High court hits attorneys’ pockets in probate cases

Thursday, Dec. 30, 2004 | 8:59 a.m.

CARSON CITY -- The state Supreme Court Wednesday came down hard on a 5 percent attorney's fee that has become automatic in handling estates in Clark County.

The court overturned the awarding of $394,429 to the law firm of Kyle & Kyle that handled the probate matters of John W. Bowlds, who died in May 1999 with an estimated worth in excess of $7 million.

The court found that some of the fees sought by attorneys and the executors were unwarranted and there was waste in administering the estate.

It returned the case to District Court in Las Vegas to determine how much work Kyle & Kyle actually put into the estate and what the fee should be.

Mark Solomon, attorney for the American Cancer Society, the major beneficiary of the estate, said Kyle & Kyle deserved $85,875 based on $250 an hour for 343.5 hours.

The three-judge panel of the court said District Judge Mark Gibbons, who has since joined the court, believed that Kyle & Kyle failed to earn the fee, but he approved the 5 percent based on local custom.

The court said District Court judges should weigh seven factors in the Supreme Court rules in deciding how much to award lawyers in handling probate.

The decision, written by Justice Bill Maupin, referred to the $395,429 fee as "generous compensation" for the Las Vegas law firm. The court said the automatic 5 percent fees "are not per se reasonable and, when challenged, must be independently reviewed by the District Court for reasonableness."

The bulk of the estate was given to the Cancer Society, and Bowlds named his tax preparers, Cris and Cathy Cris, as executors, who in turn hired Kyle & Kyle for a 5 percent fee plus $250 per hour for extraordinary chores.

Court records said the administration of the estate was fairly routine.

The court upheld Gibbons who denied payment of $54,625 to the law firm that billed for extraordinary work dealing with disposal of property in Louisiana.

Kyle & Kyle also advised the executors to sell $4 million in securities through three different brokers to avoid the appearance of favoritism that might arise from use of the executors' personal broker.

Two of the brokers -- NevWest Securities Corp and Capital Growth Resources -- charged sales commission of nearly 5 percent, and the other, Morgan Stanley Dean Witter, was willing to liquidate the stocks for a 1 percent commission.

The Supreme Court upheld Gibbons' finding that Kyle & Kyle improperly advised the executors to use three brokers. He deducted the brokerage commission in excess of 1 percent amounting to $106,991 from the fees paid Kyle & Kyle.

The court said that the executors should also be required to pay part of the $106,991. Maupin said Cris "had been a licensed stockbroker for many years and was aware that brokerage fees varied within that industry (and) he made no attempt to negotiate the commission."

The court said the executors had the fiduciary duty to conserve the assets of the estate. "Mr. Cris must have understood that, regardless of his attorney's advice, he was committing waste against the estate."

When the Cancer Society challenged the fees, the executors hired attorney Cary Colt Payne to defend them and to pay him from money in the estate. Gibbons said Payne should not be paid out of the proceeds in estate and the Supreme Court agreed.