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In re Adoption of M.M.H.

September 4, 2009

IN RE: ADOPTION OF M.M.H.
APPEAL OF: JAMES E. MAHOOD AND WILDER & MAHOOD, P.C., APPELLANTS



Appeal from the Order Entered July 21, 2008, In the Court of Common Pleas, Allegheny County, Civil Division, at No. A08-010(x3).

The opinion of the court was delivered by: Allen, J.

BEFORE: KLEIN, ALLEN, and COLVILLE,*fn1 JJ.

OPINION

¶ 1 This is an adoption case that concerns the orphans' court's authority to determine, sua sponte, the reasonable value of an attorney's legal services and to reduce the legal fees it finds excessive. In this case, the trial court, sitting en banc, concluded that the legal fees of James E. Mahood and Wilder and Mahood, P.C., ("Appellants") were excessive when compared to similar cases in Allegheny County, and reduced them to an amount that it found to be reasonable. On appeal, Appellants maintain, in essence, that the trial court committed an error of law because it lacked the authority to take such measures. We conclude that based upon the facts of this case, the trial court did not possess the authority -- statutory, policy-based, inherent or otherwise - to unilaterally decrease Appellants' attorney's fees. Accordingly, we reverse the trial court's order and remand for proceedings consistent with this Opinion.

¶ 2 As this case presents a pure question of law, a detailed recitation of the factual and procedural history is unnecessary. The following account suffices for our disposition.

¶ 3 M.M.H. was born on August 5, 1998, and her natural mother died on October 21, 2006. Since June 2004, M.M.H. resided with her maternal grandmother ("Grandmother"). On January 14, 2008, Appellants entered into a contract with Grandmother and agreed to represent her in legal proceedings against M.M.H.'s natural father ("Father"), as she sought custody and adoption of M.M.H. R.R. at 36a-39a. In the contract, Appellants informed Grandmother that she would be charged (on average) $350.00 per hour for legal services and notified her that "these rates may be substantially higher than those charged by attorneys who do not limit their practices to family law." R.R. at 36a.

¶ 4 On February 11, 2008, Appellants filed a Petition for Involuntary Termination of Parental Rights and a Petition for Adoption. Father initially contested these petitions and filed his own Complaint for Custody. Appellants prepared the case in anticipation that it would proceed to multiple hearings and/or trials. The case proceeded on a dual track in both the Family and Orphans' Court divisions. Then, without providing any prior notice, Father failed to appear at an evidentiary hearing on Grandmother's Petition for Involuntary Termination of Parental Rights. At this point, Appellants learned for the first time that Father would not oppose the adoption. Ultimately, Father did not contest the remaining proceedings and they concluded in Grandmother's favor.

¶ 5 On May 8, 2008, Appellants filed a Report of Costs, Fees and Expenses in accordance with Pa.O.C.R. 15.5(d), itemizing and listing the total amount of their legal fees as $11,513.32. The trial court, on May 21, 2008, entered an order directing Appellants to appear before the court, en banc,"to present factual information and argument as to why the attorney's fees charged... should not be reduced." Order, 5/21/08, at 1 (unnumbered).*fn2

At the hearing, Appellants basically argued that Mr. Mahood was a seasoned attorney who had over thirty years of experience in the practice of family law. Appellants also stressed that Grandmother agreed to pay them $350 per hour and that she did not take issue with either the rate or total amount of legal fees charged. In addition, Appellants argued that the certified report of legal fees was supported by an itemized list that fully documented and explained the nature and extent of their legal services. Finally, Appellants opined that orphans' court did not possess the authority to review and reduce, sua sponte,their legal fees under the Adoption Act.

¶ 6 Following the hearing, on July 21, 2008, the trial court, sitting en banc, ordered Appellants to reduce their legal fees by approximately fifty percent - from $11,513.32 to $6,000.00.*fn3 In its opinion, the trial court placed significant weight on the fact that during the last six and one-half years, there were forty-six cases of uncontestedadoptions by a grandparent in Allegheny County and that the average legal fee in such a case was $1,325. Trial Court Opinion (T.C.O.), 7/21/08, at 1. Emphasizing its role as the "protector of the adoption process," the trial court concluded that it had the authority to reduce legal fees in adoption cases. Id. According to the trial court, this authority had its genesis in 23 Pa.C.S.A. § 2724(a) and Pa.O.C.R. 15.5(d). The trial court reasoned that since these provisions require an attorney to disclose his/her legal fees to the court, it would be illogical to read them as only granting the court the authority "to check the arithmetic of a legal bill." Id. at 6. The better view, the trial court proposed, was to read 23 Pa.C.S.A. § 2724(a) and Pa.O.C.R. 15.5(d) as providing it with "the inherent authority to modify those fees." Id.

