Friday, July 19, 2013

The economics of financial elder abuse civil cases in Oregon, (or, if you are getting valuable property from a disabled elder, be sure to get it in cash.)



I sometimes sue people for the financial elder abuse of elders. Being a full service elder law lawyer, I also defend people accused of it.

(I have written a bunch of posts about what goes into financial elder abuse cases, who brings them, and the advantages that the treble damages provisions give to a plaintiff. In this post I will stick to the economics of the cases and how to pay the lawyers.)

A friend of mine who teaches classes for other lawyers on the ins and outs of Oregon's financial elder abuse advises lawyers new to the area to look first for the money. Ask whether if you win the case, can you collect on the judgment. If the person accused of elder abuse is a turnip—in that you can't get blood (or money) out of a turnip—what is the point in suing. So first, find a lump of money or a piece of valuable real estate from which any judgment can be collected.

The next question for the plaintiff (the person filing the lawsuit), is how will the lawyer get paid. These lawsuits are expensive. They take a lot of the lawyer time and involve a lot of expenses. There are court filing fees, fees to obtain records, deposition costs, expert witness fees, and a slew of miscellaneous costs. Somebody has to be there to pay these costs, and the lawyer is not going to pay them out pocket on the off chance he or she wins the case and collects. Even lawyers silly enough to take these cases on a contingency basis, will demand that someone be there to pony up for costs and expenses.

Once in a blue moon an elder discovers that he has been cheated and then uses his own money to hire a lawyer and sue the bad guys for elder financial abuse. Everybody loves these cases and hopes for the elder to win. I have never had one of these cases, but I keep hoping.

Most financial elder abuse cases are brought by conservators or executors. That means that when the case is filed, the elder is either demented or dead. The conservator or executor brings the case on behalf of the incapacitated or dead elder alleging that the bad guy—usually a relative—took money from the elder before the elder died or became demented. Most often the claim is that the bad guy used “undue influence” to get the money. (I discuss undue influence elsewhere). The conservator or executor wants to use the case to bring the money or property taken from the elder back into the probate or conservatorship estate so that it can be used for the elder's care or distributed according to the elder's will or both.

A conservator has control of an incapacitated person's money. A personal representative—the same thing as an executor—has control of the money the elder had when she died. The plaintiffs in these cases use the elder's money to pay their lawyers and the costs of litigation.

The key move for a sister who wants to use an elder abuse case to undo that gift of the house from dad to the neer-do-well son, Bob, is to get appointed executor or conservator. Whether sis can get appointed executor depends on dad being dead and what the will says. If dad is loopy but not dead, sis can ask that she be appointed conservator. It could look bad if she gets appointed conservator and then immediately sues Bob, so she might instead ask that a professional conservator be appointed. Because of all the money that can be made by a professional conservators in cases like this, it will not be hard for her to find a local professional willing to carry the water for her in a lawsuit against Bob. The professional will take possession of dad's assets and use them to hire a lawyer to sue against Bob.

Now let's turn to the other side. Bob finds himself served with a lawsuit for financial elder abuse because dad gave him a house.

I was at a conference on elder law once and I joked that one of the reasons I liked doing defense in financial elder abuse cases was that the accused client obviously had the money to pay me. One of my colleagues—a very serious person who assumes that the plaintiffs in elder abuse cases are always the good guys—took umbrage. My joke, however, may have lacked both humor and truth. If dad gave Bob $100,000 in cash that a conservator now wants to recover, Bob has money to pay me, and my fee for all practical purposes comes from the same source of funds that finances the conservator—dad's money.

If, however, dad gave Bob a house to live in and he is living there on his Social Security disability income, he may not have the money to pay for his defense. In that case he will be under enormous pressure to settle. Sis may not be satisfied with just giving the house back because the damages for elder abuse—in this case taking property through undue influence—is three times the damage to the elder. That means three times the value of the house. Sis may demand that Bob give back the house and whatever inheritance he was destined to receive when dad died. With no money to defend the case, Bob may cave. The will might well have said that upon dad's death, his property goes to Bob and sis equally. Getting a free house from dad while he was alive—which probably seemed to Bob a great idea at the time—sinks him in the end. Sis uses her leverage to get the house back plus some or all of Bob's inheritance. It is hardly the result that dad had in mind, but that is life in the big city.

If Bob got $100,000 in cash instead of a house, but spent all the money on booze and women before a conservator gets appointed to sue him, he still has no money to pay a lawyer for his defense. In this case, he will have to settle with sis by giving up the remainder of his inheritance. She will take that because Bob is now a turnip.

The lesson for Bob is that when negotiating a big gift from dear old dad, get cash and don't spend it all. Bob will need a good chunk of it to pay me to defend him when sis sues. Dad's money always pays to bring the lawsuit. Defending dad's wishes and the gifts he gave while alive will require some of dad's money as well.


(If this post makes you angry because dad really did want to give Bob that house or money, see my post on financial elder abuse and the obligation to say no.)


2 comments:

  1. Hi Orrin,

    Thanks for the informative post. Thought the readers might find this interesting.

    Elder abuse - what the signs are and what can be done to stop it -- http://www.pabianrussell.com/Elder-Law/elder-abuse-what-the-signs-are

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