Estate of Sue Bratton Thompson

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
September 28, 2011 Session
ESTATE OF SUE BRATTON THOMPSON
Direct Appeal from the Chancery Court for Maury County
No. P646-08 Jim T. Hamilton, Chancellor
No. M2011-00411-COA-R3-CV - Filed March 14, 2012
This appeal involves an attorney fee award. The appellee attorney was hired to represent the
executor of an estate. After handling the estate, the attorney submitted a fee request to the
trial court. The beneficiary of the estate objected, but the trial court awarded the fee amount
requested. The beneficiary appeals, arguing that the attorney fee request was so excessive
that it should be disallowed entirely under White v. McBride, 937 S.W.2d 796 (Tenn. 1996).
In the alternative, if the fee request is not disallowed in its entirety, the beneficiary contends
that the trial court erroneously relied on a percentage formula in the local rule, and that the
fee should be reduced because the attorney sought fees for work that was either delegated to
others or which did not benefit the estate. We hold that the amount of the attorney’s fee
request and fee award is excessive. While the case presents a close question as to whether
any fee should be allowed, we conclude that the lawyer should not be precluded from
receiving any fee, and so modify the fee award to a reasonable amount.
Tenn. R. App. P. 3; Appeal as of Right; Judgment of the Chancery Court
Modified and Remanded
H OLLY M. K IRBY, J., delivered the Opinion of the Court. A LAN E. H IGHERS, P. J., W.S., and
J. S TEVEN S TAFFORD, J., each filed a Separate Concurrence.
John D. Kitch, Nashville, Tennessee; David J. Callahan, III, Nashville, Tennessee, for the
Respondent/Appellant, Catherine Dockery
Petitioner/Appellee Jerry Colley, Columbia, Tennessee, pro se
OPINION
F ACTS AND P ROCEEDINGS B ELOW
In April 2006, Sue Bratton Thompson (“Decedent”) executed a will. She executed codicils
in July 2006 and April 2008. The primary beneficiary of the will and the codicils was the
Decedent’s daughter, Respondent/Appellant Catharine Thompson Dockery (“Ms. Dockery”).
The will named First Farmers and Merchants Bank of Columbia, Tennessee (the “Bank”) as
the Executor of the Decedent’s estate. The Decedent died on October 24, 2008.
Thereafter, Columbia, Tennessee attorney Jerry C. Colley (“Mr. Colley”) was hired to
represent the Executor and probate the will and the codicils. Mr. Colley’s contract of
engagement is not included in the appellate record. In November 2008, Mr. Colley filed a
petition on behalf of the Bank in the Chancery Court of Maury County, Tennessee, to probate
the will and the codicils. An order probating the will and the codicils was subsequently
entered. After that, Mr. Colley was responsible for making sure that a proper tax return was
filed, and effectuating the transmittal of the Estate assets, primarily to Ms. Dockery. To
assist with the tax return, Mr. Colley hired C. Anthony Edwards (“Mr. Edwards”), a tax
lawyer, to prepare the estate tax return. The Decedent owned a substantial amount of Bank
stock, so Mr. Colley retained a firm to value the stock for the estate tax return.
After this work was completed, Mr. Colley filed a motion in the trial court to set a reasonable
attorney fee for his legal services to the Estate. In support, he submitted his own affidavit,
which states:
My hourly rate was $250.00 per hour during this period of time. This Estate
has an approximate value of $3,000,000.00 (Three Million Dollars) most of
which value consist[s] of 65,912 shares of First Farmers and Merchants Bank
common stock. Due to this situation I retained C. Anthony Edwards, attorney
at law, who is acknowledged as an expert in the field of estate taxation. . . .
Because of the fact that the Estate owns such a large block of First
Farmers & Merchants Bank stock we retained the firm of Lattimore, Black,
Morgan and Cane who are experts in valuing stock not traded on the public
stock exchanges. That firm was able to place a value per share on this amount
of stock which value is almost 50% (fift[y] percent) less than the price
common stock of this bank was trading for at the time of death of Sue Bratton
Thompson. The value placed on this stock was accepted both by [the]
Tennessee Department of Revenue and the Internal Revenue Service for estate
tax purposes. This resulted in a savings of approximately $500,000.00 (Five
Hundred Thousand Dollars) in estate taxes both state and federal.
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In August and September 2009, I negotiated the sale of the Sue
Thompson home at 203 Woods Circle, Columbia, Tennessee with the eventual
buyer, Tom Massey and Wife Nora Massey. This was for a sale[s] price of
$200,000.00 (Two Hundred Thousand Dollars) and was done without retaining
a real estate firm.
I shall be called upon to render further service in connection with the
administration of the Estate[.]
Mr. Colley also filed a document entitled “Hours Expended,” listing the time he spent on the
Estate. In it, Mr. Colley stated that he had expended forty-eight hours in service to the
Estate. Neither Mr. Colley’s motion, nor the attached documents, sought a certain fee
amount.
In response, Ms. Dockery filed an objection to Mr. Colley’s fee request. In her response, Ms.
Dockery asserted that many of Mr. Colley’s time entries were not appropriate and did not
benefit the Estate, especially his time entries for tax preparation, administrative work at the
Decedent’s house, and preparation of Mr. Colley’s own fee request. Ms. Dockery said that
it had “come to [her] attention” that Mr. Colley believed that he was entitled to a fee in the
amount of $50,000, and she objected to the amount of the fee. She argued that the fee
request was so excessive that Mr. Colley should be awarded no fee at all. If he were awarded
a fee, Ms. Dockery contended that it should be based on only twenty-seven hours of time
spent on work for the Estate, rather than the forty-eight hours Mr. Colley claimed.
On November 23, 2010, the trial court entered an order awarding Mr. Colley the $50,000 fee
he requested, with $10,784.50 of the total $50,000 fee to be paid to the tax attorney, Mr.
Edwards. Echoing Mr. Colley’s affidavit, the trial court’s order stated:
This Estate had an approximate value of Three Million Dollars, most
of which value consists of 65,912 shares of First Farmers and Merchants Bank
common stock. Due to this situation, Mr. Colley retained C. Anthony
Edwards, Attorney at Law in Columbia, Tennessee. Mr. Edwards is
recognized as an expert in the field of estate taxation.
