A bill inspired by a brain-injured San Jose man's fight to protect his savings from his court-appointed trustee has veered off course and no longer serves the elderly and disabled Californians it professes to help, according to the lawyer who championed the case.
Senate Bill 156 -- prompted by the plight of 38-year-old Danny Reed -- has raced through both houses of the state Legislature and is headed to the governor's desk.
But after months of advising the bill's author, state Sen. Jim Beall, attorney Matt Crosby says he wants nothing more to do with the proposed new law. The legislative process not only gutted the original bill's impact, Crosby says, it may actually have made matters worse.
"I'd hate to have Danny's name linked to this legislation because it is completely antithetical to what his case was about -- it's just the opposite. This legislation would not have helped Danny; it would have hurt him," said Crosby, who took on Reed's fight pro bono. "I'm completely disenchanted. This is a worse result than if no bill were passed."
Beall, who introduced SB156 after reading Reed's story in this newspaper, concedes concessions were made in the Assembly late last month after a stronger bill passed the Senate in April. But he said it still achieves its aim: to better protect dependent adults from financial abuse in the probate courts.
"It still gives judges the complete power to regulate fees and control exorbitant fees; that part of the bill is not disposed with," said Beall, a San Jose Democrat. "The bill provides a clearer and stronger direction for our courts."
With unanimous approval in the Assembly and state Senate, SB156 now returns to the Senate for a perfunctory final vote.
Yet Crosby says Beall's refusal to stand up to behind-the-scenes pressure from trade groups representing lawyers and fiduciaries has resulted in hollow feel-good legislation.
The bill sought to correct inequities highlighted in this newspaper's 2012 "Loss of Trust" investigation, which revealed how probate-court-appointed estate managers and their attorneys have been granted extraordinary fees from judges, often with elderly and disabled clients powerless to object.
Reed, who is partially paralyzed after being struck by two cars, was unique in fighting back after his court-appointed trustee Thomas Thorpe charged him $108,771 after just 4¿1/2 months' work. But the objection led Thorpe and his lawyers to file even more bills against Reed's trust to defend their original charges.
A quirk in state law that sets California apart from most other states allows for "fees-on-fees," sticking incapacitated adults with the bill for both sides of a legal fight over excessive service charges -- whether they win or lose their argument.
Reed fought the fees he faced up to the appeals court, and by April won a total reprieve -- with a lower court settlement and justices agreeing he had been the victim of "a feeding frenzy" on his estate.
Beall's bill aimed to better protect thousands of Californians under probate court supervision from ever facing Reed's predicament. Originally, its language was simple. SB156 created a "loser-pays" scenario, placing the burden of legal costs on whoever lost the fee fight.
The new bill allows judges to deny "fees-on-fees," but also allows them to be granted under certain circumstances -- for example, if a judge rules it is in the "best interest" of the dependent adult.
"The abuse that SB156 was originally intended to correct was 'fees on fees,'" Crosby said, but rather than prohibiting them, the bill now "institutionalizes and sanctions such fees," making them more difficult -- but not impossible -- to get.
As long as fiduciaries and their lawyers can make more money defending unreasonable fee petitions, Crosby argues, an incentive remains for them to bill high. There's also still a financial disincentive for disabled adults to challenge them, he says.
The Professional Fiduciary Association of California, however, is pleased with the new version of the bill and has switched its position from opposing to neutral. In a news release, members touted the role they played in scaling back the scope, noting their "intense advocacy efforts" to fend off provisions they considered too harsh.
Beall denied that pressure from estate managers' or lawyers' groups had anything to do with the changes, which he said were necessary concessions to the Assembly's judiciary committee. And he disputes the assessment of Reed's attorney, saying the bill sets a high bar for conservators to prove they have a right to legal costs after losing a fee fight.
"I think Mr. Crosby's interpretation of the language of the bill that it would make Danny Reed's situation worse is not correct," Beall said. "It still fixes the problem of fees-on-fees."
Meanwhile, a second bill inspired by the Reed case for entirely different aims has also breezed through both houses with unanimous votes. Assembly Bill 1339, sponsored by the professional fiduciary association, calls for consistent practice statewide on early cost estimates and court-appointed conservators receiving periodic payments, rather than a lump sum at the end of a year or two. It also requires them to submit hourly fee schedules at the onset of a case.
The bill's crafters say Reed's case pointed to the problem -- not of excessive fees per se -- but the "sticker shock" that can result from lengthy bills. The association's president, Scott Phipps, said the proposed new law is written "so that people are not blindsided when the accounting comes around."
Contact Karen de Sá at 408-920-5781.