Opinion
2019-2373
06-08-2021
In the MATTER OF the Application of Frank IACOVANGELO, Administrator of the Estate of Frederick Mok a/k/a Friderik Mok, deceased, For a Decree of Judicial Settlement
Gallo & Iacovangelo, LLP, Rochester (Frank B. Iacovangelo of counsel), for petitioner.
Gallo & Iacovangelo, LLP, Rochester (Frank B. Iacovangelo of counsel), for petitioner.
Christopher S. Ciaccio, J. Before the court is a Petition for Judicial Settlement brought by Frank Iacovangelo, Esq. as administrator of the Estate of Frederick Mok a/k/a Friderik Mok. Iacovangelo was appointed administrator of the Mok estate in 2019 in his capacity as then-Public Administrator for Monroe County, a position in which he had served continuously from January 1, 2000 through January 1, 2021.
At issue, raised sua sponte by the court (see SCPA §§ 2110 and 2307[a] ; Stortecky v. Mazzone, 85 N.Y.2d 518, 626 N.Y.S.2d 733, 650 N.E.2d 391 [1995] ); Matter of Duke , 297 A.D.2d 469, 746 N.Y.S.2d 709 [1st Dept 2002] ), are Iacovangelo's requests, in his capacity as former Public Administrator and continuing on as administrator of the estate, for statutory commissions as well as for "reasonable and necessary expenses" pursuant to SCPA 1207(4). Also at issue are the legal fees he or his firm, Gallo & Iacovangelo, LLP (of which Frank Iacovangelo is a name partner) is requesting as counsel to the Public Administrator.
The claims the court has elected to review are as follow: statutory commissions in the amount of $20,043.00, fees pursuant to SCPA 1207(4) in the amount of $18,690.00, and legal fees in the amount of $32,070.00, for a total of $70,803.00, to be collected from an estate the value of which is $534, 800.53.
No objections have been filed by any party, although it well-established and beyond dispute that the Surrogate is empowered to review attorney fees even where no party objects (Id. ; see also New York Estate Administration § 13.01 [Turano and Radigan 2021 ed]).
The Mok Estate
Friderick Mok, a long-time resident of Monroe County but who had recently moved back to his home country of Slovenia (he was a citizen of both the United States and Slovenia), died on May 29, 2018 in Slovenia.
At the time of his death decedent owned assets in Monroe County. These included the proceeds of the sale of real estate located at 70 Avery Street in the City of Rochester, having closed on a sale of the property before leaving for Slovenia and which was being held in the trust account of his attorney Patrick Lydon, Esq. He also owned cash and securities in accounts at Charles Schwab and ESL Credit Union.
On October 15, 2019, Frank Iacovangelo, as Public Administrator of the County of Monroe, was appointed as Administrator for the Estate of Frederick Mok a/k/a Friderik Mok pursuant to Surrogate Court Procedure Act 1211(1)(2). Elena Cariola, Esq., an attorney and partner (and daughter of Frank Iacovangelo) in the firm Gallo & Iacovangelo, LLP, and who was serving also the "Deputy Public Administrator," a position to which she was appointed in 2005, stated in an affidavit that she received an email from one Branco Frik indicating that his uncle "Fredrick Mok" had "died and that he was requesting the involvement of the Monroe County Public Administrator."
On January 31, 2020 Elena Cariola, Esq., signing as "Deputy Public Administrator," filed a Petition for Letters of Administration requesting that letters be issued to Frank Iacovangelo, Monroe County Public Administrator.
The Petition lists one distributee, the decedent's nephew, living in Slovenia. Two sisters predeceased the decedent, and an Order of Inheritance, from a court in Slovenia and attached to the Petition, decreed that the two sisters had predeceased Mr. Mok.
On December 16, 2020 a Petition for Judicial Settlement was offered. The Petition lists the above-mentioned assets, the total value of which is set forth in the accounting as $534,500.00.
Filed with the Petition is an "Affirmation Re: Fees for Legal Services," (using Form 8412 as prescribed by the Surrogate's Court), and verified by Frank Iacovangelo, Esq. It states that 105.9 hours were expended in representation of the Estate.