Since the Estate owns such a large block of First Farmers and
Merchants Bank stock, Mr. Coll[e]y hired the firm of Lattimore, Black,
Morgan and Cane who are experts in valuing stock not traded on the public
stock exchanges. This law firm with the assistance of Mr. Edwards was able
to place a value per share on this amount of stock which value is almost fifty
percent less than the price common stock of this bank was trading for at the
time of the death of Sue Bratton Thompson. The value placed on this stock
was accepted both by [the] Tennessee Department of Revenue and the Internal
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Revenue Service for Estate Tax purposes. This work done by these firms
resulted in a savings of approximately half a million dollars in estate taxes both
state and federal.
....
Mr. Colley also negotiated the sale of Sue Thompson’s home at 203
Woods Circle, Columbia, TN with the eventual buyer[s], Tom Massey and his
wife, Nora Massey. This was for a sales price of Two Hundred Thousand
Dollars and was done without retaining a real estate firm, thus saving a
realtor’s fee of some six percent.
Hon. Jerry Colley now requests approval of a reasonable fee for
service[s] rendered. This fee will be determined by the guidelines set forth in
Local Rules for this Judicial District 33.03, 33.04 and 33.05. Rule 33.04–Fees
for Personal Representatives. This rule suggest[s] that the Judge be guided,
but not bound by a formula allowing not less than one percent nor more than
five percent of the gross probate estate for which the personal representative
was responsible. Mr. Colley has requested a fee of Fifty Thousand Dollars
from which he must pay $10,784.50 in fees to Mr. C. Anthony Edwards
leaving Mr. Colley a fee of [$39,215.50]. This represents a fee of between
on[e and one] and one-half percent of the gross estate and is well within the
formula suggested by Rule 33.04 of the Local Rules.
After that, Ms. Dockery filed a motion to alter or amend the judgment. The motion argued
that the trial court erred in basing the fee calculation on the value of the gross taxable estate
— approximately $3 million — rather than the gross probate estate — approximately
$622,000 — in the percentage formula in the Local Rule. The motion noted that substantial
assets of the Decedent, including the Bank stock and a home that belonged to the Decedent,
passed outside of the probate estate.1
The Bank, as executor of the Estate, filed a response to Ms. Dockery’s motion to alter or
amend.2 The Bank acknowledged that Ms. Dockery was correct in differentiating between
the $3 million gross taxable estate and the approximately $622,000 gross probate estate under
the percentage formula in the Local Rule. In particular, the Bank noted that the Decedent’s
stock passed outside of the probate Estate and was not part of the Estate. In light of this, the
Bank suggested that the trial court “re-visit” the attorney fee award.
1
The Decedent apparently owned two homes. A home on Woods Circle was part of the Estate, and the
second home on Hampton Pike passed outside of the Estate.
2
The Bank is not a party to this appeal.
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In his response to Ms. Dockery’s motion to alter or amend, Mr. Colley maintained that the
fee award was justified. He cited to the Local Rules, and asked the trial court to consider
“the time, experience, skills, difficulty in dealing with beneficiaries of the Estate and the
value of the Gross Probate Estate.” The response did not elaborate on the alleged difficulties
with the Estate beneficiary or state the dollar value of the gross probate estate. Mr. Colley
relied on the “extraordinary services” he rendered to the Estate, namely, obtaining an
advantageous valuation of the Bank stock for tax purposes, and selling the Decedent’s home
without retaining a real estate agent. Based on this, Mr. Colley asserted that the $50,000 fee
awarded to him by the trial court was “reasonable and appropriate.”
On January 25, 2011, the trial court denied Ms. Dockery’s motion to alter or amend. Similar
to Mr. Colley’s response to the motion to alter or amend, the order stated: “the Court finds
that Jerry C. Colley rendered extraordinary services including [the] sale of the decedent’s
home, services concerning the value of the []65,912 shares of First Farmers and Merchants
Bank common stock for inheritance and estate tax purposes and assistance in preparing
complex tax returns.”3 Ms. Dockery now appeals.
I SSUES ON APPEAL AND S TANDARD OF REVIEW
On appeal, Ms. Dockery contends that the fee requested by Mr. Colley, and awarded by the
trial court, was “clearly excessive,” so Mr. Colley should receive no fee at all, under White
v. McBride, 937 S.W.2d 796 (Tenn. 1996). In the alternative, if Mr. Colley is allowed a
reasonable fee, Ms. Dockery contends that the trial court erred in basing its award solely on
the percentage formula in the trial court’s Local Rule, and in doing so, by calculating the
award based on the gross taxable estate rather than the gross probate estate. If Mr. Colley
is not precluded under White v. McBride from receiving any fee at all, Ms. Dockery asks this
Court to set a reasonable fee.
Our Supreme Court recently summarized the standard of review applicable to a trial court’s
decision regarding a reasonable attorney fee as follows:
[A] determination of attorney’s fees is within the discretion of the trial court
and will be upheld unless the trial court abuses its discretion. We presume that
the trial court's discretionary decision is correct, and we consider the evidence
in the light most favorable to the decision. The abuse of discretion standard
does not allow the appellate court to substitute its judgment for that of the trial
court, and we will find an abuse of discretion only if the court “applied
3
The trial court also noted that the $10,784.50 fee to the tax attorney, Mr. Edwards, was to be paid from the
overall $50,000 award to Mr. Colley.
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incorrect legal standards, reached an illogical conclusion, based its decision on
a clearly erroneous assessment of the evidence, or employ[ed] reasoning that
causes an injustice to the complaining party.”
Wright ex rel. Wright v. Wright, 337 S.W.3d 166, 176 (Tenn. 2011) (internal citations
omitted). “An abuse of discretion occurs when a court strays beyond the applicable legal
standards or when it fails to properly consider the factors customarily used to guide the
particular discretionary decision.” Lee Med., Inc. v. Beecher, 312 S.W.3d 515, 524 (Tenn.
2010).
A NALYSIS
We consider first whether Mr. Colley’s fee request is excessive, and then address whether
it is so “clearly excessive” that he should be precluded from receiving any fee at all under
White v. McBride.
