Challenging solicitors’ costs in probate and estate administration.
Since this article was originally published, the law has developed and the Court of Appeal has confirmed that a beneficiary has the right to challenge a solicitor’s costs for administering an estate. You can read more here.
Contentious Probate Solicitor, Lee Dawkins, examines the options open to executors and beneficiaries when they wish to challenge the solicitors’ costs of administering an estate.
A common enquiry we receive at www.contesting-wills.co.uk relates to solicitors’ charges for the administration of an estate.
We are regularly contacted by not only executors but also beneficiaries who wish to challenge the solicitors’ costs and this article is intended as a brief overview of the legal position governing challenges to solicitors’ costs in probate and estate administration.
The starting point of any consideration of these issues is the non-contentious costs rules. These rules apply where an executor or administrator retains a solicitor to administer an estate.
Non-contentious costs can be contrasted with costs incurred in litigation. They are defined as “monies payable for legal services in connection with non-contentious business”. Administering an estate is an example of “non-contentious business”.
As at September 2013 the basis upon which solicitors are able to charge in relation to non-contentious business is governed by (a) The Solicitors’ (Non-Contentious Business) Remuneration Order 2009 and (b) The Solicitors’ Code of Conduct.
The 2009 Order makes it clear that solicitors’ costs must be “fair and reasonable”.
The charging options available in relation to non-contentious business include normal hourly rates, hourly rates plus value and fixed fees. There is also scope for no win, no fee, with contingency fee agreements and, more recently, damages based agreements.
The leading case on solicitors’ charges in probate and estate administration is Jemma Trust v Liptrott [2003] EWCA Civ1476. This case gives useful guidance on solicitors’ costs where hourly rates plus value have been agreed. There is a duty on solicitors to exercise professional judgment as to whether to apply a value element when charging for administering an estate.
Unlike contentious matters, a solicitor cannot require a payment on account (or suspend services if it is not paid) unless he makes it a contractual condition of accepting the instructions.
At the end of the administration of the estate the solicitor should prepare a final bill covering all the solicitors’ costs and disbursements since the commencement of the retainer. Credit for any interim bills on account should be given.
There is an important distinction between a gross sum bill and a bill containing detailed items. It is the solicitors’ own decision in non-contentious business matters which type of bill to deliver.
The solicitors’ bill should contain sufficient information on the work carried out and the period of time it relates to. Once delivered, the solicitor is bound by the bill.
Non-contentious business costs can be assessed by the court where it is felt that the costs were unreasonable.
The client is entitled to apply to the court for an assessment of the final bill and important time limits apply.
When the court assesses the bill it will consider whether the costs have been reasonably incurred. The court can assess solicitors’ costs on two bases: standard and indemnity.
Where a court assesses costs on an indemnity basis, any dispute about the reasonableness of the costs will be resolved in the receiving party’s favour. Where the standard basis applies, the court will limit costs to those which are proportionate and reasonable, with disputes being resolved in favour of the paying party.
Under Section 70 of The Solicitors Act the client can apply for assessment of the bill within one month of the date upon which it was delivered.
If an application is made after one month but before 12 months from the date the bill was delivered then the client can ask the court for permission to assess. From the client’s point of view it is always better to apply for assessment within the first month as otherwise there is no guarantee that permission will be given.
Generally speaking, no order for assessment will be made after 12 months from delivery of the bill, or after judgment, or after the bill has been paid.
The assessment procedure is governed by Rule 48.10 of the Civil Procedure Rules (CPR).
The solicitor is required to serve a breakdown of costs within 28 days of the order for the assessment of costs.
The client must then serve “points in dispute” within 14 days.
The solicitor is permitted to serve a reply within 14 days thereafter.
No later than three months of the order, the parties must file a request for a hearing date.
When the costs are assessed the court will consider who should pay the costs of the assessment. Costs normally “follow the event”. If the solicitors’ bill is reduced by one fifth or more (excluding VAT) then the solicitor is likely to be ordered to pay the costs of assessment. If the reduction is less than one fifth then the party challenging the costs is likely to be ordered to pay the costs of the assessment.
If the client does not apply for the costs to be assessed the solicitor can initiate recovery proceedings after one month of delivery of the bill.
Solicitors can charge interest after one month from delivery of the bill of costs. The rate of interest since April 1993 has been 8%.
Under Section 71(1) of The Solicitors Act 1974, where the solicitors’ bill is payable by someone who is not a client, they too have the right to apply for an order for assessment.
This means that residuary beneficiaries (whose final share of the estate is subject to deduction of estate liabilities, including solicitors’ costs) can seek an assessment where they believe that the solicitors’ costs of administering the estate are unreasonable.
All beneficiaries (residuary and non-residuary) are also entitled to pursue a complaint against a solicitor even though they are not themselves clients. This is specified in the Legal Ombudsman’s Scheme Rules.
If you require advice or assistance on challenging solicitors’ costs in probate and estate administration, either as an executor or a residuary beneficiary, then contact us on 0333 888 0409. Alternatively, you can email Lee Dawkins direct at [email protected].