In that Affirmation, Frank Iacovangelo, signing as the Public Administrator, requests "compensation for legal services rendered to the Estate" in the amount of $32,070.00. In the same form he requests "Fiduciary commissions" in the amount of $20,034.00, and " SCPA 1207 (4) expenses" in the amount of $18,690.00. Accompanying the Affirmation encompassed by the form 8412 was another "Affirmation of Legal Services," signed by Frank Iacovangelo as counsel to the Public Administrator, totaling 19 pages. Most of that Affirmation is "boilerplate," i.e., language used in most applications reviewed by the court for legal fees requested by Iacovangelo and/or his firm in matters he handled as Public Administrator.
In paragraph "6" of Form 8412, which asks for "The method or basis by which requested compensation was determined," both boxes are checked: "hourly rate," and, "other: Public Administrator fee schedule."
The court requested follow-up information regarding the calculation and application of the " SCPA 1207(4) fees" and for the itemized time billing records as they pertained to the legal fees.
The itemized billing records were provided. Iacovangelo also provided an "Affidavit" setting forth the calculation of the " SCPA 1207(4) fees," in which he states that they are calculated at 3.5% of the estate value.
Public Administrator fees.
The role of the Public Administrator ("PA") for Monroe County (and for Westchester, Suffolk, Nassau, Erie and Onondaga Counties) is governed by Article 12 of the Surrogate's Court Procedure Act. He (she) is appointed by the Surrogate judge. He does not take a salary nor is he a county official, rather, his compensation is governed by SCPA 1207(3), which states that if the public administrator is an attorney, he "may act as his own counsel" and receives as compensation "such legal fees as allowed by the court together with his reasonable and necessary expenses and disbursements." Nothing is said in this section regarding retention of commissions.
This is different than in Erie and Onondaga counties. SCPA 1207(2) specifically allows the public administrator in each of those counties to retain "the same commissions as are now allowed by law to a fiduciary other than a trustee," in other words, the commissions governed by SCPA 2307. Additionally, SCPA 1207(2) allows the public administrator in Erie and Onondaga counties, in addition to the commissions, "if he be a licensed attorney at law," his legal fees as well as his "reasonable and necessary expenses and disbursements...."
Monroe County is governed by SCPA 1207(3), which states that
"The public administrator of the County of Monroe, if he be a duly licensed attorney-at-law shall receive no salary and may act as his own counsel and shall
receive as his compensation such legal fees as the attorney of the estate as may be allowed by the court together with his reasonable and necessary expenses and disbursements which shall be a charge against the estate in each instance. If he shall not be an attorney-at-law he shall be compensated as is provided for in subdivision 1."
Nothing in this section references the retention of commissions by the public administrator for Monroe County. It had been the practice for many years (certainly during the tenures of the Surrogates serving prior to 2015) that the public administrator for Monroe County would take as compensation only his legal fees and expenses and disbursements, not commissions. Commissions would be paid over to the County, an interpretation of SCPA 1207(3) that is supported by the entry at 2 Warren's Heaton on Surrogate Court Practice § 39.02 (2021), which reads as follows:
A review of the annual audit of the PA from 2000 through 2015 shows commissions being paid to the County of Monroe.
In Monroe County, if the public administrator is an attorney, he receives legal fees and reasonable and necessary expenses and disbursements (paid from the estate) as his compensation instead of a salary or commissions.
2 Warren's Heaton on Surrogate's Court Practice § 39.02 (2021).
In addition, as provided for by SCPA 1206(2), the public administrator for Monroe County "may be allowed by the Board of Supervisors a reasonable amount for the operation of his office." In 1988, that allowance was $12,500 (see, Report of the Attorney General 1988) and by the end of 1999 (when the then-surrogate retired) it is believed it had increased to $25,000.00.
Which has been replaced, in 1971, by the County Legislature.
From 2000 through 2014, again upon information and belief, the allowance paid by the County of Monroe was increased incrementally, but in 2015, an agreement was reached between the public administrator, the newly-elected Surrogate, and the County Attorney, that SCPA Article 12, read as whole but also specifically, SCPA 1207(4), was ambiguous enough to be interpreted so as to permit the public administrator of Monroe County to retain commissions in addition to his attorney fees, in lieu of the statutory allowance to be paid by the County.
The ambiguity is as follows. SCPA 1207(4) states that "on the settlement of the account of the public administrator in each instance except as provided in subdivisions 2 and 3 (emphasis provided) the court may allow his reasonable and necessary expenses and disbursements ..." As stated above, subdivisions 2 and 3 cover the compensation of the public administrator in Erie, Onondaga and Monroe Counties. However, 1207(2) already awards "reasonable and necessary expenses," as does SCPA 1207(3) ("reasonable and necessary expenses and disbursements"), so the limitation of the clause would seem to be unnecessary as it applies to Erie, Onondaga and Monroe counties.