Excessive Fee
Ms. Dockery argues that Mr. Colley’s fee award is excessive for numerous reasons. First,
she contends that the fee award was based on a percentage formula in the trial court’s Local
Rule that is contrary to the law on setting a reasonable attorney fee. Second, she argues that
the dollar value of the estate on which the trial court based its award was incorrect. Third,
Ms. Dockery asserts that the “extraordinary services” on which Mr. Colley relies do not
support the fee awarded to him. Fourth, Ms. Dockery contends that some of the time entries
claimed by Mr. Colley did not relate to the estate and/or did not benefit the estate. We
address each of these arguments in turn.
Because the fee of $10,784.50 to the tax attorney, Mr. Edwards, was expected to come out
of Mr. Colley’s fee and Mr. Edwards’ fee is not disputed on appeal, for purposes of our
analysis, we consider the fee awarded by the trial court to Mr. Colley to be $39,215.50, or
$50,000 minus Mr. Edwards’ fee.
Percentage Formula in Local Rule
Ms. Dockery argues that there is no basis in the record for a fee award to Mr. Colley of
$39,215.50. Even taking at face value the 48 hours Mr. Colley claims he spent on behalf of
the Estate, which Ms. Dockery disputes, multiplied by his claimed hourly rate of $250 per
hour, that amounts to a fee of approximately $12,000. Therefore, Ms. Dockery maintains,
it is apparent that the trial court must have relied solely on the percentage formula contained
in its Local Rule to arrive at a fee award of over $39,000.
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In the alternative, if reliance on the percentage formula in the Local Rule is permissible, Ms.
Dockery argues that Mr. Colley gave the trial court the wrong figure on which to base the
percentage calculation. Local Rule 33.04 references a percentage of the “gross probate
estate,” which in this case is $622,633, because substantial assets of the Decedent passed
outside of the probate estate. In his initial fee request, Mr. Colley simply stated to the trial
court that the “Estate has an approximate value of $3,000,000.00 (Three Million Dollars),”
which is the approximate dollar value of the gross taxable estate,4 not the gross probate
estate.
In response, Mr. Colley acknowledges that the gross probate estate is $622,633.00, and that
the figure of “approximately” $3 million is in fact the gross taxable estate.5 He argues that
the trial court did not rely exclusively on the Local Rule’s percentage formula, but also relied
on the “extraordinary services” he rendered and the hours he worked. He does not
substantively address Ms. Dockery’s argument that use of such a percentage formula is
inappropriate.
Rules 33.04 and 33.05 (the “Local Rules”) of the Local Rules of Practice of the 22nd Judicial
District, applicable to Maury County, provide as follows:
33.04. Fees for Personal Representatives. In setting or approving fees to
personal representatives, the Clerk and Master or the court will consider the
personal representative’s time, experiences, skills, difficulty in dealing with
creditors and beneficiaries of the estate, and the value of the gross probate
estate for which the personal representative was responsible. The Court may
consider any extraordinary services, including sales of real or personal
property, litigation involving claims against the estate or other matters,
complex tax returns or audits, the management of the decedent’s business, will
contests, or such other special services that may have been necessary. The
Clerk and Master and the Court will be guided, but not bound, by a formula
allowing not less than 1% nor more than 5% of the gross probate estate for
which the personal representative was responsible. Time expended and the
nature of the estate will be given greater consideration than the monetary value
of the estate.
4
The gross taxable estate was $2,877,238.
5
While Mr. Colley’s brief in this appeal concedes that the gross probate estate is not $3 million but is instead
$622,633, his pleadings before the trial court do not include this distinction.
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33.05. Fees for Attorneys. In setting and approving fees to attorneys, the
Court will consider the factors and the guideline formula set forth in the
preceding paragraph 33.04, and the factors set forth in Rule 8 of the Supreme
Court of Tennessee.
In its original fee award, the trial court stated: “This Estate had an approximate value of
Three Million Dollars,” and explained that this value consisted primarily of the stock. The
trial court stated that “Mr. Colley has requested a fee of Fifty Thousand Dollars” minus the
$10,784.50 payment to the tax attorney, leaving Mr. Colley a fee of $39,215.50. It explained
that the $50,000 award “represents a fee of between on[e] and [one] and one-half percent of
the gross estate and is well within the formula suggested by Rule 33.04 of the Local Rules.”
Thus, as argued by Ms. Dockery, it is apparent that the trial court’s award was driven in large
part by the percentage formula set forth in the Local Rule.
The Rules of Professional Conduct (RPC) contained in Rule 8 of the Rules of the Tennessee
Supreme Court address attorney fees. RPC 1.5 lists numerous factors to be considered in
determining the reasonableness of an attorney fee. Tenn. Sup. Ct. R. 8, RPC 1.5. The Court
in Wright expressly rejected the use of percentage formulas, especially percentage caps to
set an award of attorney fees. Wright, 337 S.W.3d at 182. The Court explained that
“specify[ing] a percentage of what an attorney could recover in a case involving a minor . .
. would depart from our existing law that ‘ultimately the reasonableness of the fee must
depend on the particular circumstances of the individual case.’ ” Id. at 182 (quoting White,
937 S.W.2d at 800). It cautioned: “Prescribing a fee structure would tend to result in similar
fees being awarded in cases with different factual and procedural histories.” Wright, 332
S.W.3d at 182. The Court rejected a formulaic approach based on any one of the listed
factors, noting that “no single factor found within RPC 1.5 merits special emphasis over the
other factors in determining a reasonable fee[,] . . . . [although] the trial court may conclude
that certain factors merit greater weight under the unique circumstances of a particular case.”
Id. at 186.
Local Rule 33.04 characterizes the percentage formula as a “guide” to the court in setting an
attorney fee, and notes that the court is not bound by them.6 Moreover, the “amount
involved” is expressly listed in RPC 1.5 as a factor to be considered in setting an attorney fee.
See Tenn. Sup. Ct. R. 8, RPC 1.5(a)(4) (2011). Nonetheless, we find that the inclusion of
such a formula in the Local Rule is antithetical to RPC 1.5 and Wright in that it invites the
6
For many years, awarding fees based on a percentage of the assets was common in probate matters. See In
re Estate of Weisberger, 224 S.W.3d 154, 160, 164 n.5 (Tenn. Ct. App. 2006) (the trial judge remarked, “for
many years . . . fees in probate were a percentage of the assets. Then the Courts told us that’s not the way
to do it.”).
