs. With a gap of four years, the attorneys involved may have forgotten many of the details of the matter or even left the firm, requiring that new attorney get up to speed. In general, more time means less efficiency.
Of course, we don't know the back story. The client may not have appointed her children to administer her trust and estate because she knew they were a troublesome lot. Attorney Harvey may have taken the precautions of going to court for approval of his actions also knowing that the beneficiaries were litigious. But there appears to be no excuse for Holland & Knight charging the fees it did.