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North Dakota Supreme Court Takes A Stand Against Unreasonable Legal Fees

Source: IN THE MATTER OF ESTATE OF AMUNDSON, 2015 ND 253 – ND: Supreme Court 2015 – Google Scholar

This appeal dealt with the issue of fees charged to probate estates. The North Dakota Supreme Court affirmed a judgement against a lawyer that he repay $95,000 in legal fees that were excessive.

After Donald Amundson passed away in 2011, two executors were appointed. Donald’s will provided that all of his property was to pass to the Donald G. Amundson Trust. The trial court found that one of the co-executors breached a fiduciary duty owed to the estate by paying John Widdel, Jr.’s fee bills without questioning them. The District Court ordered Widdel to repay $95,000 to the Estate.

The North Dakota Supreme Court affirmed the judgment. It noted that the District Court heard detailed testimony on the legal fees and services rendered. The court explained its reasoning:

[¶11] The court cited several specific examples of Widdel’s unreasonable fees. Widdel prepared only one tax return, charging 11 hours at a rate of $250 per hour plus a $450 document charge, for a total of $3,200. CPA Austin and attorney Vogel both testified the most they would charge for this work would be $500. The court also found Widdel failed to use paralegals, who could charge a lower rate, and who would typically handle 50% or more of the time involved in a probate matter. The court found both Magers and Widdel each were paid approximately $22,000 for the administration of the Kenneth Amundson Trust, which involved the same work for which they were seeking payment in this case. Attorney Buchanan testified that after reviewing the breaches of trust by Magers and the amount of money already paid to Widdel from the Kenneth Amundson Trust, Widdel should not have been paid more than the approximately $22,000 he was paid from that Trust. The court found Widdel had also been paid nearly $103,000 out of the Trust and Estate for Donald Amundson, which Buchanan testified was unreasonable given the circumstances. Widdel based these amounts on a fee of three percent of the total assets of the Trust and Estate (both probate and non-probate assets). Vogel testified it was inappropriate to charge anything over one or one and one-half percent of the Estate when no litigation work was performed by Widdel and non-probate assets should not even be included in the calculation, because no work is required for their distribution. Lastly, the court found Widdel spent far more time on the Estate than was required to complete the job, and a substantial portion of his costs were secretarial in nature. Finding these charges to be inappropriate, and considering all of the above evidence, the court determined Widdel’s fees in administering the Estate were unreasonable.

[¶12] On the basis of these findings by the district court, there is sufficient evidence in the record suggesting that the fees Widdel charged in administration of theEstate were unreasonable. Although the court may not have specifically mentioned in its findings every single piece of evidence presented by the parties, we presume the district court considered all the evidence presented. Olson v. Olson, 2000 ND 120, ¶ 7, 611 N.W.2d 892; State v. Syvertson, 1999 ND 134, ¶ 21 n.3, 597 N.W.2d 652 (“[A] trial court is presumed to have done its duty.”). When reviewing a trial court’s findings of fact, which are presumptively correct, we view the evidence in the light most favorable to the findings. Schmaltz v. Schmaltz, 1998 ND 212, ¶ 6, 586 N.W.2d 852. Furthermore, the district court is considered an expert when it comes to determining the value of reasonable attorney’s fees.Estate of Cashmore, 2010 ND 159, ¶ 20, 787 N.W.2d 261. Evidence in the record supports the district court’s decision on the unreasonableness of Widdel’s fees. The district court did not abuse its discretion in determining his fees were unreasonable.

This case illustrates the problem with challenging excessive legal fees. The client must usually retain a lawyer to opine that the fees were unreasonable. Here, the client also retained an accountant to testify that the fees charged for a tax return were excessive.

I have handled many fee cases in my career and this one stands out because the Court had the courage to stand up to an attorney who overcharged his clients. Often courts are reluctant to stand up to attorneys who submit outrageous bills.

Edward X. Clinton, Jr.