Expanding an elder law practice to include providing fiduciary services can be very rewarding '” both financially and professionally '” said Tucson, Arizona, elder law attorney Allan Bogutz in his recent ElderLawAnswers conference call on "How to Create and Manage a Successful Fiduciary Practice."
Bogutz, a past president of the National Academy of Elder Law Attorneys (NAELA) and a former public fiduciary, has successfully built a full-service fiduciary practice as part of his firm of Bogutz & Gordon, P.C. While the firm handles regular elder law issues, a big part of its business comes from acting in a fiduciary capacity for both seniors and children, including as guardians of the person, conservators of an estate, trustees, and administrators of an estate.
Bogutz has found the work "enormously, personally rewarding." His firm's services allow clients to stay at home, get unbiased advice, obtain a higher level of care, and maintain their resources. In addition, the business is financially rewarding. A fiduciary practice is a cumulative business, rather than a transactional business, which means there is a constant stream of income. For example, Bogutz has a client for whom he has been acting as guardian since 1981. "Having a case for 26 years is pretty unusual, with a fee being paid each month," he said. The financial rewards allow his firm to do more pro bono work and public speaking, and to accept and reject clients based the merits of the case.
Bogutz emphasizes that building a fiduciary practice can be done simply, one case at a time. "One client is all you really need to start this type of work," he said. The following are some tips he gave for starting your own fiduciary practice.
Skills involved
There are three main skills involved in a fiduciary practice: legal, financial, and social services/medical. The legal services involve establishing a legal relationship, setting up parameters of service, and reporting to the court. Financial services include gathering, managing and investing assets, reviewing bill payments, and ensuring the preservation of assets. Social and medical services include conducting needs assessments, interacting with medical caregivers, supervising care, maintaining quality of care, and preserving relationships with family.
Providing services
Services can be provided in-house, with contractors, or a combination of the two. Bogutz found that providing services in-house made the most sense financially even though it created greater overhead. "It sounds like a lot, but . . . it is possible to do in little bites," he said, explaining that hiring support staff can be done gradually to meet the business needs. He started out by hiring one social worker who could also manage finances. As business expanded, he hired a financial manager. Now he has a registered nurse, a social worker, and four financial managers on staff.
Referrals
According to Bogutz, referrals can come from a number of sources. One source is other attorneys who have clients beginning to need additional services. Bogutz provides continuing education services for the bar association on special needs trusts, preserving assets, and Medicaid liens. Other sources include hospital discharge planners, adult protective services, insurance agents, and the medical community. Bogutz also stresses the importance of building a relationship with the court. One option is to present your firm to the court as an alternative to the public fiduciary.
Charging for services
Bogutz experimented with an hourly rate, but found that it didn't meet his needs. He discovered that most fiduciaries charge a percentage fee, so he looked at the fees in the community and tried to meet them. He charges an additional hourly rate for extraordinary things like selling someone's house or being involved in litigation. All fees are subject to approval by the court and beneficiaries, so it is important to have a clear written fee schedule and to define extraordinary services. Bogutz advises checking with your state before setting fees because some states have fixed fees. "There is not too much you can do unless you start to negotiate that fee with the ultimate decision maker, which is the court, and look to extraordinary fees," he explained.
Managing investments
When acting as fiduciary, you may be required to invest large sums of money. Bogutz stresses that "you don't need to be an expert on this, you just need to find experts." When deciding how to invest funds, he uses a team of outside financial advisors to determine how to allocate the money. "Charges for the outside financial advisor are borne by the estate; it's considered just a price of doing business," he explains.
Other matters
Some other considerations when starting a fiduciary practice include the following:
- Malpractice Insurance. Many malpractice insurance policies cover attorneys acting in a fiduciary capacity. If it isn't covered, then you will need to negotiate with the insurance company or get a rider. His nurse and social worker are also covered because they are hired as legal assistants.
- Bonding. Finding bonding for so much money can be difficult, according to Bogutz, but it is possible once you have established the practice. Almost all court appointments require a bond, but when Bogutz reached $6 million in bonds, the bonding company he was using refused to bond anymore. He found a New York company that was willing to bond him once they reviewed his business practices.
- Appointments. Bogutz does not appoint himself in his personal capacity as the fiduciary; instead he appoints the firm. This provides continuity and allows him to take vacations. "Any of the officers of the professional corporation . . . are able to act on behalf of the guardianship or conservatorship without having to get powers of attorney," he explained. Naming the firm as the fiduciary has also helped with getting bonding and insurance.
- Licensing. Some states have licensing requirements for fiduciaries, so check with your state to see if you need to get licensed.
To listen to the entire conference call, held December 19, 2006, click here.
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