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trial court to use a “rule of thumb” instead of the individualized weighing process mandated
by the Supreme Court. Local rules adopted by trial courts may not conflict with the rules
adopted by the Supreme Court or other substantive law. See Hessmer v. Hessmer, 138
S.W.3d 901, 905, n.4 (Tenn. Ct. App. 2003) (citing Tenn. Code Ann. § 16-2-511 (2009)).
Here, the trial court explicitly relied on the percentage formula set forth in Local Rule 33.04.7
In doing so, the trial court “stray[ed] beyond the applicable legal standards.” See Lee Med.,
312 S.W.3d at 524.
Extraordinary Services
Mr. Colley argues on appeal that the trial court did not rely exclusively on the percentage
formula in Local Rule 33.04, but also considered “extraordinary services” that he rendered
on behalf of the Estate, pursuant to the provision in Local Rule 33.04 stating that the trial
court “may consider any extraordinary services” rendered, and listing examples of such. Ms.
Dockery insists that the trial court relied exclusively on the percentage formula.
In its original fee award, the trial court recites some of what Mr. Colley describes as
“extraordinary services,” but its explanation of how it arrived at the fee amount appears to
be based on the amount Mr. Colley requested and the percentage formula. However, in its
later order denying Ms. Dockery’s motion to alter or amend, the trial court explained its
denial of the motion as follows:
The Court finds that Jerry C. Colley rendered extraordinary services including
sale of the decedent’s home, services concerning the value of the []65,912
shares of First Farmer and Merchants Bank common stock for inheritance and
estate tax purposes and assistance in preparing complex tax returns.
Therefore, we agree with Mr. Colley that the trial court’s ultimate decision approving his fee
request was in part based on consideration of the “extraordinary services” Mr. Colley claims.
The term “extraordinary services” is not used in RPC 1.5. The Local Rule lists examples of
such extraordinary services, such as “sales of real or personal property, litigation . . . against
7
In applying the percentage formula in the Local Rule, as noted by Ms. Dockery, the trial court explicitly
relied on the value of the gross taxable estate instead of the gross probate estate referenced in local Rule
33.04. Because we find that relying on any such formula was error, we do not address this issue raised by
Ms. Dockery at this juncture. However, we find the statement of the applicable dollar value of the estate in
Mr. Colley’s fee request to the trial court to be significant to our analysis under White v. McBride, as
addressed later in this Opinion.
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the estate . . . , complex tax returns or audits, . . . or other such special services that may have
been necessary.” See Local Rule 33.04. The Supreme Court’s recent amendment to RPC
1.5 adds a comment clarifying that the factors listed “are not exclusive.” Wright, 337 S.W.3d
at 177 n.17. We find nothing about the “extraordinary services” language in the Local Rule
to be contrary to the attorney fee analysis prescribed by the Supreme Court.
In light of this, we examine the “extraordinary services” claimed by Mr. Colley in this case,
to see if they justify the fee amount awarded to him. In the trial court, and in his appellate
brief, the “extraordinary services” Mr. Colley lists are:
1.) Retaining of the firm of Lattimore, Black, Morgan & Cain, PC, to
determine the value of a large block of First Farmers and Merchants Bank
stock which consisted of 65,912 shares of this common stock. With the help
of Mr. Lattimore, Mr. Colley, with the aid of Mr. Anthony Edwards, was able
to submit to the IRS and Tennessee Department of Revenue a per share value
which saved the Estate and Ms. Dockery approximately $500,000.00. 2.) Mr.
Colley negotiated the sale of the home at 203 Woods Circle, Columbia,
Tennessee, to the eventual buyer without the need of a real estate firm, thus
saving a Realtor’s fee of sum [sic] six (6) percent. 3) Mr. Colley assisted Mr.
Anthony Edwards, considered an expert in the estate tax field, in preparing the
IRS Estate Tax Return and the Tennessee Department of Revenue Inheritance
Tax Return which, because of the size of the taxable estate, were more
complex returns.
As to the Bank stock, Ms. Dockery contends that it passed directly to Ms. Dockery upon the
Decedent’s death, and thus was never part of the probate estate. The Bank’s response to Ms.
Dockery’s motion to alter or amend confirms: “The Bank stock was a ‘transfer on death’
asset and therefore passed directly to Ms. Dockery as a non-probate asset.” Mr. Colley does
not dispute this. Moreover, Mr. Colley hired specialists to value the stock for tax purposes;
he did not value it himself. The compensation for the firm that valued the stock is not at
issue. Mr. Colley’s decision to hire specialists to value the stock was appropriate under the
circumstances, but does not appear to be extraordinary.
Mr. Colley notes that he negotiated the sale of a home belonging to the Decedent, “thus
saving [the Estate] a Realtor’s fee of s[ome] six (6) percent.” 8 We find that the house sale
is an appropriate factor to be considered in the overall fee, though it does not rise to the level
of “extraordinary” under the circumstances in this case.
8
Mr. Colley explained at oral argument in this appeal that he knew of someone who was interested in
purchasing the home, so he decided to handle the sale instead of listing the home for sale with a realtor.
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Finally, Mr. Colley emphasizes that “because of the size of the taxable estate, [the Estate tax
return was] complex . . . .” Again, because the tax issues were not within Mr. Colley’s area
of expertise, he hired a specialist, Mr. Edwards, to prepare the Estate tax return. The separate
fee of the tax lawyer, approximately $10,000, is not challenged on appeal. The hiring of a
tax specialist was appropriate, but straightforward and not extraordinary. Mr. Colley does
not explain why he should be compensated for the work delegated to the tax lawyer.
From our overall review of the record, the estate, with a single beneficiary, appears relatively
straightforward. The only potentially complex parts were appropriately doled out to
specialists, who were paid separately. It is appropriate to consider Mr. Colley’s sale of the
Woods Circle home, but only to the extent that his handling the house sale would effect a
savings or other benefit to the Estate; paying Mr. Colley a premium attorney fee for doing
the work of a realtor would be inappropriate.
Thus, we find that, in general, it is appropriate for a trial court to consider “extraordinary
services” performed by an attorney, pursuant to Local Rule 33.04. However, the services
cited by Mr. Colley cannot fairly be described as “extraordinary” and do not provide support
for awarding him an enhanced attorney fee.
