Rachel Waller, contentious wills, trusts and estates partner at Excello, explains why beneficiaries may be in a stronger position than the executor themselves to challenge the fees charged by a solicitor appointed to administer the estate.
In a number of recent matters, I’ve been reminded of the significance of the Court of Appeal’s decision in Kenig v Thomson Snell & Passmore LLP [2024] EWCA Civ 15 (18 January 2024), particularly in the current climate where costs and value are under closer scrutiny.
The upshot of the case is that beneficiaries can be in a stronger position to challenge the fees of a solicitor appointed by an executor to assist with the administration of the estate than the solicitor’s own client (the executor).
Kenig established that the restrictive “blue pencil” approach derived from Tim Martin Interiors Ltd v Akin Gump LLP [2011] does not apply to beneficiary applications under s.71(3) of the Solicitors Act 1974. Although this looked like a major shift, Tim Martin in fact related to a contractual relationship between a client and third party and the application in that case was brought under s.71(1) of the Solicitors Act 1974.
As a result of Kenig, beneficiaries are no longer confined to a limited, technical challenge to discrete items on a bill. Instead, they may invite a full and substantive assessment of costs, including scrutiny of hourly rates, time spent and overall proportionality.
This means that solicitors acting for executors or trustees must approach billing with heightened care.
The fact that instructions are given on behalf of an estate or trust does not dilute the requirement for reasonableness. On the contrary, Kenig underlines that these contexts demand particularly careful cost management. Significant departures from initial estimates, especially where costs escalate rapidly, will attract close judicial scrutiny.
Clear, realistic estimates and ongoing cost transparency are more important than ever.
The decision also raises important considerations about timing. Although s.70 of the Solicitors Act imposes strict time limits on challenges by the “chargeable party,” the Court of Appeal indicated that those limits may not apply in the same way to beneficiaries. A beneficiary who was unaware of payments at the time they were made may still be able to seek an assessment later. While such cases may be unusual, solicitors should not assume that the passage of time provides complete protection.
Finally, trustees and personal representatives cannot afford to be passive.
The judgment makes clear that beneficiaries have an independent right to challenge costs where fiduciaries fail to act. A trustee who simply approves or “rubber-stamps” substantial legal fees, without proper scrutiny, risks more than just criticism. If a beneficiary successfully challenges those fees, the trustee may face allegations of breach of duty, negligence, or even unfitness for office. Practitioners are advised to make executor/trustee clients aware of the risks.
