When a District of Columbia woman died recently, she left her son an estate worth $360,000, made up mainly of stocks.
A year ago, most lawyers, using a traditional 10 percent formula allowed by District courts, probably would have charged the son $36,000 in legal fees. But the son received a bill for $540 for the 6 1/2 hours required to do the work--a savings of more than $35,000.
The son's lawyer, Montgomery County Council member David L. Scull, is a former state delegate who for years sponsored reform measures affecting the state's legal profession.
Last year, Scull helped draft a District of Columbia bill that he says is similar to legislation pending in the state General Assembly that would eliminate the percentage formula. If the Maryland legislature approves the measure, Scull contends, Maryland consumers could save millions of dollars in fees charged for work that frequently takes only a few hours. The District probate law went into effect Jan. 1.
"The probate laws are equally simple in Maryland and the District. The only difference is that D.C. has eliminated the percentage formula," said Scull, who had introduced the probate reform bill five times as a state legislator.
"If Maryland did the same thing, its residents could expect to see a great reduction in the cost of probate."
Under current Maryland law, a "personal representative" of the deceased, usually a lawyer but not always, can charge up to 10 percent of the first $20,000 of an estate, and 4 percent above that, for handling the estate. The fee then must be approved by a judge. The pending legislation would eliminate the percentage formula and require lawyers to submit the amount of time worked on a case before the judge can set the fee.
Now, more often than not, says the bill's author, Del. Stuart Bainum (D-Montgomery), the court follows the percentage formula in setting legal fees for a will and is lax in requiring substantiation for work billed.
Bainum backs up his case with statistics supplied by a Washington-based public interest group called HALT--An Organization of Americans for Legal Reform. Last year, HALT reviewed 517 probate cases in Baltimore City and Montgomery, Charles and Frederick counties.
HALT official Michael Richards said the study showed that in more than 60 percent of the cases, lawyers charged at least 90 percent of the ceiling. The highest legal fees were charged in Montgomery County--an average $5,702--and the lowest in Charles County, averaging $2,242. In only 19 percent of the cases did the lawyers record their total time spent, and in less than 20 percent of the cases did lawyers note the hourly fee, according to Richards.
These statistics, says Richards, prove that the "percentage system is a rallying point for fees charged regardless of the work involved."
Earl S. Wellschlager of Baltimore, a lawyer who frequently practices probate law and is a member of the state's bar association committee on estates and trusts, called Richards' claims "absolute nonsense" and challenged his statistics as not being "valid empirical data." He noted that the study neglected to include the type of work involved in the individual cases or the amount of the estate.
Wellschlager also cited a study conducted by the American Bar Association in the early 1970s in Maryland and other states that he said concluded that the "majority of beneficiaries were satisfied with the work done by their attorney" in probate cases.
Wellschlager added, however, that the estates and trust committee of the state bar association probably will support Bainum's bill, but will ask the House Judiciary Committee to remove the section requiring lawyers to submit the hours worked on the case. This provision, Wellschlager said, would be too time consuming and smaller firms do not have the capacity to provide detailed information. When asked how lawyers in small firms bill for work other than probate cases, Wellschlager agreed that the most common practice is hourly billing.
Wellschlager added that the committee has decided to support the bill because in its view, the bill is "totally innocuous" and will not affect lawyers' fees because the elimination of the traditional percentage formula applies to "personal representative(s)" and not lawyers.
Bainum responded, however, that if the percentage formula is eliminated, the court will have to look much more closely at the work completed before awarding lawyer fees.
"If they think it's so innocuous," Bainum continued, "then why don't they support including giving their time?"
Bainum also said Maryland could look to other states to see whether legal fees will be reduced if the legislature enacts his bill. Bainum cited a 1975 study conducted by the First National Bank of Pueblo in Colorado, showing that after Colorado enacted similar legislation, probate legal fees were reduced by one-third.
The Judiciary Committee is expected to vote on the bill within the next two weeks, Bainum said.