Hours Worked
On appeal, Ms. Dockery argues that the hours Mr. Colley claims to have worked on Estate
business were either on matters that did not benefit the Estate, or were for administrative
work rather than lawyer work, or were duplicative of the time spent by the specialists hired
for the Estate.
Mr. Colley did not address this argument in his pleadings filed in the trial court. Likewise,
he did not address it in his brief filed in this appeal.
Mr. Colley filed a document with the trial court entitled “Hours Expended by Jerry C. Colley,
Attorney.” The document, filed in support of his fee request, lists the hours that Mr. Colley
claims he worked on behalf of the Estate. Our review is based on that document, the other
documents supporting the fee request, and the record as a whole.
Ms. Dockery first disputes the 6.0 hours Mr. Colley claims to have worked on tax issues for
the Estate, when in fact Mr. Colley hired a tax attorney, Mr. Edwards, to handle the estate
tax matters. Mr. Colley’s time records include entries for “work on TN inheritance tax,”
“conference with C. Anthony Edwards,” “preparing tax return,” and other similar entries.
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Mr. Colley does not explain why such substantial time was required of him on matters that
he hired Mr. Edwards to handle.9
Ms. Dockery also disputes 5.0 hours that Mr. Colley lists for “work at house” or “Terminix
man at house/inspection” and the like, arguing that Mr. Colley seeks a lawyer’s compensation
for clearly non-lawyer work. Most of the time entries do not indicate whether Mr. Colley’s
time was at the Woods Circle house that was part of the Estate or at the Hampton Pike house
that was not part of the Estate, and there is no explanation for why the Estate should be
charged a lawyer’s rate for time described as “work at house.”
Mr. Dockery points out that nearly all of the time entries in Mr. Colley’s “Hours Expended”
document lack any detail that would inform either the trial court or this Court how the time
spent benefitted the Estate. For example, Mr. Colley’s last time entry lists “10.00 hours” on
“[n]umerous telephone calls with Elizabeth Burnett, Katherine, C. Anthony Edwards and
Rick Mullin; preparation of Statement of Hours Expended.” The time entry thus combines
various unspecified telephone calls with Mr. Colley’s preparation of his own bill to the
Estate. It is not appropriate for the Estate to be charged for the preparation of Mr. Colley’s
fee request, as this time is expended for the benefit of Mr. Colley, not the Estate. See Union
Planters Nat’l Bank v. Dedman, 86 S.W.3d 515, 521 (Tenn. Ct. App. 2001) (“Attorney’s
fees may be charged to the estate as an administrative expense if they can be shown to have
been required and inure to the benefit of the entire estate.”). The time spent on Mr. Colley’s
“Hours Expended” document, however, is “lumped in” with various telephone calls and is
not separable from the time spent on the calls. Even for separated time entries, the time
record contains almost no indication of the general subject matter of telephone calls,
meetings, or other work.10
We note that, in its recent decision in Wright v. Wright, the Supreme Court declined to
require trial courts to rely solely or even primarily on a “lodestar” approach for setting
attorney fee awards, that is, calculating the fee award simply by multiplying the number of
hours expended by the lawyer’s reasonable or customary hourly rate. Wright, 337 S.W.3d
at 179-80. Therefore, we need not determine on appeal the exact number of hours spent by
Mr. Colley on work that benefitted the Estate.
9
Some of the time listed in the “Hours Expended” document as spent conferring with the tax attorney in
person or by telephone do not appear to “marry up” with other documents in the record, such as the time
records for the tax attorney. For example, for some of Mr. Colley’s time entries, there is no corresponding
time entry for Mr. Edwards.
10
The absence of any detail in Mr. Colley’s records might present less of a problem if Mr. Colley were
seeking only a modest fee. In this case, however, Mr. Colley seeks a substantially enhanced fee.
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However, Ms. Dockery raised valid concerns, both in the trial court and in this appeal. The
burden, of course, is on Mr. Colley to show that the time listed in the “Hours Expended”
document filed with the trial court related to assets of the probate estate and benefitted the
Estate. Union Planters, 86 S.W.3d at 521. The Wright case notes that a lawyer’s fee request
should be supported by “precise information” on the time spent on the matter. Wright, 337
S.W.3d at 181.
Ms. Dockery asserts that the time listed on Mr. Colley’s “Hours Expended” document that
benefitted the Estate totals 27 hours, rather than the 48 hours claimed by Mr. Colley. In the
face of this assertion in the trial court, Mr. Colley offered no rebuttal and no explanation, but
instead merely pointed to the “extraordinary services” discussed above. He does the same
in his appellate brief to this Court. We are left with little choice but to consider Ms.
Dockery’s contention on the hours Mr. Colley worked that actually benefitted the Estate to
be undisputed for purposes of this appeal.
RPC 1.5 Factors
As set forth above, we have determined that the trial court “stray[ed] beyond the applicable
legal standard[]” in basing its fee award on the percentage formula in the Local Rule, and
thus abused its discretion in that regard. This does not tell us, however, whether the amount
of the fee award was unreasonable and an abuse of discretion. To make this determination,
we consider the factors set in RPC 1.5. At the time of the proceedings below, this Rule of
Professional Conduct stated:
(a) A lawyer’s fee and charges for expenses shall be reasonable. The factors
to be considered in determining the reasonableness of a fee include the
following:
(1) the time and labor required, the novelty and difficulty of the
questions involved, and the skill requisite to perform the legal
service properly;
(2) the likelihood, if apparent to the client, that the acceptance
of the particular employment will preclude other employment by
the lawyer;
(3) the fee customarily charged in the locality for similar legal
services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the
circumstances;
(6) the nature and length of the professional relationship with
the client;
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(7) the experience, reputation, and ability of the lawyer or
lawyers performing the services;
(8) whether the fee is fixed or contingent;
(9) prior advertisements or statements by the lawyer with respect
to the fees the lawyer charges; and
(10) whether the fee agreement is in writing.
Tenn. Sup. Ct. R. 8, RPC 1.5.11
Applying the first factor in RPC 1.5, Mr. Colley’s time and labor is reflected in his time
records, tempered by the unrefuted objections raised by Ms. Dockery. They indicate a
modest expenditure of attorney time and labor. As noted above, apart from the valuation of
the Decedent’s Bank stock and the preparation of the Estate tax return, both of which were
handled by specialists, the Estate involved neither “novelty” nor “difficulty.” As to the skill
required, the record indicates that Mr. Colley has expertise in probate matters, and that he
possessed the requisite skill to employ the necessary specialists and handle the matters that
were not delegated to those specialists.