In that first sentence of SCPA 1207(4) (the first part of which is quoted above), it goes on to say that "... and in addition, in the counties of Erie, Monroe, Nassau, Onondaga, Suffolk and Westchester, (the court may allow) a reasonable amount for the expenses of his office, to be fixed by the court."
It then states "In addition thereto he shall be entitled to receive commissions on all moneys or property of any decedent or the proceeds of a cause of action for wrongful death which may come into his hands as provided for a fiduciary other than a trustee."
The question then is whether the word "he" as in "he shall be entitled to receive commissions on all moneys or property of any decedent" refers back to the public administrator of Monroe County, who is clearly referenced in the preceding sentence, so that read as a whole, SCPA 1207(4) is meant to override (or clarify) the seeming limitation of SCPA 1207(3) on the compensation of the public administrator in Monroe County. Bucking years of tradition, as well as the interpretation given by Warren's Heaton, the Surrogate issued a letter opinion which stated that the public administrator in Monroe County can elect to receive and retain commissions in lieu of the allowance provided by the County, which is what Frank Iacovangelo thereafter did.
This court finds the interpretation offered by the former surrogate reasonable, as there is no discernible reason in the legislative history of Article 12, and no apparent logic, that would dictate that the public administrator for Monroe County be treated differently with regard to compensation than the public administrator for Erie and Onondaga counties.
Thus, Frank Iacovangelo is allowed to retain the statutory commission for receiving and paying out funds stemming from his (now ended) role as Public Administrator and appointment as Administrator of the Estate of Frederick Mok, in an amount equal to that allowed under SCPA 2307, which in this case is $20,034.00. Granted, allowing counsel to the public administrator to retain commissions can add up to a large windfall for the public administrator, as compared to the allowance provided by the county government and especially when the public administrator acts as his own counsel, as Iacovangelo has done in virtually every estate on which he has been appointed since 2000. A review of Annual Reports filed by the Public Administrator since 2000 shows commissions far exceeding the $25,000 allowance paid in 1999, in many years by hundreds of thousands of dollars.
The windfall becomes even greater when the PA is allowed to retain what are referred to as "1207(4) expenses," as claimed in Iacovangelo's Affirmation for Legal Services, and as discussed below.
Reasonable And Necessary Expenses Pursuant To SCPA 1207(4)
SCPA 1207(4) allows for the PA to retain, as a "charge against the Estate," both a "reasonable amount for the expenses of his office (emphasis added)," as well as the "reasonable and necessary expenses" incurred in the administration of the estate. It is presumed that the latter would typically include expenses related to the retention of an appraiser of real and personal property, an investigator, a videographer (to record the contents of a dwelling, for example), or a real estate broker. This is consistent with SCPA 2307, which states that on the settlement of an account of an executor or administrator, "the court must allow to him or her the reasonable and necessary expenses actually paid by him or her ..."
As to the former, an ordinary interpretation of the "reasonable amount for the expenses of his office" would include fixed expenses, like office space, storage space, and salaried employees such as a secretary (see Guidelines for the Operations of the Offices of the Public Administrators of New York State, approved February 10, 2012 [Laws of 1993, c. 655 § 12], wherein reference is made to the purchase of office equipment or supplies).
Iacovangelo states in his Affirmation that his SCPA 1207(4) expenses on this file (i.e., his "reasonable amount for the expenses of his office") are $18,690.00, or $35.00 per thousand (3.5 % of the value of the estate).
That formula he says is taken from a document entitled "Proposed Public Administration Attorney Fee Guideline " (emphasis added) and is dated January 14, 2015. By its title it is a guideline for attorney's fees, not the calculation of the public administrator's expenses required to run his office. In addition to listing the fee schedule, it states that "it is understood that from time to time, any Estate may require additional legal (emphasis added) work." Again, the explicit reference is that the schedule of fees relates to legal work, not public administrator duties.
The next sentence makes no reference to legal work or public administrator work, but says, "In addition, unusual circumstances may require additional time and effort. In those circumstances the Court will entertain an application for fees which exceed the above schedule."
