One of the reasons that many people find hiring a probate lawyer intimidating is that there's no price tag in sight. Many clients literally have no idea how much they might end up owing. But the process doesn't have to be so mysterious. If you've found that you need expert help, first become familiar with the different ways lawyers charge. Second, protect yourself by getting a written fee agreement from the lawyer.
Remember that the estate pays the probate lawyer's fee—it doesn't come out of the executor's pocket. Of course, if you are both the executor and the only inheritor, then the fee does, in essence, come out of money that is soon to belong to you. Otherwise, the cost is taken from the estate before assets are distributed to the people who inherit them.
There are three main ways that lawyers charge for probate work; legal communities in different parts of the country have different customs. The lawyer may also offer you a choice of ways to calculate the bill.
Probably the most common way for probate lawyers to charge clients is to bill by the hour. Hourly rates vary depending on where you live and how experienced (and busy) the lawyer is. In a rural area, you might be billed $150/hour; in urban areas, you're more likely to see rates of $200/hour and up.
Specialists charge more per hour than do general practitioners, but they're likely to be more efficient. If they've filed probate paperwork a hundred times in the local court, they've probably figured out how to do it quickly and in a way the court will accept.
Because so much of the typical probate case is just standard paperwork, most attorneys use paralegals to help them. Paralegals aren't lawyers, but they've had special training or have simply learned from the attorney how to prepare certain documents. The attorney supervises their work and typically bills their time at a lower rate.
Another popular billing method is the flat fee. An attorney who's done a lot of probates knows about how long the work takes, and charging a lump sum means the attorney doesn't have to keep careful records of how the lawyers and paralegals spend their time. Some attorneys also find that clients are more relaxed and comfortable dealing with the attorney when they know the meter isn't always running.
If you are quoted a flat fee, make sure you understand what it covers. It likely won't include extra costs such as court filing costs or appraiser's fees. And if you have a complicated case—involving a will contest or an estate tax return, for example—the fee will go higher.
In a few states, lawyers are authorized by law to collect a percentage of the value of the estate as their fee. They're not required to do so—you are free to negotiate an hourly rate or flat fee with them. But many prefer it because it usually pays so well in relation to the amount of work actually required.
These are the states where percentage fees are allowed by statute:
One of the reasons these fees are so often unreasonable under the circumstances is that they are based on the gross value of the probate assets, not the actual net value. For example, if the estate contains a house worth $300,000, but there's still $100,000 left on the mortgage, the lawyer's fee is based on $300,000—not the $200,000 of equity. Also, it's not usually more difficult to prepare probate paperwork for a $700,000 house than it is to prepare it for a $150,000 house—so why should the fee be so different?
Just for an example, take a look at California's statutory fee schedule:
A probate estate with a gross value of $500,000 would generate $13,000 in legal fees. If you were paying by the hour, you could get a lot of hours of the attorney's work for that much money.
When you hire an attorney on behalf of the estate, get a fee agreement in writing. It's required by law in some states, and it's a good idea no matter where you are.
The agreement should state: the hourly fee of each lawyer and paralegal who may do work for you, an estimate of the total cost or number of hours, other costs you may need to pay (including court fees, postage, publication and so on), how often you will be billed, when payment will be due, and how detailed the bill will be (each item should be described, so you don't just get a bill for unspecified "legal services").