The landmark case of Kenig v Thomson Snell & Passmore LLP [2024] has redefined the rights of beneficiaries under S.71(3) of the Solicitors Act 1974, opening new avenues for challenging solicitors’ bills. Today, we will take a look at the key takeaways from Kenig.
S.71(3) of the Solicitors Act 1974 had enshrined the right of Third Parties, who had an interest in property which would be used to pay a Solicitors bill, to make an application for such bill to be assessed by the Court. But it was assumed that the CPR would apply, namely, that costs would be presumed to be reasonably incurred and reasonable in amount if they had been incurred with the express or implied approval of the client. In most circumstances the Executor will have approved the costs and in some circumstances approved payment as well before a Third Party would be able to raise any objection. This would render any such assessment a mere formality and unlikely to be successful in achieving a meaningful reduction in the Bill.
However, the decision in Kenig v Thomson Snell & Passmore LLP [2024] opened the door for Third Parties to have Solicitors’ bills of costs assessed and that such an assessment would have some teeth beyond what had been assumed before.
With the door firmly opened it appears that many beneficiaries, particularly residuary beneficiaries, are now aware that their right to an assessment under the Solicitors Act is now more likely to result in the bill being reduced upon assessment. For the beneficiaries it will become a kind of zero-sum game in that, every pound reduced upon assessment would be an extra pound in their pocket.
The question for Executors and probate solicitors will be how to protect the costs contained within those bills or avoid beneficiaries making such applications in the first place?
Building a constructive relationship
The first step that should be taken is to ensure that the client care letters and terms of business are provided to the beneficiaries as well as the Executors. Such documentation accompanied by an accurate estimate will help to provide a clear picture of the likely costs that will need to be incurred to administer the estate. Furthermore, if a dispute between beneficiaries does arise, or the beneficiaries provide instructions for additional work to be carried then it is strongly recommended that you advise the beneficiaries of the additional costs that will be incurred by proceeding with the course of action. Building a constructive relationship with beneficiaries and avoiding any unwelcome surprises is likely to avoid any challenges being raised by beneficiaries.
Interim Statute Billing
Another step that should be considered is to ensure that your retainer allows for the raising of interim statute bills. The ability to raise interim statute bills can also ensure that the timeframes set out in the Solicitors Act are triggered because this can also provide another form of protection from an Order being made for the bill to be assessed.
The protection comes in that the Court will only make an order for assessment in exceptional circumstances once 12 months have passed since the raising and service of the interim statute bill. Furthermore, if the bill is approved and paid by the Executor then the Court will not make an order for the bill to be assessed once 12 months has passed following payment.
In order to benefit from this protection, it is important that you ensure that the Third Parties are aware that the interim statute bills have been raised and paid so it is recommended that the interim statute bills are served on the Third Parties in addition to the Executors.
Kris Kilsby is a Costs Lawyer at Paramount Legal Costs and a Council member of the Association of Costs Lawyers. For any further questions or queries about Solicitor/Own Client Costs Disputes or if you are interested in further in-depth training on the topic please get in touch at [email protected].
