Probate Lawyers' Fees and Billing

How much will it cost to hire a lawyer to handle your probate case? The answer varies greatly, but it will probably depend more on where you happen to be filing the probate case than on how complicated the legal work is.

You can hire a lawyer to handle the whole probate case or just help you do it. (See "Working With a Probate Lawyer.") Either way, keep in mind that as executor, you don't pay the probate lawyer's fee from your own pocket. You can use estate assets to pay the bill, before inheritors get anything.

Kinds of Fee Arrangements

Lawyers usually use one of three methods to charge for probate work: by the hour, a flat fee, or a percentage of the value of the estate assets. Your lawyer may let you pick how you pay—for example, $250/hour or a $1,500 flat fee for handling a routine probate case.

Hourly Billing

Many probate lawyers bill clients by the hour. The hourly rate will depend on how much experience and training the lawyer has, where you live, and whether the lawyer practices in a big law firm or a small one. Small town rates may be as low as $150/hour; in a city, a rate of less than $200/hour would be unusual. Big firms generally charge higher rates than sole practitioners or small firms, unless a small firm is made up solely of hot-shot specialists.

A lawyer who does nothing but estate planning and probate will likely charge a higher hourly rate than a general practitioner. The advantage to you is that a specialist should be more efficient. Someone who has steered many probates through the local court has probably learned all the local rules and how to prepare and file documents the way the court likes them.

If your attorney employs less experienced lawyers (associates) and legal assistants (paralegals), their time should be billed at a lower hourly rate. This is very common in firms that do probate work; legal assistants often draw up the routine paperwork.

Many lawyers bill in minimum increments of six minutes (one-tenth of an hour). So, if your lawyer (or a legal assistant) spends two minutes on a phone call on behalf of the estate, you'll be billed for six minutes.

Flat Fees

It's also common for lawyers to charge their probate clients a flat fee. That way, they don't have to keep down-to-the-minute records of how they spend their time. (Lawyers don't like keeping track of their "billable hours" any more than clients like paying for all those six-minute intervals.) And because they have a good idea of how long an average probate will take, they can charge a fee that will be close to what they would get if they billed by the hour.

If you're billed this way, you don't have to worry about running up the bill every time you want to ask a question of the lawyer. It can be a more relaxed experience.

If you agree to pay a flat fee for legal work, make sure you understand what it does and does not cover. For example, you may still have to pay separate court filing costs, fees to record documents, or appraiser's fees.

Percentage of the Estate's Value

The worst way to pay a probate lawyer—from the estate's point of view—is to pay a percentage of the value of the estate as the fee. This is customary only in a few states. And even in those states, lawyers are not required by law to collect a percentage fee. You can and should try to negotiate an hourly rate or flat fee with the lawyer. But many lawyers prefer the "statutory fee" because it's usually very high in relation to the amount of work they have to do.

State law allows lawyers to charge a set percentage fee in:

These fees are often high under the circumstances because they are calculated based on the gross value of the probate assets, not the net value. For example, if you're handling an estate that includes a house worth $300,000, with $175,000 left on the mortgage, the lawyer's fee would be based on $300,000—not the $125,000 of equity the estate actually owns. And the probate paperwork for a transferring a $1 million house is basically the same as it is for transferring a $150,000 house—so why should the fee be so different?

You can get an idea of how high these fees are by looking at California's statutory fee schedule. For "ordinary" services, a lawyer can collect:

• 4% of the first 100,000 of the gross value of the probate estate
• 3% of the next $100,000
• 2% of the next $800,000
• 1% of the next $9 million
• ½% of the next 15 million
• "a reasonable amount" of anything over $25 million

Using this system, probating a typical California estate with a gross value of $500,000 would cost $13,000 in legal fees—a very large amount given the amount of legal work involved. The estate would do much better if it paid the lawyer by the hour.

Get Your Fee Agreement in Writing

No matter what kind of fee arrangement you have, get the terms in writing. Some states require certain lawyer-client fee agreements to be in writing; whether or not that's true where you live, it's a good idea. As with most agreements, the most valuable part is not having all the terms on paper—it's the discussion that leads to writing them down.

The agreement should cover:

• the flat fee, or the hourly fee of each lawyer and legal assistant who may work on the estate
• which lawyer will be your main contact at the firm
• an estimate of the total cost or the total number of hours
• expenses you pay separately, such as court fees, postage, and publication of legal notices
• how the lawyer's work will be described on the bills (the work done in each increment of time should be described, so you don't just get a bill for "legal services," "research" or "trial preparation")
• how often the firm will bill you, and
• when your payments will be due.