As to the second factor, there is nothing in the record indicating that Mr. Colley’s acceptance
of the representation of the Decedent’s Estate precluded him from other employment as a
lawyer.
The third factor listed under RPC 1.5 is the fee customarily charged in the locality for similar
services. Consideration of this factor in this case is complicated by the percentage formula
in Local Rule 33.04, which we have held is contrary to the Supreme Court Rules and the
applicable caselaw. Nevertheless, we recognize that the percentage formula in the Local
Rule may have been applied as a “rule of thumb” for a number of years, and may have
informed Mr. Colley’s expectations as to the fee that would be deemed reasonable by the trial
court. See In re Estate of Weisberger, 224 S.W.3d at 160, 164. The percentage formula in
Local Rule 33.04 provides for a total fee of “not less than 1% nor more than 5% of the gross
probate estate.” Because the duties of an attorney handling such an estate normally include
the estate tax return, we interpret the percentage formula as applying to Mr. Colley’s entire
fee, inclusive of the $10,784.50 fee to be paid by Mr. Colley to tax lawyer Anthony Edwards.
Applying the percentage formula to the $622,633 gross probate estate in this case, the total
fee at the low end of the range would be $6,226.33, and the total fee at the high end of the
11
On January 1, 2011, the first sentence of RPC 1.5 was amended to read as follows:
A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an
unreasonable amount for expenses.
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range for the most difficult estate would be $31,131.65. Thus, Mr. Colley’s fee request of
$50,000 substantially exceeds the upper limit of the range of fees yielded from application
of the formula in the Local Rule, and does not comport with the fees customarily charged in
his locality for similar matters.12
Under subsection (a)(4) of RPC 1.5, the Court is directed to consider “the amount involved
and the results obtained.” Here, Mr. Colley’s primary responsibilities were with respect to
the gross probate estate, a substantial dollar value of $622,633. The gross taxable estate of
$2,877,238 must also be considered even though it includes non-probate assets such as the
Bank stock, because Mr. Colley had overall responsibility for making certain the Estate tax
return was filed. However, Mr. Colley retained specialists to value the Bank stock and
prepare the Estate tax return, so the burdens associated with the non-probate assets were
borne largely by the specialists. As to the results achieved, the record indicates that the
specialists achieved very good results, and that the results for the overall Estate appear
satisfactory.
As to factor (a)(5) under RPC 1.5, nothing in the record indicates that Mr. Colley was
subjected to time limitations in his handling of the Estate. As to factor (a)(6), the record does
not include any information as to the nature and length of Mr. Colley’s professional
relationship with the executor of the Estate, the Bank. With regard to factor (a)(7), from the
high regard of the trial court for Mr. Colley, we presume his “experience, reputation, and
ability” to be excellent.
RPC 1.5(a)(8) directs the Court to consider “whether the fee is fixed or contingent.” As
discussed below, in the Supreme Court’s decisions in White v. McBride and Wright v.
Wright, this was an important component in determining whether the enhanced fee was
justified under the facts in each case. See Wright, 337 S.W.3d at 183-88; White, 937 S.W.3d
at 800-01. In the case at bar, there is no indication in the record that Mr. Colley entered into
a fee agreement that involved any risk that he would not recover a reasonable fee. There are
no further factors under RPC 1.5 that would be applicable.
The comments to RPC 1.5 also make it clear that the listed factors are not exclusive. See
Wright, 337 S.W.3d at 177 n.17. In that vein, we also consider the fact that a buyer for the
Decedent’s house was readily available, so Mr. Colley simply handled the sale of the house
and did not hire a realtor for it. This was a benefit to the Estate.
12
Using the percentage formula in the Local Rule, for the most difficult estate, the fee that Mr. Colley would
receive after paying the tax lawyer would be a little over $20,000. By this measure, the requested fee of
$39,215.50 is almost twice as much as Mr. Colley would receive at the top end of the percentage range for
the most difficult cases.
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Considering all of these factors, we must conclude that the $39,215.50 fee awarded to Mr.
Colley is well beyond the range of reasonableness for an attorney fee in this case. Therefore,
in light of the erroneous legal standard utilized by the trial court in its reliance on the Local
Rule’s percentage formula, and the trial court’s award of a fee amount that is well beyond
what could be considered reasonable, we must conclude that the trial court abused its
discretion in the fee award to Mr. Colley.
White v. McBride
Having concluded that the fee award to Mr. Colley is excessive and an abuse of discretion,
we now turn to the issue of whether Mr. Colley’s fee request was so “clearly excessive” as
to constitute an ethical transgression, thereby precluding him from receiving any fee at all
under White v. McBride, 937 S.W.2d 796 (Tenn. 1996).
Comparing Mr. Colley’s fee request to the fee Mr. Colley would receive under a strict
“lodestar” approach of hours worked multiplied by hourly rate, Ms. Dockery asserts that Mr.
Colley’s fee request was so clearly excessive that he should be precluded from recovering
any fee at all. In response, Mr. Colley argues that White v. McBride is factually
distinguishable. He insists that his fee request certainly was not so clearly excessive that he
should be awarded no fee at all.
In White, an attorney was hired to represent a husband in the probate of his wife’s estate.
Under the attorney’s fee contract with the husband, the attorney was to receive a third of the
husband’s recovery from his wife’s estate. Id. at 797-98. Before the assets in the wife’s
estate were distributed, the husband died. Id. at 798. The attorney filed a claim against the
husband’s estate for an attorney fee in the amount of $108,291, or one-third of the wife’s
assets that the husband’s estate would receive, based on the attorney’s one-third contingency
fee contract with the husband. Id. at 798-99. The executor of the husband’s estate disputed
the attorney fee, arguing that the claimed fee was “clearly excessive” and thus unenforceable.
Id. at 799.
The trial court in White rejected the attorney’s fee request under the contingency fee contract
as excessive. Id. at 799. It awarded him a fee of $12,500 under the doctrine of quantum
meruit. Id. The attorney appealed, and the intermediate appellate court affirmed. Id. at 800.