¶ 7 Additionally, the trial court found that its authority to regulate legal fees in adoption cases derived from two considerations of public policy. First, "the adoption process should not be placed beyond the reach of people with limited means who can still provide a positive environment for the adoptive child." Id. at 2 (citing In re Baby Girl D., 517 A.2d 925, 927 (Pa. 1986)). Second, "excessive fees would permit the attorney to profit impermissibly from the placement and adoption" of children. Id. (citing In re Baby Girl D., 517 A.2d at 926)). The trial court noted that although this issue was unique to Pennsylvania's appellate courts, the intermediate appellate courts of New York have held that its courts have the authority to scrutinize and determine the reasonableness of legal fees in adoption proceedings. Id. at 7-8. The trial court referenced a Pennsylvania orphans' court case, In re Adoption of C.W.S., 42 Pa. D. & C.4th 68 (Bucks Cty. 1998), as support for its decision. Id. at 6.

¶ 8 The trial court found further support for its authority to reduce legal fees by referencing other matters falling within the orphans' court's jurisdiction. Drawing an analogy to the law governing decedent's estates and settlement of a minor's civil law claim, the trial court concluded that it was vested with the equitable or inherent authority to modify attorney's fees in adoption cases. Id. at 2-3, 5-7. The trial court also cited the Pennsylvania Rules of Professional Responsibility, particularly Pa.R.P.C. 1.5, as another source of its authority to reduce legal fees because that Rule prohibits an attorney from charging an "excessive fee." Id. at 3-5. For these reasons, the trial court ultimately concluded that it had the authority to review an attorney's legal fees and to alter those fees, sua sponte, if they were excessive.

¶ 9 In analyzing the total amount of Appellants' legal fees, the trial court provided the following rationale to explain why reduction was proper:

We find there is no question that [Attorney James E. Mahood] performed legal services resulting in a successful outcome for his client. We also find that his fee of $11,513.32, almost nine times the average fee customarily charged in Allegheny County for similar legal services, is excessive and unreasonable for the adoption in this case. The only remaining issue is determining the reasonable value of [Attorney Mahood's] fee.

T.C.O., 7/21/08, at 8.

¶ 10 To calculate the reasonable value of Appellants' legal fees, the trial court first noted that the average fee for similar services in Allegheny County was $1,325.00. Id. The trial court then noted that Mr. Mahood was "a seasoned practitioner" and considered Appellants' "actual legal work" and "the novelty and difficulty of the issues involved." Id. The trial court further considered Appellants' time and effort in preparing the case in anticipation that it would be contested, and Appellants' expectation that their legal fees would be paid as billed. Id. at 8-9. Based on these factors, the trial court, without further elaboration, found that $6,000.00 was an "appropriate" legal fee. Id. at 9.

¶ 11 Following its decision, the trial court ordered Appellants to file a new certification documenting the adjusted amount of their legal fees within thirty days. Appellants complied with the trial court's request and then, on August 13, 2008, filed a timely notice of appeal to this Court. On August 14, 2008, the trial court ordered Appellant to file a Pa.R.A.P. 1925(b) statement on or before September 8, 2008. Appellants filed their statement on September 8, 2008. The trial court, in turn, issued a supplemental Pa.R.A.P. 1925(a) opinion, reaffirming the rationale employed in its July 21, 2008 opinion.

¶ 12 On appeal to this Court, Appellants raise the following issues for review:

I. Whether the orphans' court erred in sua sponte reducing fees to which client and attorney agreed and that were reasonably expended given the facts of this case[?]

II. Whether the orphans' court erred in misinterpreting its authority under the Adoption Act[?]

III. Whether the orphans' court erred in exceeding and/or abusing its jurisdiction, and in acting in a manner that is [an] affront to the jurisdiction of the Supreme Court of Pennsylvania in its exclusive regulation of the Bar[?]

Brief for Appellant at 4.

ΒΆ 13 For ease of disposition, we address Appellants' three issues ...


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