Estate and Trust Dispute Center of Ohio

Join Adam Fried, co-chair of Reminger’s Estate, Trust, and Probate Litigation practice group, for a five-part blog series exploring what makes for a good case or bad case to challenge inheritance rights. To read the full e-book, click here.

In part three, we reviewed red flags which can increase the likelihood of success in a challenged inheritance claim. Now, I will describe the economic considerations that go into a decision as to whether a claim of undue influence should be pursued.

Part 4 - Economic Considerations of Inheritance Dispute

In your heart, you believe your parent would never willingly disinherit you.  Your father was suffering from infirmities that impacted his judgment and cognition.  He relied on the assistance of a neighbor, caregiver, friend, or sibling and trusted that person—who ended up with an unnatural share of the inheritance.  You tried to reach your father by phone or visit, but you were not allowed to communicate with him outside the presence of the caregiver, if, of course, you were able to speak with your father at all.  When you called, you were told he is sleeping or when you visited you were told that he was not well and didn’t want to take visitors.  Your father has now died and, not surprising, no one is forthcoming with a last will and testament. When one is produced, you learn you have been disinherited.  This type of scenario is something we at Reminger encounter frequently.  

You are wondering: do I pull the trigger and hire an attorney?  Only you can answer that question. Even if you have a great case, our view is that you need to be armed with information necessary to make an informed decision. Included in that equation are the necessary factors of value weighed against cost of pursuit. 

Do you have any sense of the value of your case?

To assess value, I typically play a game with my prospective client called the “if you are right” game.  The game is designed to help a client see past the complicated nuances of the case and to enable a focus on the economics.  Basically, the pain and emotion of who did what and why you were disinherited is reduced to background noise and the value of the case comes into focus. Playing this game will help you make an informed decision about whether to spend time, money, and emotion to pursue and prove you were wrongfully disinherited.  Basically, we pretend that you will win the case and ask, “if you win, what do you get?”

Many of our clients have been kept in the dark about their parents’ wealth and, consequently, they have no real information to assess value.  The lack of specific information does not necessarily mean you lack information to form opinions of probable and potential value. But if you are making decisions on probable or potential value, you must be prepared for the potential that your understanding of value could be based on bad or misleading information.  

Things to consider when intuiting value of the case in the absence of direct information include: (1) historical knowledge of the decedent’s employment – was your parent a doctor, lawyer, factory worker? If they were in a high paying profession, then that would be a positive indication of value; (2) did your parent own a home and are there records relating to value available online in the form of tax values? Similar indications could be knowledge of a recent inheritance, lawsuit settlement or lottery winnings. (3) Was your parent a frugal person who tended to save their paychecks? (4) Has there been significant medical or long-term care expenses, or other spending habits that would reduce a likely inheritance?  After exploring the potential of value, you then want to understand how that value translates into an amount to which you would be entitled if you win a case.

Understanding your best-case scenario

You can be blinded by “high value” if you don’t consider what is the best-case scenario of your share of the value.  Simply, you need to understand your potential share of the inheritance if you were to pursue and win a case.  To illustrate this question, if you saw a pre-death bank statement demonstrating $500,000 in assets, you might think there is a small fortune at the end of the rainbow.  The value, of course, is reduced if the share gets divided by 10 ways, such as if there are 10 children that would inherit equally if you win your case. When you consider $500,000/10 = $50,000, the pot at the end of the rainbow is smaller. If I told you that the cost of pursuit through trial could equal $50,000, would you still decide to pursue the claim?

The ability to assess value, particularly when you have imperfect or no information is an incredibly complex calculation.  It includes, but is not limited to (a) the share you would receive if successful; (b) the cost of obtaining that share, such as attorney fees, expert fees, document retrieval and third party costs such as depositions and transcripts; (c) the likelihood of success which, necessarily includes the chance that you lose; (d) the likelihood that the facts are such as would lead reasonable people to settle claims at some agreed value; and (e) of course, you have to expect that your share will be diminished by the costs intrinsic to the asset. As a simple example to this last item, if the end of line asset to be recovered is a ½ interest in the home, to realize the benefit of the claim, the house will need to be sold and the costs of sale will diminish the final value of the asset from which the value of your share is calculated. 

