Courts Intensify Scrutiny of Lawyers’ and Trustees’ Fees

Courts, regulators and beneficiaries across U.S. probate, trust and bankruptcy proceedings have intensified scrutiny of lawyers' and trustees' fees, leading to more contested fee applications and formal objections.

Judges and court-appointed trustees are requiring fuller disclosure of time records, billing rates and the basis for percentage or commission calculations. Several probate and bankruptcy courts have held hearings to examine whether hourly rates and contingency splits reflect market rates, the work's complexity and the results achieved.

In bankruptcy, 11 U.S.C. § 330 requires fees to be reasonable, and U.S. Trustee offices have increased review of large fee requests. In state probate and trust courts, beneficiaries have challenged attorney fees and trustee commissions under fiduciary duty rules and probate codes. Fee committees, independent accountants and court examiners are auditing bills and recommending reductions or reallocations.

Law firms and professional trustees are filing more detailed fee petitions, contemporaneous time entries and comparative market data to justify rates. Some firms are shifting tasks to junior lawyers or paralegals and documenting who performed each task. Trustees increasingly submit itemized accountings and explain how commissions were calculated under statutory schedules or trust terms.

Common complaints include large hourly fees with limited documentation, high contingency percentages on modest recoveries, overlapping billing by multiple lawyers, charges for administrative tasks that lower-billed staff could handle, and trustee commissions that appear disproportionate to estate value or work performed. Courts review factors such as time spent, skill required, customary local rates, results obtained and any fee arrangement in governing documents.

Bar associations and state regulators have updated guidance on billing practices and client communications. Some probate judges and state legislatures are considering proposals for mandatory pre-approval of certain fees, stricter notice requirements to beneficiaries and standardized accounting formats. Beneficiaries have sought enforcement or adjustment where trustee calculations diverge from statutory fee schedules.

The duty of fee reasonableness traces to fiduciary obligations and ethical rules. The American Bar Association's Model Rule 1.5 lists factors courts commonly consider. Federal bankruptcy law authorizes courts to award reasonable compensation to professionals. Courts use the lodestar method-hours multiplied by a reasonable rate-or a percentage-of-recovery approach where appropriate.

Court filings show more detailed billing, clearer fee agreements and increased judicial oversight of fee-setting. Parties in trust, probate and bankruptcy matters are preparing more documentation to support fee requests and responding to more frequent objections.