Justifying “Fees for Fees” in Fiduciary Compensation Litigation

All authorities agree fiduciaries and their counsel are entitled to reasonable compensation for their services, but there is no consensus on whether attorney’s fees incurred defending this compensation are a reimbursable expense of a fiduciary’s administration. Known as “fees for fees,” some jurisdictions disallow these fees because they deplete the trust or estate rather than directly increasing or preserving it. Other jurisdictions allow these fees because challenges to a fiduciary’s commissions and fees impugn the fiduciary’s stewardship and require them to prove they acted in accordance with the duty of care. If successful, the fiduciary’s defense indirectly benefits the trust or estate because it vindicates the propriety of the fiduciary’s administration.

Aside from a handful of trial court decisions, Pennsylvania has yet to wrestle with fiduciary fees for fees and the direct-indirect benefit dichotomy. Nevertheless, well-settled precedent recognizes a fiduciary’s successful defense of a surcharge action as reimbursable from a trust or an estate for the same reasons invoked by jurisdictions that allow fees for fees. The successful defense of a surcharge action does not increase or preserve any assets, but it eliminates doubts about whether the fiduciary properly administered the trust or estate. This Article asserts the principles governing surcharge actions apply with equal force to fiduciary compensation litigation. Accordingly, this Article urges Pennsylvania courts to adopt the surcharge analogy as the basis for awarding fees for fees where a fiduciary successfully defends challenges to their commissions and attorney’s fees.