Fee Agreements in Probate Practice: Structuring Engagement Letters That Protect Your Firm

Why the Engagement Letter Is Your Most Important Document

The engagement letter is not a formality — under California Business & Professions Code §6148, it's the document that makes your fee agreement voidable at the client's election if you skip it on any matter projected to exceed $1,000. Most states have adopted similar rules. Honestly, it's the single most important document you'll draft for any given probate matter, and a well-crafted one sets expectations, defines scope, establishes the fee arrangement, and shields your firm from the disputes that plague attorneys relying on handshake deals or generic retainers.

Probate presents unique engagement challenges that do not arise in transactional or litigation matters. The identity of the client is often ambiguous: are you representing the executor personally, the estate as an entity, or both?

Multiple family members may attend the initial consultation, creating confusion about who has retained you and to whom you owe duties. The fee may be paid from estate assets rather than the client’s personal funds, which raises questions about when you get paid and who approves the amount. Each of these issues must be addressed explicitly in the engagement letter.

Malpractice insurers consistently report that fee disputes are among the top sources of grievances filed against estate and probate attorneys. In many cases, these disputes arise not because the fee was unreasonable but because the client or beneficiary did not understand how the fee was calculated, when it would be deducted from the estate, or what services it covered. A detailed engagement letter eliminates these misunderstandings before they become grievances.

Types of Fee Arrangements in Probate

Probate attorneys typically choose among four fee structures, each with distinct advantages and risks. Statutory fees, available in states like California (Probate Code §10810) and Missouri, are the simplest: the fee is calculated as a percentage of the gross estate value using a schedule prescribed by statute.

The attorney’s engagement letter need only reference the statute and explain the calculation. Statutory fees offer predictability for both attorney and client, but they can overcompensate on simple estates and undercompensate on complex ones.

Hourly billing remains common in reasonable-compensation states like Ohio and New York. The engagement letter should specify the hourly rate for each timekeeper, the billing increment (typically six or ten minutes), and whether paralegal time is billed separately.

Hourly billing aligns compensation with effort but introduces uncertainty for the client. Consider providing a fee estimate or range based on comparable matters to set expectations without creating a binding cap.

Flat fees are increasingly popular for routine, uncontested probate matters. A flat fee of $3,500–$7,500 for a straightforward estate administration is transparent, eliminates billing disputes, and rewards efficiency.

The engagement letter must clearly define what is included in the flat fee (e.g., petition for probate, inventory, final accounting, order of distribution) and what triggers additional charges (e.g., contested claims, real estate sales, tax return preparation). Hybrid arrangements—a flat fee for the base administration plus hourly billing for extraordinary services—combine the best features of both models and are worth considering for any practice.

Essential Engagement Letter Provisions

Every probate engagement letter should include the following elements, regardless of fee structure. First, identification of the client: state explicitly whether you represent the personal representative in their fiduciary capacity, the estate, or the personal representative individually.

This distinction matters enormously when conflicts arise between the personal representative and beneficiaries. The ACTEC Commentaries on Model Rules discuss the “entity theory” of estate representation at length and provide guidance on the competing approaches.

Second, define the scope of representation with specificity. Probate clients often assume their attorney will handle everything remotely related to the decedent’s affairs: selling real estate, filing income tax returns, mediating family disputes, transferring vehicle titles. Your engagement letter should enumerate the services included and, equally important, the services excluded. Common exclusions include tax return preparation (often referred to a CPA), real estate closings (often referred to a title company), and contested litigation (which may require a separate engagement).

Third, address billing practices and payment timing. Will fees be billed monthly, at milestones, or deducted from the estate at closing?

Will you require an upfront retainer, and is it reimbursable if the engagement terminates early? In probate, the source of payment—estate assets—creates a unique dynamic.

The beneficiaries, who are not your clients, will bear the economic cost of your fees through reduced distributions. Their interests are affected even though they are not parties to the engagement. Addressing this dynamic transparently in the engagement letter reduces the risk of objections at the final accounting stage.

Ethical Requirements Under the Model Rules

Model Rule 1.5 governs attorney fees and requires that every fee be reasonable under the circumstances. The rule identifies eight factors relevant to reasonableness: the time and labor required, the novelty and difficulty of the questions involved, the skill requisite to perform the legal service properly, the likelihood that the engagement will preclude other employment, the fee customarily charged in the locality, the amount involved and the results obtained, the time limitations imposed by the client or circumstances, and the nature and length of the professional relationship. In probate, the “amount involved” factor is particularly relevant because fees are often calculated as a percentage of the estate, and courts scrutinize whether a percentage-based fee is reasonable given the actual work performed.

Model Rule 1.5(b) requires that the scope of the representation and the basis or rate of the fee be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation. Many states have adopted this requirement as a mandatory rule rather than a preference.

California Business and Professions Code §6148, for example, requires a written fee agreement in any matter expected to exceed $1,000 in fees. Failure to comply can render the fee agreement voidable at the client’s election. The ABA Model Rules provide the full text of these provisions and should be reviewed alongside your state’s specific rules of professional conduct.

Model Rule 1.8(a) imposes heightened requirements when an attorney enters into a business transaction with a client or acquires an ownership interest in estate property. This arises in probate more often than attorneys realize—for example, when an attorney purchases real estate from an estate they are administering, or when an attorney-executor receives both legal fees and executor compensation.

The rule requires that the transaction be fair, that the client be advised in writing to seek independent legal counsel, and that the client give informed consent in writing. Violations of Rule 1.8 in the probate context can result in disgorgement of fees, disciplinary proceedings, and malpractice liability.

