Probate: Costs information could be improved
Law firms handling probate work could do more to guard against the risks of a conflict when administering estates and also acting as the executor, the Solicitors Regulation Authority (SRA) has cautioned.
Some could also improve their supervision of fee-earners too and provide better costs information to clients.
The thematic review of probate and estate administration was triggered by last year’s SRA annual review of continuing competence, which highlighted issues with probate practitioners.
The regulator visited 25 firms, including some sole practitioners, meeting the head of department and, where there were staff, with a fee-earner (mostly but not all solicitors). It reviewed two of their files, training records and accountant’s reports too.
All but two of the firms acted as executors too and fewer than half had discussed the potential disadvantages of this with the testator.
But there was no evidence of firms or solicitors “inappropriately proposing themselves as executors”, such as to enhance the costs they could claim, while they took “a reasonable approach” to renouncing executorship.
The review found that most of the lawyers had a good understanding of the risks of conflicts, such as the lack of oversight of costs and potential disputes from beneficiaries.
Nonetheless, only 12 of the firms had “additional controls in place to avoid or mitigate this risk” and these were present in just 11 of the 20 files reviewed where the firm acted as executor.
“We felt that there was room for improvement in this area,” the SRA said.
Controls used by some firms included ensuring the executor and administrator were different people, greater oversight of billing and additional supervision.
Some also treated residuary beneficiaries as clients, providing them with client-care letters, costs information, and regular updates, and seeking their agreement to key decisions.
The SRA stressed the importance of taking adequate steps to avoid a conflict of interest. “If firms cannot do this, they should not accept the appointment as executor. If they are already acting as executor, they should consider renouncing the appointment.”
Most solicitor heads of department were aware of the SRA’s continuing competence requirements, unlike six of the 10 solicitor fee-earners, while 15 of the 25 firms had a written continuing competence policy.
But in seven of these, the head of department or fee-earner was unaware and unable to correctly explain their professional obligations in relation to continuing competence. “This shows that having a written policy is not enough,” the review said.
Almost all lawyers undertook formal training but this mostly focused on legal and technical aspects, rather than other areas of competence, such as professional obligations. Training records often did not include reflections on learning.
Fee-earners felt they had adequate and effective supervision, but of 30 files reviewed, only nine showed evidence of it.
Half of the heads of department and sole practitioners received no supervision, oversight of their work or peer review (by external consultants where necessary) and only one of 20 files provided evidence of it.
Firms could also do more to ensure that supervision was documented, the SRA said.
All 25 firms had “a good awareness of client vulnerability” and took many steps to meet the needs of clients in vulnerable circumstances, although “some firms could do more to ensure they fully meet each client’s needs”.
The level of written information given to clients was “variable”, with most firms not providing “basic written information about the client’s role and responsibilities as a personal representative, and about the firm’s role in dealing with the administration. Not all firms were telling clients how often they could expect updates and what method of communication they would use”.
The level and quality of costs information was similarly variable; in only around half of the files did the firm explain when and how the client would need to pay costs. Costs estimates were “significantly exceeded” in four out of 50 files.
While most firms had systems in place to make sure matters were being progressed and clients were regularly updated, one firm relied on incoming communication to prompt action, while another admitted it would only deal with matters when clients chased it.
The SRA found residuary beneficiaries generally did not receive enough information. While this was not a regulatory requirement, it provided “an additional layer of accountability” and mitigated the risks of disputes.
Most firms were keeping accurate and up-to-date client and office ledgers and records of estate assets and liabilities, while all but four had a written policy and/or procedure on how it would account to clients for interest on money held.
However, as a result of the review, the SRA has opened investigations into three firms – two for failing to obtain or submit qualified accountant’s reports, and the other for non-compliance with anti-money laundering regulations.
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