Reviewing the Annual Reports of the Public Administrator since 2000, SCPA 1207(4) fees had been awarded on every estate handled by the Public Administrator on the same 3.5% basis. No explanation appears in the Annual Reports as to how that figure was arrived at.
Aside the question of how much the fees should be, it is not clear how fees collected pursuant to SCPA 1207(4) on each individual estate are to be applied.
In the Guidelines for the Operations of the Offices of the Public Administrators of New York State, as approved February 10, 2012 and mandated by SCPA § 1128(2) (Laws of 1993, c. 655 § 12) (referred to herein as "the Guidelines"), there is a section entitled "Maintenance Of Suspense Accounts " (Section 1[D]), and that the "PA may maintain an account containing fees allowed by the court pursuant to SCPA 1106[3] or SCPA 1207[4]" (Guidelines [1][D][1]).
SCPA 1106 is the governing statute for the retention of commissions and expenses for the public administrators of the counties of New York City, all of whom are salaried. Commissions are allowed, at the same rate as fiduciaries under SCPA 2307, and also allowed pursuant to SCPA 1106(3) are "reasonable and necessary expenses and disbursements and in addition, a reasonable amount for the expenses of his office ..."
Subdivision 2 of Section (1)(D) reads as follows:
"The PA may use the suspense account to pay office expenses not funded by the PA's budget, as set forth herein. Expenses funded from the suspense account must be necessary for the proper functioning of the office's operations and for the administration of estates. Where suspense account funds are used to purchase office equipment or supplies, the PA shall maintain records which set forth the date, nature, and amount of the expenditure. Where suspense
account funds are used to pay salaries and benefits for office personnel, the PA shall maintain records which set forth the reasons for employing such personnel and justify the reasonableness of their salaries and benefits."
As noted above, in Monroe County the public administrator no longer receives a budgeted amount of money with which to run the office (as does the public administrator in Nassau, Suffolk and Westchester) but does collect commissions, at least part of which should go to the functioning of the PA office. Nowhere in the Monroe County Public Administrator's Annual Audit for 2019 (or for any year) is any reference made to a "suspense account," nor are there any references to expenditures of the office, with accompanying receipts.
In his Affidavit justifying the request for a fee pursuant to SCPA 1207(4) (requested by the court) Iacovangelo noted that the formula has been applied for all 21 years that he has served as Public Administrator.
In justification he stated that the public administrator's office "comprises the whole office, 25,000 square feet, and a section of the whole office of about 6000 square feet."
The "office" presumably, is the office occupied by the law firm of Gallo & Iacovangelo, LLP, which besides the work of the public administrator, also provides legal representation in the areas (judging from its website) of general litigation, estate planning and administration, criminal defense, domestic relations and family law, insurance and municipal law, personal injury, residential and commercial real estate and business services. The website shows 18 attorneys employed, of counsel or a partner in the firm.
In the section in his Affidavit entitled "Salaries ," Iacovangelo states there are "salaries and associated expenses for a Tax Attorney, an Associate Attorney and three paralegals who spend 90% of their time working on PA files."
He notes that there are offices for all of the above positions, as well as for himself, and for his daughter, the Deputy Public Administrator. He says there is an area for file cabinets and storage of administered estates, and areas for "commonly shared receptionist, reception area, mail room services, accounting department, filing room, and file and supply clerk."
He doesn't say how much of the 25,000 square feet is devoted to the work of the other areas of legal services.
He explains that the office of the public administrator receives a number of calls regarding potential estates for which no compensation is paid because the calls do not result in an estate being opened. Substantial record-keeping is required, which he states is another cost to the public administrator office.
The public administrator, Iacovangelo notes, also arranges for indigent burials. Also, the office of the public administrator is often cited in "ancillary proceedings such as foreclosures," although the annual audit shows that Iacovangelo charged to the entities holding mortgages and seeking foreclosure a fee of $1,000.00 in exchange for consent to be appointed as "limited administrator," which he implies sometimes does not cover additional work that "needs to be addressed," with no additional compensation.
The fee charged by the PA in other counties including Erie and Onondaga is considerably less.
Iacovangelo acknowledges that these "1207(4) fees have been awarded in all estate matters" in which he has served as Public Administrator.
There are several problems here.
