The Impact of Fee Shifting Rules on Settlement in a New Jersey Will Contest - Estate Lawyers

The Exception to the American Rule in Probate Litigation

In general, when it comes to litigants’ payment of their attorney’s fees, courts in New Jersey follow what is known as the “American Rule.” Put simply, under the American Rule, each party pays its own way. There are a number of exceptions to this rule, which apply to specific types of claims and circumstances. This post will address the exception that applies to probate litigation in the case of a will contest, where the shifting of attorney’s fees enhances the leverage of a person wishing to challenge a will relative to the actual strength of their case. The fee shifting rule applicable to will contests in New Jersey creates an incentive for a person with a weak, but not frivolous claim, to challenge a will.

New Jersey Court Rule 4:42-9(a)(3) permits a court to award attorney’s fees for both parties in certain types of probate litigation, including will contests, regardless of who ultimately prevails in the lawsuit. "Except in a weak or meretricious case, courts will normally allow counsel fees to both proponent and contestant in a will dispute." In re Reisdorf, 80 N.J. 319, 326 (1979). An unsuccessful contestant is entitled to costs when he or she shows "reasonable cause" for bringing a probate challenge, defined as a belief that "rested upon facts or circumstances sufficient to excite in the probate court an apprehension that the testator lacked mental capacity or was unduly influenced[.]" In re Will of Caruso, 18 N.J. 26, 35 (1955). According to the Appellate Division, this standard "'works no hardship upon the contestant and affords some protection to the estate from speculative and vexatious litigation.'" In the Matter of the Estate of Edward A. Cantor, No. A-3819-08T2 (App. Div. October 14, 2011)(unpublished)(quoting In re Caruso, 18 N.J. 26, 35 (1955)). This statement is technically true, but in reality the “protection” afforded is largely illusory.

The Impact of Fee Shifting Given the Nature of a Will Contest

Specifically, the Appellate Division’s analysis is problematic in that it ignores the reality of proceedings in trial courts. Where the capacity of the decedent is challenged, unless the parties are in a position to present, at the outset of a case, definitive medical and/or anecdotal documentation as to the mental capacity of the decedent, a trial court is likely to be reluctant to make an immediate and conclusive determination. So long as the pleadings set forth a superficially legitimate or prima facie basis to question the validity of the will, like the absence of mental capacity, a trial court will hesitate to quickly declare valid a will that otherwise appears valid on its face. An estate lawyer defending the estate in this situation is in a difficult position.

If a will contest is not disposed of based upon the sworn pleadings that must be filed to initiate the case, a substantial amount of discovery may be necessary in order to prove or debunk the accusations. Since the observations of both lay and expert witnesses spanning a potentially large time period may be relied upon by a court to evaluate whether or not a decedent had the requisite testamentary capacity or was the object of undue influence, discovery can easily become labor intensive and expensive. Often, the stronger the contestant’s case, the more work that will be required and the less likely that the discovery process will provide an answer so conclusive that a case can be resolved merely by a motion rather than trial or settlement.

So while it is true to say, as the Appellate Division implied, that a challenge to a will that lacks merit will usually prove less labor intensive and thus less costly, the amount of “protection” estates have from “speculative and vexatious litigation” is questionable. Unless the decedent or his agents have taken unusually substantial proactive measures to thwart any potential future challenge to a will, the estate will find itself protected from speculative litigation only to the extent the challenger lacks the financial means or desire to litigate. In addition, the estate lawyer defending the estate may find reason to push forward with discovery in order to more quickly debunk the allegations in the Complaint.

The Fee Shifting Exception Gives Estate Lawyers Strong Reasons to Explore Settlement Regardless of the Strength of the Challenger's Case

In addition, even if the case does proceed to trial and the challenge fails, there is a distinct possibility that the estate will be ordered to reimburse the challenger for his or her attorney’s fees unless the challenge appears completely frivolous. Given the highly fact sensitive nature of the questions of testamentary capacity and undue influence, the good faith, but ultimately false, allegations underlying a will’s invalidity made by an individual contesting a will may well be sufficient to surpass the “sufficient to excite” standard necessary to justify the estate’s payment of the challenger’s attorney’s fees.

As a result of the fee shifting exception, unless the estate finds itself in an uncommonly strong position to defeat a challenge to the will at the outset, the estate has a strong incentive to settle as soon as possible. Due to the likelihood that the estate will be forced to expend substantial attorney’s fees both in defending the suit and reimbursing the challenger for his or her attorney’s fees in prosecuting the will contest, regardless of the outcome, the estate has a strong incentive to settle if it can do so for less than the cumulative prospective attorney’s fees. This incentive to settle is particularly acute where the size of an estate is sufficiently large to justify the bringing of suit, but at the same time small enough that attorney’s fees alone threaten to consume a large amount or all of the estate.

The estate lawyers of the Law Office of Bart J. Klein, located in Maplewood, New Jersey, counsel clients regarding disputes over estates. If you believe you need the advice of an estate lawyer, including in the prosecution or defense of a will contest, we welcome you to contact us for further information.