Wards' assets vulnerable

WORLD-HERALD EXCLUSIVE

In December 2007, a motorist struck Wilbur Miller as the 78-year-old Omahan crossed the street.

A retired laborer with little money, Miller spent the next two weeks in Creighton University Medical Center, racking up $100,000 in medical bills.

Eventually, attorneys hired by Miller's guardian secured a $100,000 settlement from the motorist's insurance company.

Here's who was supposed to benefit: Wilbur Miller.

Here's who ended up with the money:

-- Miller's guardian, who a judge says improperly took $62,700. She is in the Douglas County Correctional Center, facing theft charges in three unrelated cases.

--Two attorneys, who were paid $33,333 in contingency fees.

The lawyers said they earned the fees. One was quick to note that he had worked on eight other guardianship cases for free.

A national expert said such an arrangement amounts to an informal “barter” system: using money from one case to compensate lawyers for work on other cases.

It's part and parcel of an old-school system in which judges scramble to reward the unsung work of attorneys and guardians, the expert said.

But the take-from-Peter-to-pay-Paul approach raises questions about how Nebraska funds its guardian and conservator system to protect the most vulnerable in society — incapacitated people who have no family or friends to look after their physical and financial welfare.

A committee of judges, lawmakers, attorneys and investigators is reviewing Nebraska's guardian-conservator system and is expected to make recommendations in October.

The review followed a series of World-Herald reports that detailed how lax oversight led to hundreds of thousands of dollars in losses to wards.

In such cases, judges appoint a guardian to oversee the health and a conservator to oversee the wealth of an incapacitated person, known as a ward. Attorneys shepherd cases through court, filing documents but having little day-to-day oversight of the ward.

Forty-eight states tap taxes and private grants to help pay for the work that attorneys and guardians do for indigent, incapacitated wards like Miller.

Nebraska is one of the two states that have no public guardian office — and no public funding for such work.

Instead, Nebraska judges allow lawyers to collect “reasonable” fees from those wards who do have assets.

In cases in which there are few or no assets, judges rely on the good will of volunteers to oversee the wards and of attorneys to do the legal work.

Without public funding, one retired judge said, judges sometimes steer cases with money toward certain attorneys.

“I always tried to take care of the attorneys that I knew were doing all the unpaid work,” said retired Douglas County Judge Jane Prochaska, who once specialized in such cases.

“As a result, I was able to keep some pretty darn good, experienced lawyers on the cases where we needed them. That's a good thing.”

Others aren't so sure.

Winsor Schmidt, a University of Louisville professor who has studied guardian and conservator systems for 30 years, said such a practice is fraught with inequities.

“It's an informal taxation on one case to pay for another,” Schmidt said.

“States that have public funding for guardians are able to be aboveboard and accountable in each case. States that don't have public funding, judges have to get creative,” he said. “It almost becomes a barter system where judges reward attorneys in one case for their work on others.”

Experts say an informal barter arrangement neglects the fundamental duty of the courts: to conserve the assets of each ward.

In Miller's case, the judge found that Miller's conservator — who has been charged with thefts from three other wards in her care — took $62,700 “for her own use.”

The attorneys said they earned their $33,333 — the one-third contingency fee they charged for helping to obtain the $100,000 settlement.

Miller, meanwhile, ended up with little.

Asked if he had considered paying any of his fees back, one attorney in Miller's case wondered whether anyone was going to pay him for all the other cases he handled for free.

In interviews, judges expressed discomfort with the idea that the fortune, or misfortune, of one ward would help compensate attorneys for work on other, unrelated cases.

However, they also acknowledged that they sometimes struggle to find a way to pay attorneys who do legal work in cases with no money.

“The attorneys we work with are doing this out of civic duty, not to get rich,” Presiding Douglas County Judge Susan Bazis said. “They know the system is broken and we don't have anyone else to do the work.

“I can't imagine that any attorney is doing this work with the idea that there is going to be some pot of gold in some case down the road. It just so rarely happens.”

When it does, Bazis said, judges are required to weigh whether attorney fees are reasonable. Likewise, she said, the Nebraska Supreme Court ruled recently that contingency fees must be fair and must be reasonably related to the work expended on a case.

Bazis, who serves on the committee reviewing Nebraska's guardian and conservator system, said judges shouldn't award large fees from one case just to compensate attorneys for work on others.

At the same time, she said, “there are a lot of cases where attorneys and guardians are not getting paid because we don't have the money. Bottom line: We've got to figure out some way to pay for a public guardian.”

Tapping Nebraska taxes may be a long shot.

The Legislature didn't act on a 2007 request for $400,000 to start a statewide public guardian's office.

Nebraska Supreme Court Chief Justice Mike Heavican, who appointed the committee that is reviewing the state's guardian and conservator system, cautions that any changes must fit within “the reality” of the state's budget crunch.

Some courts in California fund payments for guardians, conservators, attorneys and auditors by taking a small percentage of all estates that require court appointments. Other states use court fees to fund a portion of public guardian offices.

The need is only going to grow, said Brenda Uekert, a researcher with the National Center for State Courts.

Uekert said states must prepare to meet the demands of the nation's aging population — one that's expected to reach 71 million by 2030, more than double the number in 2000. Relying solely on volunteer guardian-conservators and attorneys won't cut it, she said.

“Across the nation, we're seeing the same crises, but we're not seeing the resources devoted to it,” Uekert said. “It's a tremendously important issue, but it's not an easy one to solve.

“Nebraska is just like a lot of other states: It's got a long ways to go.”

Contact the writer:

444-1275, todd.cooper@owh.com

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