There is no statutory or administrative authority for the amount that estates are being charged for "1207(4)" expenses, which is a 3.5% charge against every estate. This is in addition to the commission for receiving and paying out assets, and, is in addition to the legal fee (approximately 6%) requested in the estate before the court (and in many others in which Iacovangelo was appointed as well).
Moreover, for the last 21 years, Iacovangelo, as the public administrator, has by his own admission been conflating the work of counsel to the Public Administrator with his role as public administrator. The confusion and conflicts that can arise over hiring one's own firm, in which he is name partner, should be obvious, but not unavoidable if one takes care to separate out the functions of the two offices. Here, however, judging by the affidavit submitted by Iacovangelo, no effort was ever made to do so.
Iacovangelo claims the public administrator has to pay the salaries of five attorneys, including that of the public administrator and the deputy public administrator, as well as a number of paralegals. However, those persons are doing work in their capacity as counsel to the public administrator and are billing for their time and expenses against each estate. This is obvious from a review of the time billing sheets provided in the Mok Estate. Under the heading of "Gallo & Iacovangelo, LLP" one can see work done by three attorneys, each billing $350.00 per hour, and one paralegal (AJD) billing $125.00 per hour. Even if one is to accept the assertion that these persons are working nearly entirely on public administrator matters, they are being paid, and exceedingly well, from the "legal fees" charged against each estate. It is ordinarily the case, as with any law firm, that the billings for attorney and paralegal work go in part to pay overhead, which not only includes compensation - salaries - but also office space, internet service, phone service, copiers, office equipment, etc. It is not unusual that a firm should net 50% of its total billing, the other 50% being given to overhead (see Olmstead and Associates, newsletter May 22, 2018 — "A desirable profit margin range for law firms is thirty-five to forty-five percent. Some firms are able to attain fifty percent." ).
Judging by Iacovangelo's Affidavit the Gallo and Iacovangelo LLP office is an outlier, because commissions and " SCPA 1207(4)" fees seemingly go to pay all the expenses of the office, so that the attorney billings and a large proportion of all the commissions collected, are net of nothing, in other words, pure profit.
Even if it were true that the public administrator does substantial work on matters for which no compensation is received, it is hardly fair or equitable that money in such large amounts - and there is no question, 3.5% per estate is a large amount - should be harvested from larger estates to pay for the work to be done on smaller and indigent estates.
The court has done an informal survey of the public administrator offices across the State. Among those offices, only in Queens County does the PA charge a fee pursuant to SCPA 1207(4), and then, only 1% of the estate value and moreover, the money is kept, consistent with the above-referenced Guidelines , in a segregated account and is used solely for office expenses of the public administrator.
In Queens (as in the other four counties of New York City and elsewhere) the public administrator is a salaried governmental employee, entirely separate from counsel to the public administrator (which is a private law firm or firms) so there is no opportunity for the kind of commingling of staff and resources that is present (and has been for 20 years) here in Monroe County. Also to be noted is that in Erie County on the vast majority of cases over the period covered by the Part 36 disclosure the counsel to the public administrator is not the firm where the public administrator is a partner.
Accordingly, given the lack of explicit authority or rationale for the award of 3.5 % on estates greater than $5,000.00, and that Frank Iacovangelo has not provided any type of accounting to show the segregation of the money into what is known as a "suspense" account, and that his affidavit does little to clear up or clarify what use is made of the "suspense account" money, the charge to this estate of $18,690.00 is disallowed in its entirety.
Iacovangelo in his capacity as PA and counsel to the PA has submitted several petitions for judicial settlement to this court with requests of fees, commissions, and "1207(4)" fees in the amount of 3.5%. The court has not yet formulated a standard approach, having approved some (on smaller estates) and reduced the "1207(4)" fees to 1% on others.
It is also worth noting that the total " SCPA 1207(4)" fees collected by Frank Iacovangelo as public administrator over the 20 years since his appointment are in the millions of dollars, and at no time has there ever been a reference in any audit report of the balances kept in the "suspense" account, or any record of receipts and disbursements.
Attorney's Fees.
In the context of a petition by the public administrator for a judicial accounting, such as the one brought on behalf of the Mok estate, the determination of the fees to be paid to the counsel to the Public Administrator is governed by the Guidelines for the Operations of the Offices of the Public Administrators of New York State section II(D)(4), which states that counsel is required "to maintain in (his) files contemporaneous time records for all legal services rendered, and to support (the) request for compensation with an affidavit that complies with the requirements of SCPA 1108[2][c] and 22 NYCRR Uniform Rule 207.45."