Conflicts of Interest in Dual Representation

One of the most common ethical pitfalls in probate practice is representing both the personal representative and one or more beneficiaries. This dual representation creates a conflict of interest under Model Rule 1.7 whenever the interests of the fiduciary and the beneficiary diverge—which happens far more frequently than many practitioners anticipate. The personal representative’s duty to administer the estate impartially may conflict with a beneficiary’s desire to accelerate distributions, challenge creditor claims, or dispute the valuation of specific assets.

If you choose to undertake dual representation, which some jurisdictions permit with informed consent, your engagement letter must include a detailed conflict waiver. The waiver should explain the nature of the potential conflict, describe the risks to each party, and confirm that both parties have had the opportunity to consult with independent counsel. Some practitioners address this by representing only the personal representative in their fiduciary capacity and making clear in the engagement letter that beneficiaries are not clients and should seek independent legal advice if their interests diverge from the estate’s administration.

The safest approach, and the one recommended by most malpractice insurers, is to represent only the personal representative in their fiduciary capacity and to decline representation of any individual beneficiary. This avoids the conflict entirely and allows you to advise the personal representative without the constraint of competing loyalties.

For a fuller discussion of probate ethics issues including dual representation, see our article on ethics in probate practice. Additional guidance is available from the ACTEC Commentaries on Model Rules.

Court Approval of Extraordinary Fees

In most jurisdictions, the probate court must approve attorney fees before they are paid from estate assets, either as part of the final accounting or upon a separate petition. This judicial oversight creates both an opportunity and a risk.

The opportunity is that court-approved fees are virtually immune from later challenge by beneficiaries. The risk is that the court may reduce your requested fee if it finds the amount unreasonable given the complexity of the matter.

Extraordinary fees—compensation beyond the statutory schedule or the amount contemplated in the engagement letter—require separate court approval in most jurisdictions. Extraordinary services in probate typically include contested proceedings (will contests, creditor claim disputes, removal proceedings), tax controversies (estate tax audits, income tax disputes), real estate transactions (sale of estate property, partition actions), and business continuity issues (managing ongoing business operations during administration). Your engagement letter should reserve the right to petition for extraordinary fees and should describe the types of services that would trigger such a petition.

To support a petition for extraordinary fees, maintain detailed contemporaneous time records documenting every task performed, the time spent, and the results achieved. Courts evaluate extraordinary fee petitions using the same reasonableness factors applicable to ordinary fees under Model Rule 1.5. A petition supported by detailed time records, a narrative explaining why the services were necessary and could not have been anticipated at the outset of the engagement, and evidence of the benefit conferred on the estate is far more likely to succeed than a conclusory request for additional compensation. Our probate calculator can help you estimate baseline fees so that extraordinary fee petitions are properly contextualized for the court.

Fee Waivers, Discounts, and Family Member Representations

Probate attorneys frequently encounter requests for fee discounts or waivers, particularly when the personal representative is a family member of the decedent who is grieving and financially stressed. While accommodating these requests can be good client relations and good business, they must be documented carefully to avoid ethical and tax complications.

If you discount your fee below the statutory amount or below your standard rate, document the discount in writing. In statutory fee states, the personal representative must also waive their right to the full statutory fee on behalf of the estate if the attorney’s fee is being reduced. The fee agreement should state the standard fee, the discounted fee, and the reason for the discount. This documentation protects you if a beneficiary later claims the standard fee should have been charged—and the discount deposited to the estate—rather than simply waived.

When representing family members, be especially attuned to the emotional dynamics that can complicate the engagement. Siblings who are co-executors may disagree on administration decisions.

A surviving spouse who is both executor and beneficiary may have interests that conflict with those of the decedent’s children from a prior marriage. These scenarios are not hypothetical—they arise in a significant percentage of probate matters, particularly in blended families.

Address them in the engagement letter by defining your client clearly and explaining the limitations of your representation. For more on how probate costs are calculated across different fee models, see our guide on how probate costs are calculated and our executor fees explainer.

Withdrawal, Termination, and Fee Disputes

Every engagement letter should address the circumstances under which the representation may be terminated by either party. Under Model Rule 1.16, an attorney must withdraw if the representation will result in a violation of the rules of professional conduct or other law, and may withdraw if the client fails to fulfill an obligation regarding the attorney’s services (such as failing to pay fees), the client insists on pursuing an objective the attorney considers repugnant or imprudent, or the representation has been rendered unreasonably difficult by the client’s conduct.

In probate, termination is complicated by the fact that the matter is pending before a court and substitution of counsel requires court approval. Your engagement letter should explain this procedural requirement and reserve the right to petition for withdrawal if the client breaches the agreement. It should also address how your fees will be calculated and paid if the engagement terminates before the matter concludes—typically, any unearned portion of a flat fee is reimbursed, or outstanding hourly charges are billed and due within 30 days.

Fee disputes in probate often arise at the final accounting stage, when beneficiaries (who have been watching their inheritance shrink over months of administration) object to the attorney’s compensation. The best defense against these objections is a clear engagement letter, detailed billing records, and communication throughout the process about the work being performed and the fees being incurred. Some jurisdictions require or encourage fee arbitration as an alternative to litigation.

Check your state bar’s fee arbitration program and consider including an arbitration clause in your engagement letter. For guidance on the accounting process that typically triggers these disputes, see our article on probate accounting requirements.