 In my view, it is necessary to assess both value and best-case scenario for you to make an informed decision about whether to pull the trigger and retain counsel.  Now that you have explored value, no evaluation can be complete without understanding the variety of claims that need to be brought, that if you are successful, are needed to realize your share of the inheritance. In the next installment of this blog series on choice of counsel, I will describe the types of lawsuits that are often pursued in inheritance controversies and that frequently includes multiple actions in sometimes differing courts.  Obviously, if two lawsuits need to be filed to recover an inheritance, then the costs will necessarily increase.

What Does It Cost?

At Reminger, our team has a working knowledge of the complicated path to recovery. We have the knowledge necessary to help you assess cost.  One thing we cannot do, however, is guarantee cost or time as there are so many unknown factors that go into predictions that we cannot know until we get into the case.  Factors out of our control include the response of the opponent.  Some opponents refuse to cooperate and place roadblocks at every avenue to our attempt to gather information.  We might write a letter and get no response, or we might file suit and the opponent evades service.  When the opponent throws up roadblocks, the costs increase relating to the escalating process necessary to employ to get actionable information. With that said, the options as to how to compensate counsel are generally as follow:

1. Contingency Fee – A contingency fee is, in essence, a risk sharing arrangement. If the lawyer takes the case on contingency, he or she assumes the risk of loss.  The lawyer, on contingency will invest their time, and if the case proves unsuccessful bares the risk of loss.  On the other hand, the client, while not having the risk of loss, bares the risk that the case will resolve quickly.  For instance, if you agree to contingency fee and the opponent offers a quick, high value settlement, then the attorney would have earned a larger fee then they might have earned on an hourly rate.   Thus, there are some circumstances when agreeing to a contingency fee can cost you more, and maybe substantially more, than would an hourly rate.  The size of the contingency depends on the potential value and time commitment involved in the case.  For lower value cases or expected labor intensive cases, the contingency will be larger than they may be if the cases are higher value with lower expected time commitments.  It is not unusual to see a range of 1/3^rd to ½ or more.
2. Hourly rate – Rates vary depending on skill set. It is a mistake to think a higher hourly rate translates to higher costs.  When you hire a skilled attorney with substantial knowledge and experience, less time is typically spent on issues that the lawyer intuitively understands without the need for research.   Additionally, you want to know whether appropriate work will be delegated to people who work at lower hourly rates, such as paralegals, law-clerks, or associate level attorneys. 
3. Retainers – Attorneys will often quote a retainer to be paid and held in the attorney’s escrow account. When the attorney bills the time, the retainer may be used to pay the bill.  In some circumstances, the attorney will require the client to keep the money on retainer and to pay the bill from additional funds.  If the representation is terminated and the retainer has not been exhausted than the client will get a refund of the unused portion of the retainer. Usually a lawyer requires a retainer to protect that the fee earned will be paid.  The cost of the retainer depends on the particulars of the case. 
4. Hard Costs – In order to pursue a claim for undue influence you can expect out of pocket, third party costs. In this category, you might see court filing fees, court reporter costs, the fee for purchasing transcripts, expert witness fees, fees charged by financial and medical institutions to gather financial and medical records, costs to serve subpoenas, and other miscellaneous expenses that are incurred in addition to legal fees. 

Conclusion

Deciding to pursue a claim, not only involves the economic considerations but emotional as well.   Many clients approach the question of retaining counsel as a matter of “principal” which involves an entirely different calculation altogether.  Often a client lacks sufficient information to accurately assess value, but still believes, based on the soft factors, that taking a deeper dive is worth the cost.  Many of our clients have been comforted in paying some amount of attorney fees, if only to gain the value of knowing what happened.  When you contact counsel, get a sense about what they think about value and cost and make an informed decision about next steps.  Don’t hesitate to seek a second opinion if you don’t like or understand what you are being told. 

In Part Five, I will discuss what a potential client should consider in selecting counsel to evaluate and pursue a claim on your behalf.