W. Chester law firm told to return $4.3M in estate fees

Lawyers for the estates of Chester County philanthropist John Rupert Hunt Thouron and his son must return more than $4.3 million in excessive fees charged for work that in some instances was unnecessary or resulted from their own mistakes, a Chester County Orphans’ Court judge has ruled.

Judge Mark Tunnell Jr. permitted the West Chester law firm of Lamb McErlane to keep $1 million, but he said much of the work performed by firm partner Vincent Donohue and others on his team could have been done by lower-cost personnel, or grew out of poor decision-making and thus could not be charged to the estates.

“The Lamb firm’s fees are extraordinary when evaluated under any analysis,” Tunnell said in 211-page opinion. “There is no apparent reason why the day-to-day activities [Donohue] was commissioned to help manage could not have been done less expensively and perhaps more efficiently by a professional administrator who would not have charged a law firm senior partner’s billing rate.”

Lamb McErlane has appealed Tunnell’s decision to state Superior Court.

Thouron lived with his wife, Esther, a member of the du Pont family, on a large property outside Unionville known as Doe Run. Billionaire Richard Hayne, founder and chairman of the Urban Outfitters retail empire, purchased the property in 2010.

Charges to the estates by both Lamb McErlane and executor Charles Norris were challenged by Thouron’s grandchildren, Rachel Vere Nichol and Rupert H. Thouron. Tunnell ordered Norris to repay nearly $5 million in management charges and more than $1 million in unnecessary accounting fees.

Attempts to reach Norris on Thursday were not successful.

At the time of his death in 2007, the elder Thouron’s estate was valued at $40 million. The estate of his son, John, also known as “Tiger,” was valued at about $13 million when he died in 2006.

Joel Frank, Lamb McErlane’s managing partner, said the firm had “zealously” represented Norris, its client in the matter, and that its legal representation was beyond reproach.

“This is a matter that spanned more than 10 years involving multiple complex partnership transactions and litigation issues,” Frank said. “Unfortunately, after the matters had been largely concluded, the court determined that our fees and those of the executor were too high relative to the value of the estate.”

Frank said standard metrics for legal and administrative fees in estate matters did not apply because of the size and complexity of the Thouron estates.

Tunnell had harsh criticism for the estate administrators and lawyers, as the parties battled toward the end of Sir John’s life over where his estate would be legally administered, in Pennsylvania or Florida, where he had a winter residence.

“It escaped no one’s notice that looming before them was the administration of a huge multi-million-dollar estate,” Tunnell wrote. “In the middle, with no clear direction upon the issue, was Sir John in his great old age. There is no evidence that any lawyer explained to him what domicile was. He was a rich man in terms of assets, and a poor man in terms of legal advice. Compounded was his inability to see. He was relegated to signing what was put in front of him. He was a virtual marionette.”

Because Norris failed to file a request for an extension to pay a tax bill, the IRS slapped on a $1 million penalty, which in turn resulted in lengthy litigation and legal bills of $1 million, Tunnell’s opinion said. Much of that was recovered, but the estates still suffered a net loss of more than $557,000, charged back to Norris and Lamb McErlane.