Don't let your lawyer rip you off
Hiring a law firm to wind up an estate and establishing the cost for services rendered is not as simple as it sounds, finds Angelique Ruzicka.
There are a few professionals out there that will dodge the question: “So how much will it all cost?”. Usually it’s the professionals in the service industry that are hesitant about giving you an overall picture of how much their services will cost and these include mechanics, builders and lately as a friend of mine came to discover lawyers do it too.
Sometimes I get the feeling that they try to avoid the question so they can charge as much as they humanly can. Of course I am not trying to tar all mechanics, builders and lawyers with the same brush here but experience and observations have led me to conclude that some of these so-called ‘professionals’ really do try to dodge the question for this very reason.
Counting the cost
A friend of mine recently tried to hire a law firm after her father passed away to manage his estate which consisted of some assets that were based locally (in South Africa) and abroad in Europe. The South African law firm she hired put her in touch with a law firm that specialised in dealing with estates that were based overseas.
However, this specialist law firm gave her the run around in terms of how much the overall cost of recovering and distributing the estate would be. Common phrases like ‘it’s difficult to calculate how much it would be’ and ‘it depends on what happens’ were used to steer her off course, but when she eventually pried them for an example of a case they were currently working on. She found out that the bill for another client currently sat at R500,000 and the estate had not been wound up. Needless to say she walked away and found another law firm who were willing to give her a quote.
So if you are looking to hire a law firm to wind up an estate, what should you be looking out for and what should they be charging you? According to Meyer de Waal, director of Oosthuizen & Co Meyer de Waal Attorneys, the fee prescribed by the Master of the High Court is 3,5 % of the value of the estate. The remuneration excludes disbursements such as advertising costs, Master’s fees and also excludes transfer costs where immovable property forms part of the estate.
De Waal does concede that it can be difficult for an attorney to provide an estimate. “The value of the estate is also not always easily determinable or readily available and the attorney will have to obtain further information first before being able to confirm the value of the estate for purposes of calculating the allowable fee. However, the fee to wind up the estate can be negotiated and we suggest that the attorney, as agent, be allowed the opportunity to study the nature, structure and complexity of the estate before such fee quotation is provided,” he explains.
If the estate involves property and/or cash that is based overseas then a certified copy of the will must be obtained and it should comply with the laws of the country in which those foreign assets are based. “The estate must then be wound up according to the laws of that particular country and the executor appointed. This can lead to substantial and unnecessary delays – in particular, if a South African executor has to perform his/her functions overseas,” says de Waal.
Establishing the facts
What else should you ask a law firm before you hire them? Hussan Goga, a Durban attorney and the chairperson of Trusts and Deceased Estates Committee of the Law Society of South Africa, offers this advice:
1. Obtain an overview of the administration process to wind up the estate.
2. Check on the expertise and skills of the attorney to wind up the estate.
3. Ascertain the estimated period that it would take to wind up the estate.
4. Establish the estimated costs to wind up the estate and the basis on which such costs are computed.
And if you are not happy with the quote they are giving you or if the law firm refuses to give you an overall picture of the costs it is best to walk away says Goga: “It is [asking for the overall cost] a very important question and transparency is of the utmost.”
Finally, if you are dissatisfied with the services you are getting from the law firm you have already appointed you can take the matter further with the Law Society of South Africa. “If there is a dispute between a client and the law firm, which he/she has hired then the client may approach the Provincial Law Society where the attorney practices to assess the fee payable to the attorney. This usually occurs when the mandate of the attorney is terminated during the winding up process,” says Goga.