The petitioner attorney then appealed to the Tennessee Supreme Court.
On appeal, the White Court examined the issue of “whether the contingency fee contract
itself and the [attorney’s] subsequent attempt to enforce that contract contravened DR 2-
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106,” the predecessor to RPC 1.5.13 Id. The provision of DR 2-106 at issue stated: “A
lawyer shall not enter into an agreement for, charge, or attempt to collect an illegal or clearly
excessive fee.” See White, 937 S.W.2d at 800. As with the current RPC 1.5, DR 2-106
describes how the court is to determine whether the fee sought by the lawyer is “clearly
excessive,” listing factors to be considered.14 Id. After examining the fee contract at issue
and the facts in light of the factors listed in the disciplinary rule, the White Court stated:
“[W]e agree [with the trial court] that the fee sought to be charged was clearly excessive
under DR 2-106 . . . .” Id. at 801. It therefore held that the fee contract was unenforceable.
Id.
The White Court then considered whether the attorney should nevertheless be permitted to
recover fees on a quantum meruit basis. Id. It concluded that permitting an attorney who
knowingly seeks a clearly excessive fee to utilize quantum meruit as a “fall back” would
encourage unethical overreaching by lawyers. Id. at 803. The Court held that “an attorney
who enters into a fee contract, or attempts to collect a fee, that is clearly excessive under DR
2-106 should not be permitted to “recover fees under the equitable doctrine of quantum
13
In March 2003, the Code of Professional Responsibility was replaced by the Rules of Professional Conduct.
See Bd. of Prof. Resp. v. Curry, 266 S.W.3d 379, 382 n.2 (Tenn. 2008). At that time, RPC 1.5 replaced DR
2-106.
14
DR 2-106 provided:
(B) A fee is clearly excessive when, after a review of the facts, a lawyer of ordinary
prudence would be left with a definite and firm conviction that the fee is in excess of a
reasonable fee. Factors to be considered as guides in determining the reasonableness of a
fee include the following:
(1) The time and labor required, the novelty and difficulty of the questions involved, and the
skill requisite to perform the legal service properly.
(2) The likelihood, if apparent to the client, that the acceptance of the particular employment
will preclude other employment by the lawyer.
(3) The fee customarily charged in the locality for similar legal services.
(4) The amount involved and the results obtained.
(5) The time limitations imposed by the client or by the circumstances.
(6) The nature and length of the professional relationship with the client.
(7) The experience, reputation, and ability of the lawyer or lawyers performing the services.
(8) Whether the fee is fixed or contingent.
White, 937 S.W.2d at 800.
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meruit.” Id. It therefore reversed the trial court’s award of fees on a quantum meruit basis.
White, 937 S.W.2d at 803.
Mr. Colley contends that the “facts in White v. McBride are vastly different from the facts
in this case,” and so “the rule in White v. McBride should not be applied” by this Court.
(Brief at 3.) He does not explain the fact differences that he contends are salient.
To be sure, there are differences in the facts in White compared to the facts in this appeal.
In White, the Court examined both the attorney’s fee contract “and the subsequent attempt
to enforce that contract” under the disciplinary rule. Id. at 800. In the case at bar, Mr.
Colley’s fee contract is not at issue, and is not even in the record. Rather, at issue are Mr.
Colley’s fee request to the trial court and his subsequent attempts to collect the fee.
Regardless, the disciplinary rule being enforced in White prohibited the lawyer from
“enter[ing] into an agreement for, charg[ing], or attempt[ing] to collect . . . [a] clearly
excessive fee.” Id. at 800. The holding in White went to both the fee contract and the
attorney’s attempts to collect it. Id. at 803. To hold White inapplicable to the case at bar
because the dispute is over a fee request to the Court instead of a fee contract would be
contrary to both the holding and the principles articulated in White.
Finding that White v. McBride may be applied in this appeal, we examine whether Mr.
Colley’s fee request to the trial court was “clearly excessive” and whether his attempts to
collect the fee constitute the type of ethical transgression prohibited under White and RPC
1.5.
In White, after the Court considered all of the applicable factors in the disciplinary rule, it
focused on the lawyer’s effective hourly rate if he received the requested fee. The petitioner
attorney in White sought a fee that would have equated to a rate of approximately $950 per
hour, over six times the attorney’s normal rate of $150 per hour. White, 937 S.W.2d at 801.
The Court also noted that the estate was “in the scheme of things, not terribly complicated
or novel,” and the result obtained by the attorney was “not particularly good.” Id.
The White Court also concluded that while the attorney’s fee agreement was facially a
contingency fee contract, there was no “true contingency” because the attorney was aware
at the time he undertook the representation that the wife had substantial assets and the
interest of the husband in those assets was “beyond dispute.” Id. at 800, 801. This was
important to the Court for two reasons. First, the petitioner attorney had no real risk of non-
recovery, which would have been some justification for enhanced compensation. Id. In
addition, the Court appeared to take umbrage at the attorney’s contention that, when he
undertook representation of the husband, he had “no idea” of the size of the wife’s estate, and
thus perceived a true contingency. Id. at 800. After reviewing the facts at length, the Court
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rejected this contention as untrue, and commented that the attorney’s proffered justification
for an outsize fee “rings quite hollow indeed.” Id. at 801.
The facts in White must be contrasted with those in Wright. In Wright, the petitioner
attorney was hired to represent a minor on a personal injury claim. Wright, 337 S.W.3d at
169. He entered into a contingency fee agreement and then proceeded to spend some 144
hours developing the case and looking for “deep pockets” to maximize the recovery on
behalf of the minor. Id. at 187. Eventually, the case was settled for an amount that exceeded
the available insurance policy limits. Id. at 169, 174. The minor’s attorney then petitioned
for a fee award.15 Id. at 172. In support of his fee request, the attorney filed an affidavit
detailing his time and the work he did. Id.
In a hearing before the trial court, the petitioner attorney in Wright testified in support of his
fee request. The attorney said that he tried more jury cases than any other attorney in his
locality. Because of this, he charged an hourly rate of $400 per hour, at least twice the rate
of any other attorney in the area. Id. at 173. The petitioner attorney testified that he discloses
to potential clients that he knows of no other attorney in the area whose hourly rate is so high.