In turn, SCPA 1108[2][c] states that
(c) Any legal fees allowed by the court pursuant to paragraph (b) of this subdivision shall be supported by an affidavit of legal services setting forth in detail the services rendered, the time spent, and the method or basis by which requested compensation
was determined. In fixing the legal fees, the court shall consider the time and labor required, the difficulty of the questions involved, the skill required to handle the problems presented, the lawyer's experience, ability and reputation, the amount involved and benefit resulting to the estate from the services, the customary fee charged by the bar for similar services, the contingency or certainty of compensation, the results obtained, and the responsibility involved.
SCPA 1108.
This section is a codification of well-settled law in New York regarding legal fees in New York surrogate's courts (see Matter of Potts. , 213 A.D. 59, 209 N.Y.S. 655 [4th Dept. 1925], affd 241 N.Y. 593, 150 N.E. 568 [1925] ; Matter of HSBC Bank USA, N.A. [Campbell] , 150 A.D.3d 1661, 1663, 55 N.Y.S.3d 557 [4th Dept. 2017], quoting Matter of Potts at 62, 209 N.Y.S. 655 ; JPMorgan Chase Bank, N.A. [Roby] , 158 A.D.3d 1224, 1225, 71 N.Y.S.3d 765 [4th Dept. 2018] ).
Ultimately, the standard is reasonableness ( Matter of Freeman , 40 A.D.2d 397, 341 N.Y.S.2d 511 [4th Dept. 1973], affd 34 N.Y.2d 1, 355 N.Y.S.2d 336, 311 N.E.2d 480 [1974] ; In re Feinberg , 5 N.Y.3d 206, 210, 833 N.E.2d 1204, 1206, 800 N.Y.S.2d 529 [2005] ).
The Guidelines place no limitation (other than the test of reasonableness) on the extent of the fee for public administrators governed by Article 12, which includes Monroe County, which is different than for the public administrators governed by Article 11 (the five counties of the City of New York). There, counsel to the Public Administrator are required in their request for fees not to exceed a maximum based on a percentage of the estate gross value, as set forth in a schedule. For estates of $750,000 or less, the fee is 6%.
The Guidelines specifically state that the schedule applicable to Article 11 public administrators shall not apply to Article 12 public administrators except where "so ordered or permitted by the Surrogate of the PA's county."
Here, there is no known Order emanating from Monroe County Surrogate Court that directs the public administrator to abide by the fee schedule, which as noted is only a maximum fee, not the pre-determined fee. It is entirely possible that the Surrogate in 2015, when he signed the "Public Administrator Counsel Fee schedule," intended the rates set forth in that schedule to be a guideline for counsel to the PA, not a rate from which to calculate the SCPA 1207(4) fee. Even so, review of the legal fees approved by the surrogate judges over the last twenty or so years and as displayed on the Part 36 website, under "Report of Compensation of Counsel to the Public Administrator" shows that Iacovangelo or his firm (there is often no differentiation) has been paid roughly 6% on a large number of larger estates for which compensation for counsel to the Public Administrator is listed. In this court's view, that can hardly be a coincidence.
This is true of the fee request in Mok, which, although supported by an affidavit and apparently contemporaneous time records, equals almost to the penny 6% of the estate value.
This should not be a surprise, though, because in in Iacovangelo's filing of form 8412, he indicates that he used both a fee schedule and an hourly rate in determining his legal fees. It happens that the two methods of calculating fees come out the same in a great many estates.
Nonetheless, even assuming that the prior surrogate judges for Monroe County over the past 20 years approved fees using the used the Guideline schedule, it does not excuse the responsibility on the part of the surrogate to set a fee that is consistent with the factors set forth in SCPA 1108(2) (see In re Feinberg , 5 N.Y.3d 206, 210, 833 N.E.2d 1204, 1206, 800 N.Y.S.2d 529 [2005] ).
Turning now to the time records available for review in the Mok matter, with an eye to consideration of whether the fee requested was in fact reasonable, the court makes the following observations. One is that the estate is not at all or in any way complex. The second is that the lines between work done as executor and as attorney are non-existent.
This is a simple estate. The real estate had already been sold, and the proceeds were in an attorney's trust account. The decedent had cash and equities in only two accounts. He had one distributee. The tax return, assuming one of the accounts was an IRA, was standard and routine, not unusual or complex.
