How do you hire an attorney when you need help dealing with a bad Trustee? Trustees have access to all the Trust resources, while beneficiaries do not. As a beneficiary, you cannot withdraw money from a Trust bank account to pay for legal services. So what are you to do?
You have two choices: (1) hire a lawyer on a contingency basis, or (2) hire a lawyer on an hourly basis. Each method has its own pros and cons; and each one can serve your purposes to take on a bad Trustee.
Contingency Fee
With contingency fees, you are essentially hiring a lawyer and agreeing to pay them a percentage of what you receive or what you have in the Trust. It all depends on the circumstances of your case. For example, in some cases a Trustee will simply refuse to make a distribution of Trust assets to a Trust beneficiary. We have seen cases where a refusal to distribute drags on for many years. In this case, you can hire a lawyer to file suit against the Trustee to force a Trust distribution. You may also want a Trust accounting, Trust financial information, and maybe even Trustee removal. If the lawyer is successful in the lawsuit, then you would pay a percentage of the assets distributed to you as a contingency fee. For example, if you are supposed to received $500,000 from a Trust, and you hire a lawyer on a 35 percent contingency fee, then you would pay $175,000 to the lawyer if he/she is successful in obtaining your Trust distribution. You, of course, would receive the remaining $325,000 in Trust distribution.
The upside of a contingency fee is that you only pay when and if the lawyer is successful. If the lawyer fails to reach a resolution in your case, then you do not pay. Also, you do not have to pay the lawyer monthly for the services they provide to you. In many cases, lawsuits can stretch on for a lengthy time: six, twelve, eighteen, twenty-four months or longer. Having to pay monthly for a lawyer’s services over this length of time can be burdensome.
Finally, contingency fees help meld together the incentive for the lawyer and the client, so you are both fighting for a similar reward. This helps to create a powerful incentive for the lawyer or law firm handling your case. Of course, that presumes that the lawyer or law firm is working your cases appropriately. You should be careful to choose a firm who will put their time and effort into your case if you are going to hire them on contingency.
And that raises another issue about contingency arrangements. You want to hire a law firm who has the resources to invest in your case. There are many costs to a lawsuit in California. You must pay for things like depositions, subpoenaed documents, mediators, expert witnesses. On contingency, the lawyer or law firm should be paying for those costs on your behalf. But if the lawyer does not have the resources to pay for costs when needed, then you may not have your case handled as well as it could be. So, make sure the firm you hire has the resources necessary to fund your case.
Hourly Fee
With hourly fees, you must pay your attorney monthly for the time and costs invested in your case. You also must pay regardless of result. As a result, there is no downside protection to the client as there is in contingency arrangements. You could invest tens of thousands, or even hundreds of thousands, into your case and still lose. But you are obligated to pay for the attorneys’ fees and costs regardless of the outcome of your lawsuit.
The upside of hourly is you might pay less in attorneys’ fee, especially if the case settles early in the lawsuit process. Keep in mind, cases rarely settle early. But if your case is concluded quickly, then hourly may be far less costly. It all depends on the facts and circumstances of your case.
Why Letters Don’t Work
Now let’s talk about letter writing. Often, a potential client will ask if we can just send a letter to the bad Trustee. The assumption is that a letter from a lawyer will magically cause the bad Trustee to do the right thing. Nothing could be further from the truth, unfortunately. We have written many letters in our two decades of helping beneficiaries. Of the hundreds and hundreds of cases we have handled, a simple letter worked less than five times. In other words, letters simply do you no good. Why?
It is all too easy for a bad Trustee to ignore a letter. Even if the letter comes from a lawyer, the bad Trustee can simply throw it in the waste bin. There are no negative consequences from ignoring a letter. The only real risk is receiving another harsh letter. So what?
Compare that to serving your Trustee with a robust lawsuit. That will certainly get the Trustee’s attention. And once you file a lawsuit in court, now you can use the subpoena power to obtain bank and brokerage statements directly from the financial institutions. And best of all, the Trustee will know that their day of reckoning is coming. They will be forced at some point to appear before a judge and answer for their actions. There’s just no comparison. A lawsuit gets results, a letter does not.
If you want to fight against your bad Trustee, then you need to hire a good law firm and get to work.