The attorney recounted in detail the circumstances presented to him when he was hired, and
his efforts to explore and develop potential sources for a substantial recovery. He explained
in detail his time records, including an inadvertent duplication of two time entries. Id. at
172-73. Finally, he explained his reasoning for settling the case instead of taking it to trial.
Id. at 173-74.
The trial court in Wright awarded the petitioner attorney $131,000, almost one-third of the
minor’s total recovery. Id. at 175. The guardian ad litem appealed, ultimately to the
Tennessee Supreme Court. On appeal, the Court spent the bulk of its opinion discussing
whether an attorney fee for representation of a minor should be set differently from other
cases, eventually concluding that it should be set in accordance with RPC 1.5 regardless of
the age of the attorney’s client. Id. at 185. The Court then examined the reasonableness of
the fee awarded to the petitioner attorney. Id. at 186.
As in White, the Wright Court looked at the effective hourly rate to the lawyer in the fee
awarded. It noted that the effective hourly rate equated to more than five times the attorney’s
normal hourly rate, and pointedly compared it to the award of six times the lawyer’s hourly
rate that was deemed “clearly excessive” in White. Id. at 186 (observing that the Wright
attorney’s rate of compensation “borders on” the rate in White).
15
The initial fee award was appealed by the guardian ad litem, and the intermediate appellate court remanded
for a hearing. The trial court held the required hearing and modified the fee award. The guardian ad litem
then filed the second appeal. Wright, 337 S.W.3d at 172-76.
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Despite the close correlation in the effective hourly rate, the Court in Wright approved the
fee award. It relied primarily on the fact that, unlike White, when the petitioner attorney in
Wright undertook representation of the minor, the risk of a minimal recovery appeared
substantial. Id. at 188. In addition, the result obtained by the attorney was “very good,”
owing to the attorney’s diligent work. Id. at 187-88.
While not stated explicitly, we glean an undercurrent in both cases related to the integrity and
straightforwardness of the attorney’s fee request. In Wright, the Court’s overall description
depicts a forthright, credible justification by the attorney for the admittedly high fee request.
In contrast, in White, the attorney’s proffered justification for the high fee was methodically
broken down by the Court and revealed as disingenuous; the language used by the Court
indicates indignation at such dissembling by a lawyer. White emphasized the professional
responsibility of a lawyer seeking a fee from his client, and described a violation of the
disciplinary rule governing attorney fees as “an ethical transgression of a most flagrant sort
as it goes directly to the heart of the fiduciary relationship that exists between attorney and
client.” White, 937 S.W.2d at 803.
Thus, while both White and Wright involved fee requests that were substantially enhanced
over the attorney’s customary hourly rate, the key differences appear to be the result reached,
the risk of non-recovery to the attorney, and the overall integrity of the fee request.
We apply these principles to the case at hand. This case is similar to Wright, in that the
overall result for the Estate was good, including the portion that was handled directly by Mr.
Colley. However, in contrast with Wright, in this case there is no risk of non-recovery by
the attorney to justify such an outsize fee request. From our reading of White and Wright,
the risk of non-recovery is a major consideration.
As to the remaining factor, Mr. Colley’s fee request leaves the Court uneasy. We presume
that Mr. Colley, an experienced probate lawyer, was aware that the percentage formula in
Local Rule 33.04 was based on the dollar value of the gross probate estate rather than the
gross taxable estate. Despite this, his original fee request recites that the “Estate has an
approximate value of $3,000,000.00 (Three Million Dollars),” a clear reference to the dollar
value of the gross taxable estate. The trial court’s fee award explicitly applies the Local Rule
percentage formula to this dollar value supplied by Mr. Colley. After the difference between
the dollar value of the gross taxable estate and the gross probate estate was pointed out in Ms.
Dockery’s motion to alter or amend and confirmed in the Bank’s response, Mr. Colley’s
response to the motion does nothing to address or clarify the correct dollar value for the
percentage formula. Moreover, after valid questions about the somewhat sketchy time
records were raised, Mr. Colley chose not to explain them, but to simply ignore the questions.
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In addition, as justification for the hefty fee, Mr. Colley pointed primarily to the
accomplishments of the specialists hired. All of this is troubling.
Certainly a lawyer can be expected to advocate forcefully for a fee he believes to be
reasonable compensation for his valuable services. However, while some “spin” by a lawyer
on behalf of a client may be tolerable, the cases indicate little tolerance for it where the
attorney is advocating for his own fee from his client. White and Wright indicate that an
attorney in such circumstances should shrink from overstatement and present a detailed,
forthright justification for the requested fee.
Mr. Colley’s fee request does not meet the level of straightforwardness exhibited in Wright.
This factor, along with the lack of any risk of non-recovery and the disproportionate amount
of the fee Mr. Colley requested, “gives us pause.” Wright, 337 S.W.3d at 186. However,
Mr. Colley also steered clear of the outright untruths laid bare in White, and, like Wright, a
good result was reached in this matter.
While this case presents a close question, on balance, we conclude that Mr. Colley’s fee
request and his efforts to collect the fee do not rise to the level of “an ethical transgression
of a most flagrant sort.” White, 937 S.W.2d at 803. Therefore, we find that he is not
precluded from receiving any fee at all.
Reasonable Fee
We go on, then, to set a reasonable fee for Mr. Colley’s services in this case. The moderate
amount of time required of Mr. Colley, the lack of any risk of non-recovery, and the lack of
novelty or difficulty of the tasks not delegated to specialists all indicate that a modest
attorney fee should be awarded. However, the amount involved was substantial and the
results good. Moreover, although Mr. Colley should not be compensated at a lawyer rate for
handling the sale of the Decedent’s house, avoiding the necessity of a realtor’s fee was a
benefit to the Estate.
Overall, we find that a fee in the amount of $8,000 is a reasonable fee for Mr. Colley’s legal
services in this case. The fee of $10,784.50 for the tax lawyer, Mr. Edwards, must be added
to this, making the overall fee award a total of $18,784.50.
C ONCLUSION
The order of the trial court awarding Mr. Colley a fee of $50,000 is modified to award a total
fee of $18,784.50 for the purposes set forth above, and the cause is remanded for further
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proceedings consistent with this Opinion. Costs of this appeal are assessed against Appellee
Jerry C. Colley, for which execution may issue if necessary.
HOLLY M. KIRBY, J.
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