Time is billed for communications to financial institutions - e.g. "telephone calls," "correspondence" - that seem disproportionate to the issues involved (e.g., item 174482 - correspondence re estate savings account, three hours billed). The detailing of instructions regarding transfer of assets from an investment account to the Estate is among the most routine of estate matters, something done every day in hundreds of estates across New York.
Excessive time is billed for simple review of documents that in themselves are simple and routinely done by paralegals, but here, they are billed to an attorney. Numerous matters billed as legal expenses appear to be executorial in nature, i.e., work that could have been done by a layperson. For example, multiple hours were billed (and in amounts that seem excessive) for calls to the financial institutions that held the decedent's assets; for correspondence with the same institutions; for setting up an estate account and receiving signature cards; and correspondence with decedent's family. "Such vague and generalized descriptions are insufficient to establish that these acts were legal as opposed to executorial in nature ( Matter of Passuello , 184 A.D.2d 108, 111, 591 N.Y.S.2d 542 [3d Dept. 1992] ).
It is well-settled that "the burden rests on [the public administrator] to establish the nature and extent and value of the services performed by him as an attorney as distinguished from those which the law requires him to perform as executor. The line of distinction need not be difficult to draw" ( Matter of Hallock , 214 A.D. 323, 324, 212 N.Y.S. 82 [3d Dept. 1925] ).
No complexity presents itself in any of the Mok estate filings, except for the issue that the distributee is in Slovenia. However, the legal work needed there seems to have been taken care of outside of the activities of the public administrator, and no billing reflects any work done in conjunction with Slovenian authorities. While it is true that Gallo and Iacovangelo LLP is well-regarded in the area of estate administration and has considerable experience, nonetheless the time claimed in settling the estate is disproportionate to the work actually needed to be done on such a simple estate.
There was no litigation. There was no contesting of any issues regarding distribution or taxes. There were no lengthy conversations with family members regarding administration. No remarkable result was achieved, indeed, none could be, given the utter simplicity of the estate. The legal services rendered were largely "routine" (see Matter of Jones, 168 A.D.2d 448, 562 N.Y.S.2d 568 [2d Dept. 1990] ; Matter of Ury , 108 A.D.2d 816, 485 N.Y.S.2d 329 [2d Dept. 1985], lv denied 64 N.Y.2d 611, 490 N.Y.S.2d 1024, 479 N.E.2d 827 [1985] ).
An additional factor is suggested by 8 Warren's Heaton on Surrogate's Court Practice § 106.02 (2021), which is, "the customary fee charged by the Bar for similar services." Here in Monroe County it is not customary to charge a 6% fee on the estate (however calculated), and in fact no "rule of thumb" exists. Hourly billing is the lodestar, the days of a fee being pegged to a fixed percentage, such as the executor's commission, are long gone ( Matter of Clark, 13 Misc. 3d 1221(A), 831 N.Y.S.2d 346 [Sur. Ct., Monroe County 2006] ). By reviewing the data on the Part 36 website, under the heading "Compensation of Counsel to the Public Administrator," an approximate comparison can be made of counsel fees awarded by surrogates in other counties, and especially in the upstate counties of Erie and Onondaga. Rarely if ever is a fee of 6% of the estate value awarded for the work performed by counsel for the public administrator.
The court finds then that the fee requested in the Mok estate is excessive and that counsel has not sustained his burden of establishing the reasonableness of his fee request.
Breaking it down, the court finds that 15.00 hours were billed for what could fairly be described as executorial services at $350/hour, and 40.25 hours were excessively billed, at $350.00 hour (all attorney time, not paralegal time). The total is $19,337.50. Subtracted from the total legal fee claimed, the net payable for legal services by counsel to the PA is $12,732.50.
CONCLUSION
Accordingly, the judicial account is approved with following alterations:
Commissions are allowed in the amount of $20,034.00.
The attorney fee is set at $ 12,732.50.
SCPA 1207(4) fees are disallowed in their entirety. It might be that SCPA 1207(4) fees in the amount of 3.5% is entirely appropriate, but the same must and can only be determined on a case by case basis, and, the Public Administrator at some point has to account, in a manner consistent with the Guidelines, for the money collected and which is supposed to be deposited into a "suspense account," from which expenses can be paid, and from which a record of all deposits and disbursements is to be generated.