Can charity legacy officers challenge solicitor executors’ costs?

Legacies left to UK charities under a Will are an important source of income for charities. However the costs incurred in administering the estate can often seem excessive and charity beneficiaries (particularly residuary ones) who have concerns about the costs being charged by the solicitor acting as executor or on behalf of the executors of a Will, often can be left feeling like they have no control. In such circumstances however, charity legacy officers have various methods available to them for challenging the costs of the solicitor. We’ve also covered whether charity legacy officers can challenge the costs of other professionals acting as Personal Representatives, read this here.

The Basics

Legal costs in probate cases are governed by the non-contentious costs rules. Non-contentious costs are defined as “monies payable for legal services in connection with non-contentious business”.

Probate is an example of non-contentious business, where a solicitor is acting as executor, or if the executor instructs a solicitor to administer the estate.

Costs must be fair and reasonable (Civil Procedure Rule Part 44) and as with all areas of non-contentious business, a client or a beneficiary who has concerns about the charges has a right to challenge those costs.

Complaints

The Law Society and the Solicitors Regulations Authority both have set standards they require solicitors to adhere to when dealing with estates and beneficiaries, most importantly that beneficiaries ought to be given cost estimates and have recourse to the solicitor’s firm’s complaints handling procedure as if they were a client.

All beneficiaries (non-residuary as well as residuary beneficiaries) are also entitled to make a complaint against a solicitor even though they are not direct clients of the firm. This entitlement is specifically included in the Legal Ombudsman’s Scheme Rules.

However, it should be noted that charity beneficiaries cannot use this service if the charity has income of more than £1 million.

Practical steps for challenging costs

Firstly, request a breakdown of the solicitor’s costs to understand how they have been incurred and how the PR’s claim they are entitled to them;

If costs are higher than anticipated, excessive or unreasonable, the beneficiaries can look to challenge or reduce them by discussing this with the PR directly, and seeing if an agreement can be reached.

However, this should be within the statutory timeframes provided, as it is difficult to challenge costs if left too late. Having this conversation could resolve matters and could avoid the associated costs involved should it be necessary to take any further steps and ultimately keep costs to a minimum.

Detailed Assessment

If this does not succeed, there is a statutory method of querying charges and the beneficiaries can look to issue an application for detailed assessment under Section 71(1) of The Solicitors Act 1974, which provides that:

“Where a person other than the party chargeable with the bill for the purposes of section 70 has paid or is or was liable to pay a bill either to the solicitor or to the party chargeable with the bill, that person… may apply to the High Court for an order for assessment of the bill as if he were the party chargeable with it…”

This means that the charity can challenge those costs as the ‘party chargeable’, it being the charity’s legacy which is effectively being used to pay the charges of the solicitors and executors.

The charity can apply to the court to have the charges checked by a costs judge in order to decide whether they are fair and reasonable.

The assessment will be on the indemnity basis which means the costs do not need to be proportionate only reasonable.

The Law Society has confirmed this protection in its guidance to residuary beneficiaries:

“Residuary beneficiaries are not clients, but they are able to complain and to expect the solicitor to respond to the matter under the solicitor’s complaint’s handling procedure. This is in line with a residuary beneficiary’s ability to seek third party assessment of costs under section 71(1) Solicitors Act 1974, whether or not the solicitor is an executor of the estate”.

Time Frames to adhere to

There are strict time frames for action – within one month of a final bill of costs being delivered. This can include interim bills if they are deemed to be statute or “full and final” bills – you should look at the Solicitor’s retainer to establish the position.

If an application is made late, but before 12 months has elapsed then you can apply to the Court for permission to assess the bill – though there is no guarantee that permission will be granted.

After 12 months from the date of delivery of the bill it is highly unlikely that a Court would agree to assess the costs.

Under the Civil Procedure Rules Part 46.10 Costs – Special Cases, the solicitor must serve a breakdown of their costs within 28 days of the order for costs to be assessed.

Within 14 days, the client or beneficiary must then serve “points in dispute” challenging for example type of work done, time spent and experience of solicitor, hourly rates and conduct.

The solicitor must serve any reply within 14 days of service of the points of dispute.

Settlement

Ideally parties should attempt to settle matters pre-hearing, usually in correspondence. You will want to avoid going to a detailed assessment hearing if at all possible, as unfortunately the costs of doing so can often be disproportionate to the amount in dispute. In any event, the Court will expect the parties to have attempted to settle matters before any hearing.

If the parties are not able to settle then a detailed assessment hearing will take place no later than 3 months after the date of the order for the costs to be assessed.

If at the hearing the solicitor’s costs are reduced by one fifth or more, then the solicitor will probably be ordered to pay the costs of the assessment. If less than one fifth, then the challenger is likely to be ordered to pay those costs.

Summary

There are several remedies available to beneficiaries and it is particularly important that charity beneficiaries consider what their rights are in any given circumstance. Early legal advice is always recommended to ensure that the charity’s rights are protected at minimum cost, as well as ensuring that strict time limits are not overlooked.